The finance ministry said Wednesday that the current weak baht supports tourism’s recovery in the post-pandemic era, which is key to the nation’s economic performance.
Speaking in an interview regarding the Asia-Pacific Economic Cooperation (APEC)’s sidelines, finance minister Arkhom Termpittayapaisith explained that Thailand was good value for money, attracting bargain-seeking travelers.
Mr. Arkhom said the baht’s prolonged weakness would “surely” help foreigners return.
The Thai currency had the second worst performance in Southeast Asia this year, and its weakness could persist for another two years, the finance minister stated.
While the baht fell 0.2% against the dollar at 2:18 p.m. local time after two days of gains, Mr. Arkhom said the currency remains competitive, and the Bank of Thailand (BoT) does not have to worry about capital outflows as much as other countries.
Furthermore, the finance ministry does not believe that the US Federal Reserve will stop rate hikes any time soon and said that the BoT’s 25 basis point increases in the past quarter had helped the economic recovery gain traction even now that inflation has hit a 14-year high.
Thanks to foreign visitors’ return, gross domestic product is expected to rise 3.7% next year, faster than the 3% to 3.5% projected for 2022, Mr. Arkhom added.
Meanwhile, the government is considering specific stimulus for the end of the year, hoping to implement new measures or improve existing ones to protect Thai households’ from higher energy costs, he went on.
According to the finance minister, many Thai companies are happy with the baht’s weakness. He also said the country needed better profitability and encouragement to use local materials to prepare for when the currency finally appreciates.
Mr. Arkhom also stated that the floods that have hit the country in recent weeks would have little effect on GDP. Furthermore, the impacted area in 2022 would be only one-third of what was affected when Thailand experienced a similar situation in 2011.
In a separate development, economists at DBS Bank in Singapore expect the kingdom to gain more traction in 2023 to support a 4.2% growth.
Fitch Ratings projected a similar expansion, saying the tourism recovery is gaining momentum and more dollars will flow to support the baht as tourism revenue returns.
Analysts’ reports back Thailand’s projection that foreign visitors’ “revenge spending” would hasten the recovery of the tourism industry, which accounts for 12% of GDP.