The BoT has come out with an announcement stating that the local economy will finally start to uptick in the second quarter of the next fiscal year. However, it’s not determined whether this will be an uptick compared to the economy before COVID-19 or just relative growth compared to the second quarter of 2020.

If that is the case, then it’s not much of a promise, because if the growth is not guaranteed then we can say that the Thai economy is in the extreme red zone in terms of recovery.

Backing up the statement

Relative growth has already been seen in August 2020 compared to the lockdown months in Thailand. But that much is obvious considering the easing open borders for incoming tourists and the government stimulus packages that drive consumer spending according to the BoT.

However, Thailand had quite a strange requirement for all incoming tourists in the 3rd quarter of 2020. They requested that all visitors had a $100,000 insurance plan and went through a 72 hour quarantine period after arriving and before leaving Thailand.

The latter was mostly a reputation management effort from the government, as no country wants to be named as the source of another wave in the world.

More extreme cases included the Special Tourist Visa or STV, holders of which were subjected to 14 full days of quarantine after arriving in Thailand. Naturally, this included people who were mostly coming in for long-term stays as the government couldn’t really afford the housing of millions that would apply.

Nevertheless, it seems that these efforts are starting to pay off based on the economic outlook as well as the currency performance in the last few weeks.

USD/THB slowly but surely doing better

The month of September was an amazing success for Thailand considering this specific currency pair. Baht started off quite strong relative to the USD, but still had some downturns over the last few weeks. But based on information gathered from local FX specialists, the currency is slowly starting to even out the curve, thus giving stability not only to local purchasing power, but also a friendly environment for incoming tourists.

One thing to consider though is the outlook that the BoT has for the Baht. The thing is that Thailand is in a very unique position regarding its currency. They don’t really want it to be as strong as many other countries would wish for themselves.

Why? Because a huge chunk of their economy is derived from the tourism industry. And what does a tourist always want in a country they’re visiting? Affordable services and a sense of abundance in terms of money. Therefore, should prices remain the same in the foreseeable future and the exchange rate relatively balanced, Thailand can expect billions in foreign currency transactions inside the country thus boosting the economy for the long-term.

General economic metrics in Thailand

The BoT has already changed its outlook from an 8.1% decline to a 7.8% one instead and reported an improvement in merchandise exports from an 11.9% decline to an 8.2% decline year-on-year.

Reports also touched upon the unemployed citizen numbers decreasing to 1.9 million from 2.1 million. However, the number of people claiming unemployment rose from 410,000 to 440,000 during the summer of 2020.

The bank also touched on the GDP issues but did not necessarily mention anything necessarily important for future metrics. One thing we need to know is that the household debt to GDP has risen to 84% showing risks of rising to 88-90% later in 2020.