Economic Factors in Thailand to Help Predict Thai Forex Markets
There’s no doubt that Thailand’s GDP took a significant hit in the first half of 2020, with a hefty contraction of -9.7% recorded in quarter two as the nation’s lucrative tourism sector was forced to shut down.
Fortunately, this loss was partially reversed by impressive growth of 6.5% in Q3, which was significantly higher than the forecasts produced by economists. So, while year-on-year growth forecasts remain stark at -6.4%, there’s no doubt that the economic climate is beginning to improve in Thailand.
In this post, we’ll appraise the economic factors that will drive growth in the country and help investors to predict Thai forex markets in the coming months.
1. The Reopening of International Borders (in March 2021)
While the region’s borders remain closed to international visitors (although domestic tourism continues to be heavily promoted throughout Thailand), there’s finally some hope at the end of a long and difficult tunnel.
More specifically, the government has announced that it expects to at least partially reopen its border in March next year, with the second quarter of 2021 therefore likely to deliver a significant boost to economic sentiment and GDP.
Given the strategic importance of tourism to the Thai economy, the decision to reopen borders early in 2021 will provide a significant boost to the nation’s overall GDP and economic performance.
From the perspective of forex investors, this will undoubtedly boost the value of the Thai baht and boost capital inflows into the country, which may also have a knock-on effect in infrastructure spending and other asset classes nationwide.
2. A Change in Economic Approach
With property prices having also fallen during 2020, the government has taken some initial and proactive steps to change its economic approach and encourage GDP growth across multiple sectors.
One measure has seen officials strive to make Thailand more attractive for those who want to own a second home, in a bid to boost the real estate sector and its profitability.
This includes a number of innovative schemes that make it far more attractive for overseas visitors to stay for extended periods of time in Thailand, primarily by offering strategic incentives to invest such as long-term visas or even permanent residency in some cases.
This may also see Thailand officials strive to invite and attract highly skilled labour into the country, boosting economic competitiveness and underlying GDP over a far longer period of time.
3. The Rise and Rise of Exports
Like Vietnam, Thailand has sought to offset the loss of tourism revenue by capitalising on its increasing competitive exports market.
Of course, growth in this type of sector is synonymous with lower currency prices, but this is something that can still appeal to speculators from the perspective of the Thai baht.
According to the EXIM Thailand President, the Bank has forecast that Thai export growth could peak at 4% in early 2021, rising from a low base of -10% in the immediate aftermath of the coronavirus pandemic.
This will definitely further room for optimism as 2021 begins in earnest, creating positive sentiment and laying the foundations for more sustained economic growth. Certainly, Thailand remains in a good position to improve its fortunes next year, while also outperforming many of its Southeast Asian neighbours.
This article has been published in accordance with Socialnomics’ disclosure policy.