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    • The week ending April 30th, 2021 the Thai Baht was being exchanged at 30.71 baht to every 1 US dollar.

    • Rating agency's confidence in Thailand pleases PM

    Prime Minister Prayut Chan-o-cha has welcomed confirmation by the Japan Credit Rating Agency (JCR) that the Thai economy's outlook is stable despite the economic impact of Covid-19.

    The JCR announced on Monday that Thailand had been rated as having a stable outlook and said that reflected the country’s strong economic base focused on exports, the stability of its banking system and its solid international trade balance.

    The Thai economy contracted 6.1% in 2020 due to a slowdown in its exports and a large decline in the number of foreign tourists caused by the pandemic, the agency acknowledged.

    However, it said the economy had begun recovering after bottoming out in the second quarter of 2020 partly thanks to the effect of the government's large-scale financial and fiscal package worth 1.9 trillion baht, equivalent to 12% of GDP.

    While the resurgence of the pandemic needed to be closely watched, the economy was expected to return to growth of about 3% in 2021, said the JCR.

    The public debt-to-GDP ratio increased significantly due to the implementation of the massive fiscal package but the JCR was confident the ratio would be kept at manageable levels in the future. This was due to the government's commitment to the law that requires the ratio to be kept lower than 60%.

    The agency also applauded Thailand for remaining loyal to fiscal discipline, with both the fiscal balance and government debt kept at sound levels in GDP terms.

    Although the trade surplus expanded last year mainly due to a faster fall in imports than exports, the current account surplus in GDP terms declined from 7.0% to 3.3% in 2019 due to a bigger service account deficit mainly resulting from a reduced number of foreign tourists.

    The country's foreign currency reserves (excluding gold) stayed high at USD 245.3 billion (7.69 trillion baht) at the end of February 2021 due to an accumulation of current account surpluses.

    The reserves were 4 times the country's short-term external debt and this indicated that Thailand remained resilient to external shocks, said the JCR.

    With sufficient funds in hand, Gen Prayut has affirmed the government’s readiness to proceed with implementing more Covid-19 relief measures for all affected parties as well as economic stimulus packages, said a government spokesman.:
    • Thai economic recovery trails others in Asia – ADB

    Developing Asia’s economy will rebound faster this year than previously estimated, as nations tread diverging recovery paths, according to the Asian Development Bank.

    Southeast Asia’s forecast was lowered to 4.4% growth this year amid reduced projections for Malaysia, the Philippines and Thailand.

    The region’s gross domestic product will expand 7.3% this year, better than the 6.8% forecast in December and a turnaround from last year’s 0.2% contraction, the ADB said in its Asian Development Outlook released Wednesday. It sees developing Asia’s growth moderating to 5.3% in 2022.

    “Economies in the region are on diverging paths,” ADB Chief Economist Yasuyuki Sawada said. “Their trajectories are shaped by the extent of domestic outbreaks, the pace of their vaccine rollouts, and how much they are benefiting from the global recovery.”

    Strong exports and a recovery in household consumption will help China’s economy to expand 8.1% this year -- faster than the 7.7% forecast previously -- and by 5.5% next year, the Manila-based lender said. India will grow 11% in fiscal year 2021, which ends in March 2022, but the recent surge in coronavirus cases may put this recovery at risk.

    “The most significant threat to this outlook is the unfavourable evolution of the Covid pandemic,” Sawada said Wednesday morning in an interview with Bloomberg TV’s Rishaad Salamat and Haslinda Amin, citing both renewed outbreaks of the virus as well as the effectiveness of national vaccination plans.

    ‘Indispensable’ stimulus

    Fiscal stimulus that softened the pandemic’s blow had boosted the region’s debt burden, though at about 65% of economic output it remained “manageable,” Sawada said.

    “The massive package at this moment is really indispensable to handle the downside pressure on the economy generated by the pandemic,” he said.

    While the US Federal Reserve’s easy monetary policy could produce some price pressures in Asia, he predicted that “substantial slack in many economies will keep a lid on inflationary pressures” over the next two years.

    Other key points from the report:

    Economic recovery is particularly strong in East Asia, but weaker elsewhere, especially in the Pacific. Differing trends are also apparent in labour markets, with unemployment declining unevenly across economies
    The region’s average inflation is forecast to fall to 2.3% in 2021 from 2.8% as food-price pressures ease
    Developing Asia’s current account surplus is projected to narrow to 2.1% of GDP in 2021 from 2.4%, as healthier economic activity leads to faster growth in imports than exports:
    • Little more than a month away and the PM is still here (2 years)……..

