“Thailand is value for money,” Arkhom said in an interview on the sidelines of a meeting of finance ministers of the Asia-Pacific Economic Cooperation in Bangkok, highlighting the destination’s appeal to travellers looking for bargains. The baht’s prolonged weakness will “surely” help in getting more foreigners back, he said.
The weakness in the local currency – Southeast Asia’s second-worst performer so far this year – may linger through 2024, he said, adding that it is still competitive and the central bank need not worry about capital outflows as much as other economies.
His comments suggest that the benefits of a weaker currency outweigh the negatives at the moment for the tourism-reliant economy and that the Bank of Thailand’s measured approach to tightening monetary policy was appropriate in a world where central banks led by the Federal Reserve are employing large interest-rate hikes to fight inflation.
Arkhom, who doesn’t see the Fed halting its rate hikes anytime soon, said the BOT’s gradual rate moves – two quarter-point increments last quarter – helping economic recovery gain traction, even as inflation is near a 14-year high.
Arkhom expects the gross domestic product to rise 3.7% next year, faster than the 3%-3.5% pace projected for this year, thanks to the return of foreign visitors. As tourism revenue comes back, more dollars are flowing in to support the baht, the current account and rebuild reserves that have plunged to a five-year low due in part to revaluation, he said.
Thailand, where tourism accounts for 12% of GDP and a fifth of jobs, is betting that “revenge spending” by foreign visitors lured by its broad reopening will help rev up recovery. Its growth is trailing regional peers after two years of pandemic kept tourists away, costing billions of dollars in an economy that hosted as many as 40 million overseas a year before the virus outbreak.
Thailand is seeing more visitors from neighbouring countries as well as India and the Middle East to help offset the absence of Chinese nationals restricted by Beijing’s lockdown. Before the pandemic, Chinese nationals accounted for almost 30% of overseas visitors.