Thailand: alert, the strength of the baht threatens tourism and exports

Economists are sounding the alarm, the Thai baht has reached its highest level in four years, threatening tourism and exports.

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

A too strong baht threatens Thai competitiveness

The rise of the Thai baht threatens exports. Illustration: The Nation Thailand

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

« If nothing is done, 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, EIC's chief economist, said the strength of the baht was not consistent with Thailand's moderate economic fundamentals.

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

Vietnam is gaining ground against Thailand

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

Against a backdrop of baht appreciation, the Vietnamese dong has depreciated by 3.5% against the dollar since the start of the year.

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

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

If this tourist visited Vietnam instead, they would pay an average of around 6% less, according to the EIC simulator, Mr. Yunyong explained.

See: Baht too strong: Thailand loses ground to Vietnam

The EIC expects the baht to continue to appreciate to 31.50-32 against the dollar this month and 31-32 by the end of the year.

This Tuesday, September 30th at 10:00 (Thai time), 1 euro is worth 37.86 bahts and 1 US dollar is worth 32.30 bahts.

See: Thai Baht THB exchange rate

The baht at its highest since 1997

Banknotes, euros and Thai baht. Photo: Gwengoat

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

This has 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, the rise in gold exports amid rising global prices, the current account surplus, and capital inflows into the bond market.

See: Thailand: baht rise linked to gold exports to Cambodia

Tourism: Fragile recovery and increased competition

Tourists in an airport. Photo: Bangkok Post

According to Mr. Yunyong, the number of foreign tourists remains significantly lower than last year, but signs of recovery are emerging.

The number of Chinese tourists is still down from last year, but the decline is easing.

Returning tourists are spending more cautiously, however.

Thailand is also facing increasing competition to attract Asian tourists, with target segments overlapping between regional countries.

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

See: Thailand: a strong baht and regional competition are driving tourists away

Youth unemployment on the rise

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

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

The unemployment rate among 15-24 year olds reached 18.9% in the second quarter of 2025, up from 16.1% in the previous quarter.

In a context of slowing economic growth and weak business expansion, employment continued to slow down, impacting the labor market.

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

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

Growth forecasts revised downward

Economy in Thailand. Photo: The Nation Thailand

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

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

See also:

Rise of the baht: Bank of Thailand responds to rumors of gray money

The rise of the baht threatens tourism in Thailand

The Bank of Thailand will tackle the impact of gold on the baht

Source : Bangkok Post