Thailand Gains Top Rank among EM to Beat Expectations with Strong FX Reserve and Inflows

Thailand Gains Top Rank among EM to Beat Expectations with Strong FX Reserve and Inflows.

Thailand is well placed at the top among the emerging-market standouts that could beat expectations next year, stated Bloomberg.

 

Based on the study of 17 developing markets by Bloomberg, Thailand made it to the top of the list, owing to its strong reserves and high potential for portfolio inflows, which are investments in the form of stocks, bonds and other financial instruments.

Thailand has a good position in 2020 current account to GDP at 3.1%, while net investment position to GDP remains positive at 8%.

 

Goldman Sach’s Effective Lockdown Index (ELI) indicated that Thailand is the second-least impact at 8.4% behind Taiwan at 2.2% from the lockdown among all 17 countries. Once the pandemic is under control, most developing economies stand to gain a lot in terms of activity catchup. The indicator should all eventually converge close to zero.

 

Bloomberg surveys show that analysts are penciling in high rates of growth next year for some of those that have been hardest-hit in 2020. In 2021, it is expected that Thai GDP will continue to grow at 3.9%.

 

The Covid-19 recession prompted a record wave of rate cuts in the first half of the year. A number of central banks also ventured into unconventional policy, buying government and private-sector assets. Their motivations vary. Some are looking for new ways to stimulate as interest rates approach zero. Others appeared to be monetizing budget deficits. Bloomberg Intelligence expected most emerging-market central banks to remain on hold, at least until the end of 2021.

Thailand reported the latest inflation at -0.5% in which Bloomberg Economics expected to improve to -0.2% by the end of 2021. Meanwhile, the policy rate is expected to remain at 0.50% until 1Q23 that the Monetary Policy Committee should start the hike.

 

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