Escalating COVID Infections Drawing Gloomy Economic Uncertainties and Battered Baht

The Center for COVID-19 Situation Administration (CCSA) on this afternoon announced cumulatively Thailand crossed 1 million COVID cases amid the highly contagious Delta variant. However, it is important to note the number of daily cases dipped below 20,0000 in 10 days. As of August 20, approximately 5 million vaccine doses have been administered in the Kingdom.

 

Today marked the 50 days of the Phuket Sandbox pilot program. According to data released by the Tourism Authority of Thailand (TAT), 22,389 foreign tourists entered the country and 62 of them were infected with the virus. Data shows 404,665 rooms were booked over the course of 6 months.

However, Thailand lost the majority of its income earned from tourism, roughly over $60 billion before pre-pandemic, highly pressurizing the Thai baht trading at USD/THB 33.357 (+0.015). Earlier the National Economic & Social Development Council (NESDC) forecasted a current account deficit of $10.3 billion which is 2% of the Thai GDP. This would be the second time in history for the nation to see a budget deficit since 2013.

 

Meanwhile, the U.S. Federal Reserve signaled for assets tapering, which put more upward pressure on the Dollar, conversely might weaken the baht even further.

 

Earlier this week, the governor of the central bank cited additional government spending of 1 trillion baht to counter the economic downturn. His comments followed even if public debt climbs to 70% by 2024 would be manageable given high domestic liquidity, low borrowing costs and the country’s current account surplus.

However, earlier today the finance minister pressed on the earlier borrowing of 500 billion baht is sufficient to combat the COVID-led economic downturn. He said he is yet to discuss the additional borrowing with BoT but he believes the existing fund is adequate enough.