The US-China trade war is quite a thing. While other economies seem to contemplate a lot about it, Thailand is expecting a decent economic gain. With the upward movement in the US interest rates, Thailand is also experiencing rising interest rates. The policy rates and the US government bonds is rising, leading to capital outflows from the emerging markets. However, countries having high foreign debts, current account deficit, and low international reserves like Argentina are facing adverse outflows. Whatever be the scenario, foreign investors are flocking to invest in Thailand.
The Scenario
In a recent meeting, the Fed has raised their policy rate to 1.75 – 2.00% surpassing the policy rate of Thailand of 1.50%. In fact, the Fed may increase rates twice this year, by 25 points each. And this is resulting in spurring of capital outflows from the Thai stock market in the past few weeks. However, the country continues to enjoy huge capital inflows from the present account surplus ever since exports and tourism is growing robustly. Additionally, it has a surplus the outflows quite a lot of times.
Moreover, Thailand has low foreign debt and high international reserves. This makes it less vulnerable to any sort of capital outflows in comparison to the other emerging economies. Resultantly, the baht is likely to strengthen from the last year by 7% based upon the consensus forecast.
With regard to the farm sector, chances are brighter for the rice farmers when compared to the rubber planters. In fact, global rice prices are forecasted to go up at least by 5% this year. This is because of lower global supply as compared to last year. Additionally, the rice production in Thailand is expected to be higher due to favorable climatic conditions.
The Outcome in Favour to Your Decision to Invest in Thailand
As mentioned above, the rise in the global interest rates, stronger demand and higher inflation, Thailand’s policy interest rates may hike by the end of this year.
Coming to the uncertainties of the US-China trade, a threat to trade and investments is evident. It is obvious that Thailand can earn profits from the same in the long-run. This is because the impact of trade and investments seem to divert to them. As both the countries slap a heavy amount of tariffs on some goods, Thailand gets the opportunity to export them. Goods are such as farm items to China and computer parts to the US. In this context, not only Thailand but also other Southeast Asian countries could gain from investment relocation.
That was the international trade scenario. Now it is up to you whether to invest in Thailand or not. If your answer is “Yes”, mail us at [email protected] for best solutions to register your business in Thailand. The best thing is that we can help you minimize the risk on your investment in Thailand.
