Kittiratt: Strong baht may derail export target this year
Finance Minister Kittiratt Na-Ranong has again stepped up pressure on the Bank of Thailand, saying he feels uncomfortable with the baht's strength as it could cause exports to miss the 9% growth target.
"This year is an important year to begin to rebalance the country's economy. The baht's appreciation is a risk factor that needs to be watched as it may hurt the country's exports," the deputy prime minister said.
The baht, which is Asia's strongest currency this year, briefly gained beyond the 29-baht threshold level against the US dollar last week to a level unseen since it was devalued in July 1997.
The currency has risen about 5% this year due to an influx of capital inflows stemming from a strategy among central banks in major economies to implement super-loose monetary policy.
"Even though we are reducing dependency on exports, it is still necessary for us this year to rely on exports," Mr Kittiratt said.
Thailand started its economic rebalancing last year when gross domestic product expanded by 6.4% but exports _ once the main engine accounting for more than 70% of GDP _ grew by only 3.1%.
Mr Kittiratt said exports could fall short of the 9% growth target set by the Commerce Ministry if the baht keeps rising.
Below-target export growth could reduce private-sector profits, government tax collection and the incomes of public sector employees while sending a ripple to domestic consumption, he said.
However, Mr Kittiratt believes economic growth could continue to be driven by three other forces _ government spending, domestic consumption and public investment.
Thailand's economy could reach a balanced point in 2014 or 2015 as budget disbursement of the government's 2-trillion-baht infrastructure projects and 350-billion-baht water management projects would gather steam at that time and exports could no longer be the main engine.