The Thai economy has been hard hit by the pandemic triggered halt to international tourism. But the Thai economy is seeing a bright spot as its export sector gets a boost and could see higher than expected growth because the baht has depreciated by about 10% against the US dollar.
The weakened baht has benefited exporters and has provided some encouragement as the sector look towards the end of the year. The Thai National Shippers’ Council forecasts a 10% growth for 2021, limited by continuing pandemic and stilted vaccine rollout. Other industry wide obstacles such as container shortages and high freight rates are not only facing shippers in Thailand but are being faced globally.
The first half of 2021 was also encouraging for Thailand because the global economic recovery and boosted demand from foreign trade partners. Over the first half exports skyrocketed to nearly 45% year-on-year, the largest increase in just over a decade.
On the flipside, the depreciation is also affecting importers. Importers are concerned that the decline puts the baht as Asia’s worst performing currency. Some importers were expecting this to be a good time to import machinery and equipment by seizing on a pandemic recovery.
Across all industries there is hope for mass vaccinations, stronger trade, and the return of tourism as a major contributor to the Thai economy to support the appreciation of the baht.