    Keep your friends close and your enemies closer


    • The week ending May 7th, 2021 the Thai Baht was being exchanged at 30.79 baht to every 1 US dollar.

      • Bank of Thailand leaves rate at record low, warns of Covid risk

      The central bank left its key interest rate unchanged at a record low of 0.50% on Wednesday, as expected, preserving its limited ammunition as the economy struggles with a third wave of coronavirus infections.

      The latest outbreak has slowed domestic activity for the tourism-reliant economy at a time when it was preparing to reopen to travellers, but increased exports, another key growth driver, have lent some support.

      The Bank of Thailand's (BoT) Monetary Policy Committee voted unanimously to keep the one-day repurchase rate unchanged for an eighth straight meeting.

      All 14 economists in a Reuters poll had expected the BoT to remain on hold after three rate reductions in the first half of 2020 to ease the impact of the pandemic on the economy that suffered its deepest slump in over two decades.

      "Economic growth is likely to sharply slow due to the third Covid-19 wave," the central bank said in a statement.

      Monetary policy will remain accommodative to support economic activity, the BoT said.

      The bank reiterated that the limited policy room should be preserved to be used at the most effective time.

      The third Covid-19 wave, spurred by the highly transmissible B.1.1.7 variant, has accounted for more than half of total cases since the start of the pandemic. The outbreak came as Thailand prepared to reopen more broadly to foreign tourists and global vaccine rollouts paved the way for air travel to pick up.

      The BoT said the number of foreign tourists would be less than the 3 million projected three months ago. That compares with nearly 40 million in 2019, before the pandemic.

      Last week, the finance ministry cut its 2021 GDP growth outlook to 2.3% from 2.8% but raised its export growth forecast to 11% from 6.2% seen earlier.:
      • BoT slashes its GDP forecast again

      The Bank of Thailand (BoT) slashed Thailand's economic growth forecast for 2021 on Wednesday for the second time this year to 1-2%, largely depending on the procurement and distribution of Covid-19 vaccines.

      The central bank's previous estimate of growth of gross domestic product (GDP) was 3% but it now includes three scenarios including the base, worse than the base, and worst-case scenarios, said the secretary for BoT's Monetary Policy Committee (MPC) Titanun Mallikamas.

      For the base scenario, the bank predicts a GDP growth of 2%. This prediction assumes that vaccine procurement and distribution reaches 100 million doses this year and leads to herd immunity in the first quarter of 2022. Moreover, it also factors in foreign tourist arrivals increasing to 1.2 million while the number of unemployed and underemployed hovers around 2.7 million.

      Under the worse than base scenario, the bank forecasts GDP growth to hit 1.5% with procurement and distribution of 64.6 million vaccine doses which will lead to herd community by the third quarter of next year. In addition, offshore tourist arrivals will hit 1 million while the number of unemployed or underemployed hits 2.8 million.

      Mr Titanun said the central bank assessed the worst-case scenario to cause the GDP to grow 1%. This prediction was made under the assumption that vaccine procurement and distribution is delayed with less than 64.6 million doses procured and a delayed distribution this year which will prevent herd community until the final quarter of next year. In this scenario, the number of unemployed and underemployed will reach 2.9 million.

      If the economy performs worse than the base, it would cost the Thai economy around 460 billion baht, accounting for 3% of the country's GDP in 2021-2022. In the worst-case, the Thai economy would lose 890 billion baht or 5.7% of GDP during 2021-2022.

      However, the assumptions do not include the government's new economic stimulus packages.

      "If the worse and worst-case scenarios do not take place, the Thai economy could achieve growth of 3-5.7% in 2021-2022. So, vaccines are a key factor to drive the country's economy," he said.

      Despite this, the central bank revised down the country's GDP forecast for 2021 in March from 3.2% previously to 3% and the next revision was scheduled in June. However, given the higher impact of the third wave of Covid-19, the bank has decided to cut the economic growth forecast earlier than scheduled.

      In case of a delay in vaccine procurement and distribution, it will impact the country's reopening and weaken the tourism sector and small-and-medium-sized enterprise (SME) segment.

      In a related matter, Mr Titanun said the MPC on Wednesday voted unanimously to maintain the policy rate at 0.50%. The committee assessed that the Thai economy would expand at a much slower rate due to the third wave of Covid-19 which has affected domestic spending and foreign tourist figures.

      The MPC believes that procurement and distribution of vaccines in an adequate and timely manner was the most important issue for the Thai economy at present. In addition, the committee believes the continuity of government measures and policy among government agencies is critical to support economic recovery impacted by the new outbreak.

