Thailand’s Monetary Policy Committee (MPC) has expressed concerns over the strength of the baht that could derail the kingdom's economic recovery.

Assistant Governor of Bank of Thailand (BoT) and Secretary of MPC, Titanun Mallikamas said, the 2020 economic outlook was highly uncertain given the global economic and financial environments with the risks to the economic outlook tilting downward.

Thai authorities are worried that stronger baht against other currencies would make the country's export less competitive as well as discourage foreign tourists from visiting the kingdom. The tourism sector is one of the major revenue contributors to Thailand.

“At the latest policy meeting the MPC emphasized that developments in the financial markets and the foreign exchange markets warranted close monitoring,” Titanun said in a statement.

He said the monthly current account is likely to be nearly balanced until the tourist revenues recover, down from the historical average of around US$3 to 4 billion (US$ 1 = RM4.27) in surplus per month during the past few years.

He said the trend represents a shift in the current account balance and exchange rate dynamics following the COVID-19 pandemic.

“The current account is not expected to be the main driver of baht appreciation pressure in the forthcoming period months,” he said.

Latest economic data for April 2020 point to a deficit in the current account of around US$ 0.7 billion.

Excluding gold, the current account balance recorded a deficit of around US$3.1 billion, the largest deficit since the 1990s.

Looking ahead, the recovery in global oil prices and a prolonged shortage of inbound tourists are expected to weigh on the current account outlook.

The Committee will release the new growth, inflation, and current account projections in the next MPC meeting on June 24, 2020.

Thailand’s GDP shrank by 1.8 per cent in Q1 2020 as the COVID-19 pandemic hit tourism sector and reduced business activities.

Thailand’s National Economic and Social Development Council (NESDC) had slashed its forecast for the country’s 2020 gross domestic product (GDP) to a contraction of between five and six per cent from a growth of 1.5 per cent to 2.5 per cent projected in February. - BERNAMA