Thailand: Alert: Strong baht threatens tourism and exports

Economists warn Thai baht hits four-year high, threatening tourism and exports

According to Siam Commercial Bank (SCB EIC), this appreciation weakens Thailand's competitiveness against its neighbors, threatens exports and slows the recovery of tourism, while youth unemployment is increasing.

Too strong baht threatens Thai competitiveness

The rising Thai baht threatens exports. Illustration: The Nation Thailand

The Siam Commercial Bank Research Centre (SCB EIC) warns:

"If left unchecked, the continued appreciation of the baht against the US dollar could weaken Thailand's competitiveness in the tourism and export sectors compared to its regional neighbors."

Yunyong Thaicharoen, chief economist at EIC, said the baht's strength was not consistent with Thailand's moderate economic fundamentals.

He warned that the baht could amplify external shocks, harming export competitiveness and tourism recovery.

Vietnam gains ground against Thailand

Vietnam is overtaking Thailand in terms of economy and tourism. Illustration: The Nation Thailand

Amid a strengthening baht, the Vietnamese dong has depreciated 3.5% against the dollar since the beginning of the year.

This divergence is expected to reduce Thailand's competitiveness in exports and tourism.

“For example, a Chinese tourist visiting Thailand would face prices for goods and services about 4% higher than in other destinations.

"If this tourist were to visit Vietnam instead, they would pay on average about 6% less, according to the EIC simulator," Yunyong explained.

See: Baht too strong: Thailand loses ground to Vietnam

The EIC forecasts the baht will continue to appreciate to reach 31.50-32 per dollar this month and 31-32 by the end of the year.

This Tuesday, September 30 at 10:00 a.m. (Thailand time), 1 euro is worth 37.86 baht and 1 US dollar is worth 32.30 baht.

See: Thai Baht THB exchange rate

Baht at highest since 1997

Banknotes, euros and Thai baht. Photo: Gwengoat

Since the start of the year, the baht has appreciated 7.6% against the dollar, its highest level in four years and the highest among its regional peers.

This led the baht's trade-weighted index to reach its highest level since the 1997 financial crisis.

The continued strength of the baht could weaken Thailand's competitiveness in tourism and exports.

This appreciation is due to external and internal factors, including the weakening of the US dollar, increased gold exports amid rising global prices, the current account surplus and capital inflows into the bond market.

See: Thailand: Baht's rise linked to gold exports to Cambodia

Tourism: fragile recovery and increased competition

Tourists at an airport. Photo: Bangkok Post

According to Mr. Yunyong, the number of foreign tourists remains well below last year's level, but there are signs of recovery.

The number of Chinese tourists is still down compared to last year, but the contraction is easing.

Returning tourists, however, are spending more cautiously.

Thailand also faces increasing competition to attract Asian tourists, with target segments overlapping between countries in the region.

The EIC maintains its forecast for 2025 at 32.9 million international tourist arrivals.

See: Thailand: Strong baht and regional competition drive away tourists

Youth unemployment on the rise

Students and job seekers at the Kasetsart University job fair in Bangkok's Bang Khen district in March 2025. Photo: Varuth Hirunyatheb/Bangkok Post

In addition, the EIC highlights its concerns about the rising unemployment rate, particularly among new graduates, which reflects the impact of the slowdown in business expansion.

The unemployment rate for 15-24 year-olds reached 18.9% in the second quarter of 2025, compared to 16.1% in the previous quarter.

Amid slowing economic growth and weak business expansion, employment continued to slow, impacting the labor market.

Companies prefer to hire experienced workers rather than recent graduates in response to difficult economic conditions.

“Disruptions related to artificial intelligence are another key factor contributing to rising youth unemployment, a trend that has become increasingly evident in the United States,” Yunyong said.

Growth forecasts revised downwards

Economy in Thailand. Photo: The Nation Thailand

At the same time, the EIC has revised down its GDP growth forecast for 2025 from 2.0% to 1.8%, and predicts a potential decline to 1.5% in 2026.

If no action is taken, Thailand's competitiveness could continue to deteriorate against Vietnam and other neighbors, increasing pressure on the government and the Bank of Thailand.

See also:

Baht rises: Bank of Thailand responds to gray money rumors

Rising baht threatens tourism in Thailand

Bank of Thailand to address gold's impact on the baht

Source: Bangkok Post