      The measures to accelerate the procurement and distribution of vaccines will prevent a prolonged outbreak. Fiscal measures should ensure the continuity of fiscal impulses, mitigate the impacts of the outbreak and support economic restoration going forward.:

      Keep your friends close and your enemies closer


      • The week ending May 14th, 2021 the Thai Baht was being exchanged at 30.88 baht to every 1 US dollar.

        Keep your friends close and your enemies closer


        • Thai economy shrinks by 2.6% in Q1

          The Thai economy shrank by 2.6% in the first quarter of this year -- an improvement from a 4.2% contraction in the previous quarter -- after it was boosted by a continued increase in agricultural production, recovery of non-agricultural production, acceleration in domestic investments, rise in government consumption expenditure and improvement in exports of goods.

          However, the new wave of Covid-19 infections at the end of 2020 affected private consumption expenditure adversely, prompting the government's planning unit -- the National Economic and Social Development Council (NESDC) -- to lower its economic growth forecast for a second time to 1.5-2.5% from 2.5-3.5% made on Feb 15 and against 3.5-4.5% growth made in November last year.

          On a quarterly basis, gross domestic product (GDP) rose by 0.2% in the first quarter, compared to 1.1% in the fourth quarter of 2020.

          In the final quarter of 2020, the economy shrank 4.2% from a year earlier but expanded to a revised 1.1% for the quarter.

          "Although there were various supporting factors in the first quarter, they were not enough to drive overall economic growth," said Danucha Pichayanan, the NESDC's secretary-general.

          He cited the decline of private consumption, tepid tourism, and the loss of business at restaurants and hotels which fell by 0.5%, 63.5%, and 54.3%, respectively, which weighed down economic growth in the first quarter.

          He said the second wave of Covid-19 infections played a key part in contraction in the first quarter while the third wave of infections, which began in April has led the agency to revise down Thai economic growth this year to 1.5-2.5% or an average of 2%, a sharp decline from the 6.1% predicted in 2020.

          He said these projections are based on the government's likelihood of getting infections under control by June of this year; global economic growth of 5%, growth in world trade by 7.8%; an exchange rate of 29.8-30.8 baht against the US dollar and Dubai crude oil prices between US$56-68; and 170 billion baht worth of revenue to be generated from 500,000 foreign visitors this year.

          He said the key contributors to Thailand's economic growth this year will stem largely from a significant recovery of the global economy and merchandised trade, government expenditure, and the low growth base in 2020.

          In total, it is expected that export values of goods, private consumption expenditure, private investment and public investment will increase by 10.3%, 1.6%, 4.3%, and 9.3%, respectively. Meanwhile, headline inflation is expected to be in a range of 1.0-2.0% and the current account to register a surplus of 0.7% of GDP.

          For the remaining months of the year, the NESDC also advised the government to contain domestic outbreaks to minimise cases and to prevent new waves.

          "The government needs to enforce disease control and preventive measures strictly, along with enhancing active disease surveillance especially in high-risk areas; monitor and control high-risk activities; prevent the entry of additional variants from abroad especially through visitors and border areas; expedite the process of vaccine acquisition and distribution in order to achieve herd immunity; prioritise the distribution to high-risk groups of people using public health guidance; consider restoring economic activities in key tourism destinations and manufacturing production bases; and allow for flexibility to cope with uncertainty," said Mr Danucha.

          "It also needs to continually enhance public health capabilities to efficiently control the current situation and to prepare to cope with [if any] additional waves and provide precise and accurate information to the public in order to build confidence about vaccination and run campaigns about public health guidelines to prevent additional outbreaks and to reduce the possible risk of post-vaccination infections."

          The government is also being urged to implement targeted economic measures to support affected people, labour and businesses together with economic recovery policies; encourage the export of goods, increase foreign income and bolster manufacturing and private investment recovery; stimulate private investment and maintain growth momentum from government expenditure and investments.

          The state planning agency also recommended the government prepare for re-opening to foreign tourists and to maintain the domestic political environment amidst vulnerabilities due to the Covid-19 outbreak.:

          Keep your friends close and your enemies closer


          • The week ending May 21st, 2021 the Thai Baht was being exchanged at 30.92 baht to every 1 US dollar.

            • KBank sees diminished baht

            Kasikornbank (KBank) forecasts the baht will weaken further against the US dollar by June this year because of dividend repatriation by foreign investors and the country's lower current account surplus.

            For May 17-21, dividend payments of SET-listed companies are expected to exceed 18.7 billion baht, while the following week the amount is estimated at 6.53 billion. Repatriation of these dividends will continue to pressure baht depreciation, said KBank.

