PATTAYA, Thailand – Thailand is weighing new measures to manage the baht’s strength amid concerns over its impact on exports, tourism, and broader economic growth. Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said the currency’s appreciation—driven by a weaker U.S. dollar, a strong current-account surplus, and speculative capital flows—could reduce GDP by up to 0.2 percentage points for every one-baht gain.
Authorities are reviewing steps to curb speculative activity, especially transactions linked to gold trading, which have contributed to volatile capital inflows. While the Finance Ministry and the Bank of Thailand are exploring regulatory options, any new tax measures would need to be considered by the next government, as the current administration lacks the authority to introduce new fiscal policies.
Ekniti signaled that there may be room for interest rate cuts and that managing currency strength will likely require a mix of fiscal and monetary tools. The government is also prioritizing foreign direct investment to help ease pressure on the baht by boosting imports and narrowing the current-account surplus. Investment applications through the Board of Investment rose 93% last year to approximately 14 billion US dollars, with a new “BOI Fast Pass” introduced to accelerate approvals in sectors such as electric vehicles, smart electronics, agri-tech, and wellness.
The Finance Ministry is also addressing high household debt by purchasing non-performing loans from low-income borrowers through the Financial Institutions Development Fund and transferring them to state-backed asset management companies. The program covers around 2 million people and is intended to support financial recovery and discipline.
Fiscal policy remains focused on medium-term consolidation, with a plan to bring the budget deficit below 3% of GDP within two years through revenue measures and spending controls. Thailand’s economy is projected to grow around 2% this year, slightly below last year’s pace, amid global trade headwinds. Potential growth remains at about 3%, limited by demographic pressures, though the government is seeking to raise this through investment in infrastructure, human capital, and productivity. (NNT)
