Kasikornbank raises interest rates twice, positive for the economy pointing out that tourism will lead Thailand to recover – strengthen the baht
Mr. Kobsit Silpachai, Executive Director of Economic and Capital Market Research Kasikorn Bank Speaking at the seminar on the topic The global economy amid inflation interest rate rise and economic recession risks that the Thai economy is projected to expand 2.5-2.9% for the whole year as the tourism sector has started to recover after the state relaxed measures will help the current account balance become less negative It can also strengthen the baht’s depreciation due to the strong influence of the Federal Reserve’s interest rate hike. If tourism recovers, the baht may turn back to a strength of 33.50 baht per US dollar. Meanwhile, the Fed is expected to shift its view on strong drugs after more recession signals emerge.
Mr. Kasit said While the global economy is still highly challenging from the aftermath of COVID-19 and the war between Ukraine and Russia Including the monetary policy of the US Federal Reserve (Fed) that will allow the world economy to enter a recession. This is reflected in the lower GDP estimates. while inflation expectations rise Futures are also expecting the Fed to raise interest rates to 3.5% by the end of the year. However, bond and stock markets signals that the chances of the US economy entering a recession are greater.
At the same time, the Thai economy has not yet entered a recession. but is in a slow recovery The Monetary Policy Committee (MPC) raising the policy rate would be good for the Thai economy. Due to inflation, which is a pressure from high energy costs, leading to continuous inflation problems, resulting in high cost of living It also reflects that people’s consumption sector has declined. including the heavy baht depreciation is therefore a factor that The MPC is finally considering raising interest rates, with the MPC expected to raise interest rates twice this year, the first of which will begin at its meeting on August 10 and later at its meeting on September 28. Assess the overall results of the interest rate hike and the MPC may raise interest rates a second time at its meeting on 30 November
“When it comes down to weight, raising interest rates has more positive outcomes than negative ones. because if the interest rate is raised, the currency will not weaken But if inflation continues to rise It will have a heavy impact on many aspects that are heavily encountered, namely, the high cost of imports. The price of the product is expensive The money in the pocket was gone. If you can do something quickly, it will be better than allowing problems to accumulate. The Ministry of Finance would probably come and look at measures to support the economy at the same time. If nothing is done, the situation will go into recession on its own,” said Mr. Kasit.
Mr. Kasit said from the forecast that the baht will weaken in the short term and will move in the frame of 34.70 baht per US dollar while the Thai currency depreciated to 4th place compared to other countries in the same region. The countries with the most volatility in currency are Korea, Indonesia, the Philippines and Thailand, respectively. However, it is expected that the Bank of Thailand will try to prevent the baht from weakening to 36 baht per USD. The existing ones were sold in US dollars and bought baht at the appropriate level. to delay the baht from becoming too weak until the next meeting of MPC will raise interest rates This is a method that supports the baht from weakening. and can control inflation
“In this regard, the Thai economy will receive good signs from the tourism sector that is recovering in the second half of 2022 and may return to normal in the beginning of 2023, during which time it will take time to heal business operators in the service sector that about the tourism sector as well After the tourism has been closed for a long time, such as hotels where the number of room viewing has not returned much including the aviation business that has caused the layoff of employees This period is therefore the time to heal the wounds for the business to gradually Come back and be better early next year. If tourists come in according to the government’s forecast of 7-10 million people, the value of money will spread more,” Kabsit said.