            Dividend payments by listed companies on the Stock Exchange of Thailand are scheduled from March to May this year, while dividend repatriation of offshore companies peaked at 20.6 billion baht from April 19-23 this year.

            Kobsidthi Silpachai, KBank's head of capital markets research, said the bank predicts the local currency to decline to 31.1 baht against the dollar by the end of June this year.

            In addition, Thailand's current account surplus has declined from US$38.2 billion in December of 2019 to $3.90 billion in March of this year, pressuring a weakening baht.

            With a lack of foreign tourist spending because of the pandemic, Thailand's current account surplus continued to decline.

            In addition, the country's vaccination rate remains low at 1.12% of the population, compared with a global rate of 4.56%, with the US at 36.9% and the UK at 29.6%.

            KBank predicts the baht to gradually appreciate, possibly reaching 29.75-29.80 baht to the greenback by the end of 2021.

            A stronger baht could be supported by the government's mass vaccination plan from June, leading to the country reopening to tourism and increasing economic activities in the second half of the year, said KBank. The global economic recovery should also support Thai export growth and a firmer baht.

            However, the third wave of infections and the Thai economic contraction in the first quarter remain downside risk factors for the economy this year, said the bank. As a result, KBank may readjust its 2021 economic growth forecast later in the year.:

            Keep your friends close and your enemies closer


            • The week ending May 28th, 2021 the Thai Baht was being exchanged at 30.80 baht to every 1 US dollar.

              Keep your friends close and your enemies closer


              • The week ending June 4th, 2021 the Thai Baht was being exchanged at 30.77 baht to every 1 US dollar.

                • Latest Thai stimulus injection expected to stem the bleeding, not boost economy

                The government launched its latest stimulus package on June 1 in a bid to shore up the economy and aid those impacted by Thailand’s third wave of COVID-19. Worth Bt140.4 billion, the package covers 51 million people.

                From July, all state-welfare cardholders will get a monthly Bt200 cash handout until the end of the year. This is the third handout scheme launched by the government since last year. The disabled and those who do not have a smartphone will also get monthly payments of Bt200.

                The government also extended the co-payment subsidy scheme for a third time to help low-income people with daily shopping and travel expenses. The scheme offers a subsidy of up to Bt150 per day, capped at Bt3,000 per person.

                Also on offer are e-vouchers to encourage the high-income group to go shopping. This handout is capped at Bt7,000 per person.

                The Fiscal Policy Office estimates the measures will inject Bt594.4 billion into the economy, some of it from people’s own pockets.

                Slow jab rollout hitting economy

                The Thai economic outlook is haunted by the slow vaccine rollout compared to developed economies, which are starting to grow at a higher rate. The Organisation for Economic Cooperation and Development (OECD) recently revised its global growth projection for this year to 5.8 percent, substantially higher than the 4.2 percent projected in December. The growth is being driven mainly by recovery in advanced economies, where the rate of vaccination is much higher.

                In contrast, research houses in Thailand have revised their economic projections downward, with some forecasting growth rate of less than 2 percent this year.

                Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Securities, is skeptical that this newest relief package will stimulate economic activity.

                “At best it will stop the economy from falling further, especially since the third wave of infections has been the most severe while relief packages have done little to ease the impact so far,” he said.

                Revised growth projections

                Pipat expects the Thai economy to expand 1.5 to 2 percent after last year’s sharp contraction of 6.1 percent.

                The various relief packages implemented since last year have been costly and offered only short-term support, he said. Many people are relying on state cash handouts just to survive, as they do not have enough to cover their basic necessities, he added.

                The economy will only pick up once businesses can reopen and people can resume normal daily activities, and this largely depends on the mass vaccine rollout to achieve herd immunity, Pipat said.

                To reach that target, at least 70 percent of Thailand’s 70-million population must be fully vaccinated.

                He also warned that “lockdown fatigue” could lead to another surge in infections, with people returning to life as normal after two or three months of being cooped up.

                Moreover, the on-again, off-again lockdowns are discouraging consumers from spending as they have little confidence in economic recovery, he said.

                And while reopening the country is crucial to recovery, tourists will not come if they lack confidence in the government’s handling of the pandemic, he warned.

                However, there are some positive signs. The first batch of locally manufactured AstraZeneca vaccines was delivered on June 2, raising hope that the company will honor its promise to deliver 61 million doses to Thailand this year.

                Another positive is the growth in Thai exports over the past few months, driven by the global recovery. However, the manufacturing sector has been hit recently by infection clusters among workers.

                “The export industry stands to lose if importers start worrying about contaminated food products from Thailand,” Pipat commented.

