Thailand could be at risk of entering a "dual deficit" situation and facing longer-term baht weakness.
Authorities should emphasise economic stability while strengthening the country's long-term economic resilience, according to Kiatnakin Phatra Financial Group (KKP).
In a post on his personal Facebook page, KKP chief economist Pipat Luengnaruemitchai suggested Thailand could be moving towards a "dual deficit" condition, driven by both current account and fiscal deficits. He warned the situation could affect Thailand's economic stability and contribute to longer-term baht depreciation.
"The risk of a dual deficit is reflected in several factors, particularly the country's trade balance. Although exports continue to record strong growth, imports have risen rapidly -- especially capital goods, energy and technology-related products -- pushing the trade deficit to record levels," he said.
Thailand's trade deficit reached an all-time high of US$10 billion in April this year, driven by a 45% year-on-year increase in imports to $41.6 billion, compared with exports of $31.5 billion. During the first four months of the year, total exports amounted to $128 billion, while imports totalled $147 billion, resulting in a trade deficit of $19.5 billion.
For years, Thailand was regarded as one of the region's most financially resilient economies due to its persistent current account surplus.
Export earnings from goods and services consistently exceeded imports, supporting the baht and helping it remain stronger and more stable than many regional currencies, even during periods of global economic uncertainty.
"Thailand's current account surplus and strong baht conditions have started to shift since the pandemic. Recent economic data suggest the country's key external buffer is gradually weakening," Mr Pipat noted.
The country's services balance -- once strongly supported by tourism -- has also changed. Although foreign arrivals have nearly returned to pre-pandemic levels, the services surplus has not recovered to its previous strength.
Rising shipping and transport costs have increased payments to foreign service providers.
Thailand also faces a growing "digital deficit" from payments to foreign digital platforms and services, including streaming subscriptions, cloud services, artificial intelligence tools and online advertising.
Foreign direct investment, particularly in data centres and cloud services, adds pressure to the digital deficit. Such investment projects require substantial imports of high-value technology equipment, including servers, semiconductors and cooling systems. These industries typically have import content of 80-90%, meaning imports could rise significantly during the early stages of investment.
In addition, Mr Pipat said the government continues to run fiscal deficits through expansionary budget policies, further intensifying the risk of a dual deficit. This condition, often considered a vulnerability among emerging market economies, could raise concerns among foreign investors, contributing to foreign capital outflows from Thailand's financial markets, increasing baht volatility and depreciation pressures over the longer term despite the country's underlying economic fundamentals, he noted.
Although a weaker baht could help improve export price competitiveness, exchange rate depreciation alone would not be sufficient.
Mr Pipat suggested both monetary and fiscal policies place greater emphasis on economic stability, while paving the way for improvements in Thailand's productivity, technology adoption and economic competitiveness. He said economic stability could become one of Thailand's long-term challenges.
