Baht to the future: Thailand exports ready for Trump change
The Export-Import Bank of Thailand is bullish about the country’s export growth this year, buoyed by ripple effects from US President Donald Trump’s trade policies.
According to Exim Bank President Rak Vorrakitpokatorn, several global regions, including the EU, South Asia, and Southeast Asia, are ramping up imports in anticipation of Trump’s next moves, especially with uncertainty looming over US imports in the upcoming quarters.
Rak reported that apprehensions about Trump’s policies led to a notable surge in exports in various countries during the fourth quarter of last year.
For example, Vietnam saw exports soar by 11%, China by 10%, Taiwan by 9%, and South Korea by 4%. However, fluctuations in the baht could throw a spanner in the works, with the exchange rate having varied by as much as nine baht against the dollar in 2024.
To shield against currency volatility, Exim Bank recommends exporters use forward contracts or options. Rak believes a rate of 34.5 baht per US dollar strikes the right balance for both exporters and importers.
Yet, there’s a looming threat of cheap Chinese goods flooding Thai and global markets, including products like electronics, steel, and chemicals, amidst continued geopolitical jitters.
Despite these challenges, Rak foresees a 3% growth in Thai exports this year, though this is a step down from the earlier prediction of a 5.6-5.8% rise for 2024.
In the realm of green finance, Rak highlighted the bank’s commitment to sustainability, with environmental initiatives accounting for 40% of its portfolio last year, worth 75.8 billion baht.
Exim Bank aspires to ramp this up to 50% by 2027, underscoring the urgent need to tackle environmental issues amid the economic rollercoaster.
The burgeoning climate crisis has spawned over 18,000 environmental regulations worldwide, yet significant climate finance gaps remain.
The Climate Policy Initiative pegged global climate finance at US$1.5 trillion (roughly 50 trillion baht) in 2023, but this falls woefully short of the US$7.4 trillion annually needed from 2024 to 2030. Rak stressed that this discrepancy spotlights the pressing demand for climate finance on a global scale.
Meanwhile, Exim Bank reported outstanding loans reaching 189 billion baht in 2024, a near 7% uptick from the previous year. Notably, 20% of these funds are fuelling Thai entrepreneurs eyeing opportunities in Cambodia, Laos, Myanmar, Vietnam, and other new markets.
As the baht weathers global tsunamis, questions remain whether Thailand will sail smoothly or face stormy seas.
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