                Bank of Thailand governor Sethaput Suthiwartnarueput has also expressed concern that the Thai economy will not return to its pre-pandemic level until early 2023 at the soonest, instead of the third or fourth quarter of 2022 as previously forecast.:
                • Third wave, slow vaccine rollout may delay recovery to 2023 – BoT

                Thailand's economy could take until the first quarter of 2023 to return to normal due to a third wave of coronavirus infections and uncertainty over the rollout of vaccines, the central bank governor said on Monday.

                As the economic recovery will take time, there is a need to move quickly to resolve liquidity problems facing smaller businesses, Bank of Thailand Governor Sethaput Suthiwartnarueput told a seminar.:
                Keep your friends close and your enemies closer


                • The week ending June 11th, 2021 the Thai Baht was being exchanged at 30.60 baht to every 1 US dollar.

                  • Thailand’s consumer confidence index for May lowest for 22 years

                  Thailand’s consumer confidence index (CCI) for the month of May plunged to its lowest point in 22 years and eight months, due to impacts from the third wave of the COVID-19 pandemic and political instability, said Mr. Thanawat Pholvichai, rector of Thai Chamber of Commerce University and chairman of the university’s economic and business forecasting centre.

                  The centre gauged the opinions of 2,243 consumers from across the country in May about their current confidence in the state of the economy.

                  Mr. Thanawat said that the CCI fell from 46.0 in April to 44.7 in May, which was the lowest in 22 years and eight months, since the system was introduced in October 1998, adding that the indices of all items also nosedived, including the overall economic confidence index, which fell to 38.9 from 40.3 in April, job opportunity confidence index to 41.3 from 42.9 and future revenue confidence index from 54.7 to 53.8.

                  He noted, however, that the unprecedented low CCI is expected, because of the high COVID-19 infection rates in April and May, which caused widespread anxiety among consumers, resulting in hesitation to spend, while tourism remains stagnant.

                  Nevertheless, Mr. Thanawat said he expects the CCI in June to pick up slightly, as more people in Thailand will have been inoculated, even though the amount of vaccines available is insufficient to meet the demand.

                  He is optimistic that Thailand’s growth rate for the whole year may be about two percent.:

                  Keep your friends close and your enemies closer


                  • The week ending June 18th, 2021 the Thai Baht was being exchanged at 30.92 baht to every 1 US dollar.

                    • Money changers feeling the pinch

                    Fifty-seven money changers closed their operations over the past year, while the volume of money exchanged plunged by over 600%, mainly due to the country's suspension of cross-border travel amid the Covid-19 pandemic.

                    According to data from the Bank of Thailand, as of May 2021, the total number of money exchange service providers was 2,334, declining from 2,365 in December last year and 2,391 in May last year.

                    Over the past year or so after the Covid-19 outbreak emerged in Thailand in March 2020, 57 money changers shut down.

                    As of May this year, service providers located in the North stood at 132, down by 18 from 150 in May last year. The number in the Central region dropped by 17 to 1,031 as of May this year, in the South they declined by 17 to 1,117, while in the Northeast the number fell by five to 54.

                    As of February this year, total buying volume in this business segment was US$167.91 million, while selling volume was $168.89 million.

                    Transactions significantly declined from December last year when buying volume was $204.66 million and selling volume was $209.22 million.

                    Meanwhile, both the buying and selling volume in February last year was equal at around $1.25 billion each.

                    The buying volume plunged 648% in February this year, on a year-on-year basis, while selling was down 642%.

                    Piya Tantivachayanon, president of SuperRich Currency Exchange (1965), a leading local money changer, said the number of money changers would continue to decline, especially those in a vulnerable condition and carrying high operational costs.

                    Related rental fee is the one core operating expenses for the business, particularly in communities and tourist areas.

                    Even though the Phuket sandbox scheme is a good project and will encourage business activities in Phuket, it is not sufficient to bring money exchange transactions back to normal.

                    "The country's reopening, especially Bangkok, is a key factor to help boost money exchange transactions to a significant level. However, the business operation for the post Covid-19 period will not be the same as before the outbreak," he said.

                    Besides the heavy impact of the outbreak with no foreign travellers, digital disruption is another key factor causing higher competition in this service segment. Demand for the digital currency service has been rising before the outbreak in line with the digital era.

                    Mr Piya said his firm has been transforming to a digital platform service in preparation for operations for the post-Covid era and in the longer term in line with the changing demands of consumers. SuperRich has closed physical branches to control operating costs and targets to keep 17-18 outlets, down from 49 branches before the pandemic.:
                    Keep your friends close and your enemies closer


                    • next week a review...........

                      two years
                      Keep your friends close and your enemies closer


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