Thailand’s Export Outlook Amid Currency Challenges

BANGKOK (Reuters) – Thailand’s exports are anticipated to increase by 2% this year, at the upper limit of the previous forecast of 1% to 2% growth. However, the Thai National Shippers’ Council warned that the rapidly strengthening baht could pose challenges for the remainder of the year.

The baht recently hit its highest level in 31 months, trading at 32.125 against the US dollar. Year-to-date, the baht has appreciated by 5.2%, making it the second-best performing currency in the region after Malaysia’s ringgit.

The Bank of Thailand noted that the quick appreciation of the baht is affecting exporters and tourism spending. Chaichan Chareonsuk, chairman of the council, remarked, “The baht’s appreciation is too fast when compared with our partners and competitors,” adding that it could significantly impact agriculture and food shipments.

He further stated, “This is the biggest risk… there are no supportive factors in the final stretch, we have to fight to drive exports.”

In the first eight months of 2024, exports rose by 4.2% compared to the same period last year, fueled by a weaker baht. Overall, exports, which are crucial for the economy, fell by 1% throughout 2023, although they increased by 7% in August. Nevertheless, the expected rise of the baht could negatively influence shipments in the fourth quarter.

Exporters have called for the government to postpone plans to raise the minimum wage, with Chaichan stating that such a move would impact their cost structure and competitiveness.

So far, the government has delayed the minimum wage increase planned for October, which was set to rise by 8% to 20%, depending on the region.