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https://www.nationthailand.com/business/econ/40019356

Thai household debt has exceeded 500,000 baht this year, fuelled by the higher cost of living, according to results of a survey by the University of the Thai Chamber of Commerce’s Centre for Economic and Business Forecasting.

Assoc Prof Thanavath Phonvichai, the university’s president and the centre’s chief adviser, said on Thursday that Thailand’s household debt on average stood at 501,711 baht this year, a 3.7 per cent increase from last year.

He said the debt per household was the highest since the centre began its annual survey on Thai household debt 13 years ago.

Thanavath blamed the increase on higher prices of food and consumer products caused by higher fuel prices, as the country’s economy is yet to fully recover from the Covid-19 pandemic.

“People’s incomes do not match their expenditures, as the economy has not seen a full recovery,” he said.

The academic also said that of all the debts, 78.9 per cent were borrowed from financial institutions while the remaining 21.1 per cent were from lenders outside the banking system.

“If the economy recovers, people will be more capable of paying back their debts,” he said.

Thanavath suggested that the government focus next year on encouraging investments, both from the public and private sectors, to help distribute incomes to rural areas.

Investments in infrastructure could ensure the country’s economic recovery in the long run, he said. It was better than economic stimulus measures, he said.

This will likely stimulate spending by the middle class who have earned more income, according to Thanavath.

Published : August 25, 2022

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https://www.nationthailand.com/business/econ/40019343

The central bank forecasts the gross domestic product will expand by 3 per cent this year thanks mainly to an expected increase of foreign tourists, its governor said.

Bank of Thailand (BoT) governor Sethaput Suthiwartnarueput made the remark while speaking at the annual investment conference “Thailand Focus 2022: the New Hope” held by the Stock Exchange of Thailand on Wednesday.

Sethaput said the BoT is optimistic that the number of foreign arrivals would rise to around 8 million this year, compared to the initial projection of 6 million.

He noted that 3.2 million foreign tourists have already visited the country in the first half of 2022, so it would not be hard to see 8 million for the whole year.

“For this reason, the central bank expects GDP growth to be 3 per cent this year and 4.3 per cent next year,” Sethaput said.

Tourism revenue constituted about 12 per cent of GDP and the employment of tourism workers constituted about 20 per cent of overall employment, so tourism was a key factor driving the Thai economy, he pointed out.

Sethaput however admitted that geopolitics and new possible Covid variants could be negative factors that might cause the country to miss its tourism target.

The BoT governor also admitted that the ratio of household debt was worrying as it had risen to 30 per cent of GDP. He noted that this debt increased by 10 per cent during the Covid crisis.

Sethaput said it would take time to address the issue of household debt because economically vulnerable groups would slowly improve their financial situation.

The central bank would have to ensure that rising inflation does not affect vulnerable groups, he added.

The bank has come up with some measures to help debtors, including a plan to hold a debt settlement fair on September 26, the BoT governor said.

He made it clear that the bank would not be hawkish in raising the policy interest rate, but the rate would be gradually increased to minimise the impact on SMEs and household debtors.

On August 10, the central bank’s Monetary Policy Committee raised the policy rate by 0.25 percentage point from 0.50 to 0.75 per cent.

Sethaput said the BoT would gradually employ monetary measures to ensure a smooth takeoff of the economy.

He acknowledged that the baht is now fluctuating but the situation would improve once the US Federal Reserve sends clear signals on its monetary policy.

Sethaput said there were signs of baht speculation, with about 48 billion baht of foreign funds sweeping into the country since the beginning of the year.

“The central bank does not want to see the baht fluctuating, but a weakening baht was caused partly by the strong US dollar, which we cannot control. So we have to let it move in accordance with the market,” he added.

Published : August 25, 2022

By : THE NATION

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https://www.nationthailand.com/business/econ/40019334

Most investors are still confident in Thailand’s economic growth, especially financial stability, Finance Minister Arkhom Termpittayapaisith said on Wednesday.

He made the remark during the discourse “Thailand Economic Reopening and Enhancing Competitive Advantage” at the Thailand Focus 2022 event at Grand Hyatt Erawan Bangkok Hotel.

The event, organised by the Stock Exchange of Thailand, will continue until Friday.

Arkhom said Thailand’s gross domestic product (GDP) would expand by up to 3.5 per cent depending on exports and tourism.

“We believe tourism and exports will help support our GDP growth in the second half of the year,” he said, adding that the Thai National Shippers’ Council had promised to do its best to boost exports.

The public debt-to-GDP ratio is 60 per cent. This debt will drop further if the government can generate more revenue, he noted.

Arkhom went on to say that the economy is expected to grow because of four factors – tourism, exports, domestic expense and investment.

He pointed out that the number of foreign visitors had increased over the past eight years, and expected 8 million to 10 million visitors this year.

However, the minister noted, it depends on each country’s policies. For example, he said, Chinese tourists are facing difficulties in travelling to Thailand due to strict government policy.

Regarding exports, Arkhom said they have gained positive sentiment from a weakening baht – compared to the previous year – and demand for consumer goods, especially food and agricultural products.

As for domestic expenses, he believed these would increase once the economy recovered. He also expected inflation to hit a peak in the third quarter before falling in the fourth.

Meanwhile, the government has launched the fifth phase of the “Khon La Khrueng” (Let’s Go Halves) shopping subsidy scheme in a bid to boost domestic expenses as the economy starts to recover, Arkhom said.

“The scheme will benefit the grass-roots economy, such as food outlets and fresh markets,” he said, adding that there are also measures to mitigate the impact of rising energy prices.

Concerning investment, the minister said the budget bill for fiscal year 2023 would come into effect on October 1 this year.

