Thailand - Prachai Leophairat, CEO of TPI Polene Public Company Limited, expressed concern over the rising value of the Thai baht and its potential economic impact, drawing parallels to the 1997 "Tom Yam Kung" crisis.
Prachai outlined 11 key risks associated with the strong baht. He emphasized that if the U.S. dollar's interest rate falls while Thailand's baht interest rate rises, the baht will appreciate.
A 10% increase in the baht's exchange rate combined with a 10% decrease in the dollar will raise production costs by 20%. This cost hike would make Thai products 20% more expensive than competitors, leading to a decline in primary goods and forcing secondary and tertiary industries to halt production.
The potential consequences include:
- Factory closures
- Rising unemployment
- Reduced consumer spending
- Halted industrial investments
- Increased household and business debt
- Higher bank loan costs due to rising bad debt reserves
- Banks limiting loans to struggling businesses
- Reduced government tax revenues and budget cuts
- Lower government spending
- A shrinking GDP
- Declining foreign currency reserves
Prachai warned that if exports don't increase and factories continue to close, Thailand might face a shortage of foreign currency reserves. This could lead to a repeat of the 1997 crisis, leaving the country vulnerable to foreign exploitation of its assets, reported Naew Na.
Top: FILE photo
-- 2024-09-30
Inga kommentarer:
Skicka en kommentar