The President of the Standing Committee on Commerce, Industry and Banking has said that the export contraction has fed into Thailand’s domestic economy in private consumption and investment as he predicts that matters will grow even more pressing with the intensification of the trade war and further easing of fiscal policy in the US expected by the end of the year. It has also emerged that Thailand’s woes are also being driven by Chinese moves to effectively devalue the yuan which tanked nearly 3.7% in August, a move that was advocated in July by the IMF mission in Beijing which had said that the Chinese currency should adopt a more flexible approach to US trade tariffs.

Thai business leaders want the Thai government to effectively bring down the value of the baht. It comes as the Deputy Prime Minister plans to present plans to the economics cabinet on Friday for attracting inward investment. This week, he highlighted efforts to roll out digital technology.

Key business leaders called this week for government action to lower the value of the Thai baht. The President of the Standing Committee on Commerce, Industry and Banking Preedee Daochai warned that the strong baht’s effect on exports was now filtering into the domestic economy. His comments were reinforced by the President of the Federation of Thai Industry, Suphan Mongkolsuthee who said that the appreciation of the baht against a range of currencies meant that Thai products abroad were now 10% more expensive since the beginning of the year. It comes as the Deputy Prime Minister for the Economy, Somkid Jatusripitak, pushes for more inward investment into Thailand and a focus on digital technology.

On Wednesday, Preedee Daochai who is the President of the Standing Committee on Commerce, Industry and Banking told the media that the export contraction has fed into private consumption in Thailand, investment and industrial output. Tourism alone remains in a somewhat healthy position.

Calls from business growing more strident

Thai business groups are becoming increasingly more strident in their calls to have the government take action in relation to the strong value of the baht against the dollar and regional currencies which is reported to be still having a devastating effect on Thai exports as the economy moves well into the second half of the year.

World economic prospects towards the end of 2019 are not bright with scope for more turmoil

The high ranking business representative said the signals for the months head towards the end of the year are not good with growing US Chinese tensions as well a deepening trade rift between Japan and South Korea and the prospect of Brexit disrupting markets both in the United Kingdom and Europe. Plans by the US Federal Reserve to further cut interest rates will exacerbate things further.

Government must act to rein in the baht

The business representative leader called on the Thai government to quickly take concerted action to rein in the strong baht. His comments were reinforced by a statement by the President of the Thai Federation of Industry, Suphan Mongkolsuthee who pointed out that the baht has risen by 10% from the beginning of the year when weighed against a range of currencies which impact exports. For example, this year it has risen 14% against the Korean Won and 10% against the Chinese currency.

Chinese moves on the trade war are also devastating for Thailand as the yuan depreciates

The problem Thailand is facing with the baht is not just against the dollar where some constraint has set in but significantly against the Chinese yuan which alarmingly devalued in August in a what was designed as a counterblow to US President Donald Trump’s tariff tactics. 

The yuan dropped by nearly 3.7% against the dollar in August. It has been reported that the move was advised by the mission of the International Monetary Fund in Beijing which was confirmed recently by Bloomberg when it reported that IMF officials in July advised China to introduce more flexibility in the value of its currency to counter the intensifying effects of the trade war.

Baht has gained more against the yuan than the US dollar since the end of June this year

The effect of the depreciation of the yuan is also a countermeasure from China which effectively hampers efforts or plans to relocate manufacturing by Chinese firms to places such as Thailand. It also makes Chinese exports more competitive than Thailand’s on Asian markets. Since the second quarter, the Thai baht has gained in value against the dollar by 5%, the figure of the yuan is 8%. These are startling numbers. 

Calls for Economic committee comprising of the Ministry of Finance and the Bank of Thailand to urgently address the issue

Mr Suphan said that the proposed committee recently suggested by Deputy Prime Minister Somkid Jatusripitak involving the Finance Ministry, other agencies and the Bank of Thailand should get together and address the issue.

Deputy PM Somkid to present Board of Investment plans to attract foreign investment

On Friday, it is expected that the deputy prime minister for the economy will present plans to the economic cabinet prepared by the Board of Investment to help attract digital and personnel training firms to Thailand. Somkid is reported as saying that he had personally spoken with international firms who are interested in investing in Thailand and see the kingdom as a hub for the ASEAN region.

Internet and an emphasis on digital technology

The economic czar also highlighted efforts to expand the internet within Thailand and said he would be encouraging the increased use of 5G technology and artificial intelligence in Thailand’s existing telecoms and digital sector.

Deputy prime minister predicts a boost in Thailand’s economic prospects in the third quarter

Deputy Prime Minister Somkid has said that he is confident that the government’s stimulus measures and policy to guarantee crop prices will pave the way for a boost in Thailand’s economic prospects in the fourth quarter of the year and move the economy towards its objective of 3% growth for 2019.

Property development firm boss says foreign buyers for property under ฿10 million are moving away due to the high Thai baht

Meanwhile, the boss of one of Thailand’s leading property developers Prasert Taedullayasatit of Pruksa Real Estate Plc has confirmed that the high priced baht has impacted the sale of properties under ฿10 million to foreign buyers who have become significantly less active in the sector even since the second quarter of the year.

Domestic property market down because of Bank of Thailand lending curbs since April 1st

The overall downturn in the economy in the second quarter of the year also has fed directly into the property market already impacted by curbs imposed by the central bank on lending to domestic borrowers. Now, the rising baht is making the price of Thai property to foreign buyers far more expensive.

Figures released this week by the National Economic and Social Development Council showed the biggest drop in employment due to the slow down was experienced in Thailand’s building sector.

Foreign buyers now find a property in Thailand and Bangkok more expensive as baht gains

A property agent in Bangkok estimates that already in the first half of 2019, the percentage of foreign buyers had dropped from 20% last year to 14%. The indications are that the drop since then will be even more severe. The Chief Executive of Pruksa explains what the strong baht means that for Chinese investors, property prices in Thailand have gone up by 8% and for those paying in dollars, the increase is 5% even since the end of June.

Some good news – wealthy buyers from Hong Kong are snapping up high-end property following political unrest in the territory

Meanwhile, Mr Prasert had some good news. That is that the market of high-end property developments and condominiums is holding up in Bangkok. This has been buoyed by a surge of interest from Hong Kong based business people seeking to purchase a second home in Bangkok following the escalating political unrest in the territory.

Further reading:

Finance minister ready to take further action to prevent the Thai economy falling into recession