ASEAN KEY DESTINATIONS
Baht hike hits Thai economy
Since the baht has escalated by 10 percent, or more than 3 baht, the impact on GDP so far should be at 1 percent.
However, that figure is based on the assumption that Thailand is the only country to have a currency appreciation.
It is estimated that for next year, Thailand's GDP would be around 4-5 percent, assuming the baht stays at 29-31 to the dollar.
Many Thai economists disagree with the private sector's request for the Bank of Thailand to cut interest rates to slow the baht's ascension, as he feels interest rates are not the only factor pushing the baht to rise.
The quantitative easing policy - in essence, the printing of more money - imposed by the US government is the main reason.
For the long term, Thailand should promote capital outflows by encouraging Thai companies to invest abroad and upgrade their production to offset lower import prices.
Other measures such as a cut in the policy rate from 1 percent would likely make a deep impact on the market and must be considered carefully, said Dr Naris.
The upside of a strengthening baht cannot be ignored, he added, especially increased tourists and inflows from this sector the past few months.
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