ASEAN KEY DESTINATIONS
Strong Thai baht may bring benefits
A study by the ministry's Office of Industrial Economics (OIE) shows that every 1 percent the baht has strengthened will cause a decrease of 7.45 billion baht in real gross domestic product (GDP).
In the short term, some industries - construction, steel, chemicals and beverages - benefit from a strong baht based on their costs and revenues. In the longer term, the overall effect on the economy will be positive, the OIE says.
On the assumption that the baht strengthens by 1 percent yearly, the negative impacts will ease year by year until the eighth year, when the baht appreciation will start to be a positive force. Growth in the domestic market is also based on the assumption that the sizes of the workforce, investment and production capacity increase yearly.
On the other hand, the weakening of the baht by 1 percent will cause a drop in GDP by the eighth year, reflecting a declining dependence on foreign economies.
"The government needs to increase the productivity of the workforce, increase infrastructure for investment and look into the baht so that it does not fluctuate too much. This way, Thailand will be able to reap the benefits [of the appreciation]," said the study.
The baht has strengthened by 9.9 percent from 33.30 to the US dollar at the beginning of this year to 30.00 as of yesterday.
The Fiscal Policy Research Institute Foundation said the exchange rate for the full year would average 31.70.
Kanit Sangsubhan, director of the institute at the Finance Ministry, said currency instability would continue over the next 12 to 18 months.
Somchai Harnhirun, the OIE deputy director-general, said businesses need to adapt to the reality of an appreciating currency, especially when minimum wages have been increased.
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