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Thailand Looks to Post-COVID Future With Ambitious Budget Bill

Thailand Looks to Post-COVID Future With Ambitious Budget Bill


By In Conjunction

Tuesday 29 June 2021, 06:21PM


 

In early 2020, Thailand was in a strong position. The world was on the cusp of a global pandemic that would extend for over a year, but that was still some way off. In the APAC regions, there are several nations that are developing rapidly and attracting significant external investment interest.

Thailand laid its claim as one of the emerging forex markets in Asia on the back of a robust Telecommunications and trade-in service industry, that lies at the core of their economic expansion and blossoming industry. 

The country was showing promise to investors as far back as July 2018. Three years ago, Thailand possessed $237.5 billion in international reserves alone - second only to Singapore, amongst the Southeast Asian nations. It ranked as the second-largest economy after Indonesia, too.

It was for that reason that Bloomberg business news’ investment strategists have adopted a bullish outlook of the Thai economy going into 2021 as likely to exceed expectations, as the global recovery continues to progress. 

A combination of a healthy foreign exchange reserve and major potential for inflowing portfolios are seen as foundations pieces of this higher ranking. Additionally, the governmental approach to fiscal recovery, underlined by an ambitious budget bill, narrowly passed at its first reading in June 2021 by 269 votes to 201.

 

The pandemic’s impact is wide-ranging, and difficult to gauge concisely. However, Thailand’s economy was thought to shrink by approximately 5% in 2020 once the pandemic reached Thai shores. With weakened global export demand, a lack of tourism, and a massive decline in retail sales, the bill is believed to be crucial to the country’s return to normality. Not that it’s all plain sailing from here. The bill will go through second and third readings throughout August before its final, royal approval is earned. 

Amazing Thailand Expat Golf event - Aug 2021

The impact of the bill on the forex market is always complex and closely tied to the specific contents of the bill itself. Casual and retail investors hoping to gain a more comprehensive understanding of forex trading are highly recommended to seek out detailed guidance, as the forex market is a complex and fast-paced environment that always carries a level of unpredictability.

However, Thailand’s ambitious plans are likely to support the value of the Baht against other major currencies like the Dollar and Euro, due in no small part to the progressive rejuvenation of the nation’s infrastructure and workforce that are tied to the Thai Government’s COVID recovery plan. 

The bill is part of a wider strategy in Thailand to stimulate a faster and sustainable recovery from the general malaise of the health crisis. Tax relief, infrastructure projects, debt restructuring, skilled training programs, and direct cash injections have all been leveraged as means of lifting Thailand out of the global recession. 

The nature of forex has always been about timing, and one of the greatest challenges created by the pandemic for forex traders was the lack of clarity about its timespan and severity. Therefore, Thailand’s budget bill marks a positive turning point in many ways.

It’s a strong indication of a recovery strategy that could make the Baht much stronger as a currency of a nation that has invested heavily in internal industry and economic stimulation to ease out of a long lockdown. Forex traders who were tracking the Baht before 2020 will likely have increased interest in its future performance, as the EIC has predicted that the baht will remain strong until the end of 2021.

However, the looming possibilities of future spikes in cases can never be underestimated. In the grand scheme of things, the value of the baht pales in comparison if the pandemic were to have a third or fourth wave. But the agreement between all, forex traders or otherwise, is the sooner things return to a form of normality, the better. 

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