He also said the Comptroller-General’s Department has done away with measures to assist entrepreneurs and contractors on procurement, so they must speed up their work to be ready for new projects next year.

“The budget for fiscal year 2023 would be allocated in the fourth quarter this year,” he said, adding that the Interior Ministry will speed up allocation of money to other provinces.

Published : August 25, 2022

By : THE NATION

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https://www.nationthailand.com/business/econ/40019328

The baht opened at 36.07 to the US dollar on Thursday, strengthening from Wednesday’s close of 36.13.

The currency is expected to move between 35.85 and 36.15 during the day, Krungthai Bank market strategist Poon Panichpibool predicted.

He said the baht could swing sideways until the results of a key US Federal Reserve meeting at Jackson Hole as investors might adjust their asset possessions and this could cause even the dollar to swing sideways.

Poon believes political tensions here might ease in the short term and influence foreign investors to purchase Thai stocks, but this will not cause the baht to strengthen much because the investors will still offload Thai bonds.

The strategist advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.

Published : August 25, 2022

By : THE NATION

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https://www.nationthailand.com/business/econ/40019319

Finance Minister Arkhom Termpittayapaisith said that the country can still achieve its growth target of 3.5 per cent, but government agencies must start budget spending for fiscal 2023 in October.

Speaking to reporters after making a speech at “Thailand Focus 2022” business forum on Wednesday, Arkhom said economic growth of 3.5 per cent was achievable depending on four factors: tourism, exports, domestic spending by consumers, and investments, especially by government agencies.

Arkhom said the fiscal 2023 budget bill has cleared the House of Representatives, so he has instructed government agencies to start making preparations to spend the budget for the first quarter — from October to December — of fiscal 2023. The budget bill is expected to be endorsed by the Senate soon.

“I’ve told government agencies to speed up spending on small investment projects by calling bids for construction or purchasing projects while waiting for the budget bill to take effect,” Arkhom said.

He said early invitations for bids would ensure that the contracts for such projects could be signed in time by October so that the budget would be injected into the economy as soon as possible, instead of being concentrated in the last quarter of the fiscal year like what happened in the past.

Arkhom said he had set a target that 25 per cent of the budget for fiscal 2023 should be spent within the first quarter.

Arkhom said the government would speed up investment projects in the Eastern Economic Corridor after the administration had signed contracts for several projects.

The finance minister said about 8 to 10 million foreign tourists would visit Thailand this year, or about one-fourth of the pre-Covid pandemic level.

He said the country’s exports expanded by 12 per cent during the first six months of this year, which was higher than the target thanks in part to the weakening baht. He said the government had earlier set the export target growth at 10 per cent.

He added that the government has tried to stimulate consumer spending by approving the fifth phase of the Kon La Khrueng co-payment scheme, Arkhom added.

Arkhom said he and the Bank of Thailand governor had assured investors during the business forum that the country still enjoyed financial stability.

He said the country’s public debt was within the ceiling of 70 per cent of GDP. Currently, public debt stood at 61 per cent of GDP but once the economic figures improved late this year, the ratio of the country’s public debt to GDP would decline, Arkhom added.

He said public debt based on foreign loans was only 1.79 per cent of all public debt although the law allowed the ratio to be 10 per cent.

Speaking to reporters before the Constitutional Court suspended Prime Minister Prayut Chan-o-cha from duty pending deliberations on the constitutional limit on the PM’s tenure, Arkhom said the court ruling would not affect the country’s credibility in the eyes of foreign investors.

He explained that all major investment projects have been started and committed in the span of several budget years so the country’s development and growth would continue with stability.

Published : August 24, 2022

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https://www.nationthailand.com/business/econ/40019311

The Constitutional Court’s suspension of Prime Minister Prayut Chan-o-cha from duty will not affect Thailand’s economic recovery or foreign investor confidence, the Thai Chamber of Commerce (TCC) said on Wednesday.

TCC vice chairman Visit Limlurcha made the remarks after the majority of court judges voted to accept an opposition petition for deliberation on Prayut’s tenure and suspended him from duty until a ruling is made.

The judges voted 5:4 to accept the petition, which was forwarded to the court by the Secretariat of the House of Representatives.

Being the first deputy prime minister, Prawit Wongsuwan automatically took over as caretaker prime minister.

Visit felt the court’s decision would not affect Thailand’s economic recovery or foreign investor confidence.

He said preparations for the Asia-Pacific Economic Cooperation summit in November would continue as the Constitutional Court could come out with a ruling on Prayut’s tenure before the summit begins.

“Even if a court ruling does not come in time, there are still the caretaker prime minister and other Cabinet ministers,” he pointed out.

According to Visit, foreign investors “aren’t uncertain” about the issue because it is purely a domestic matter.

Published : August 24, 2022

By : THE NATION

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https://www.nationthailand.com/business/econ/40019278

The baht opened at 36.08 to the US dollar on Wednesday, weakening from Tuesday’s close of 36.13.

The currency is expected to move between 35.95 and 36.25 during the day, Krungthai Bank market strategist Poon Panichpibool predicted.

He said the baht could swing sideways in a wide range even though it was supported by a weakening dollar and an increasing gold price.

However, Thailand’s political situation would cause currency market volatility in the short term, especially if foreign investors decided to sell their Thai stocks to reduce risks, Poon warned.

Meanwhile, businesses are awaiting the opportunity for increased transactions, he said. Importers hope the baht will strengthen to a level below 36 to the dollar, while exporters will not hurry to conduct transactions because they have already closed their risks.

The strategist advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.

Published : August 24, 2022

By : THE NATION