Thailand’s Economic Recovery Accelerates, Resumes FTA Negotiations with the EU

Aug 2021

The baht has depreciated by 10.4% against the dollar so far in 2021, helping the Thai export sector. According to the president of the Thai National Shippers’ Council, the weakening baht is considered a boon for exports, forecasting a 10% export growth in 2021.

The surge in exports has supported Thailand’s economy, which expanded by 7.5% in the second quarter of 2021, with the manufacturing sector growing by 16.8% year on year. Within this sector, the raw material industry posted a 10.3% year-on-year growth, supported by expansions in all product categories, including chemicals and chemical products, in response to demand from downstream industries.

In parallel with the acceleration of the economic recovery, Thailand and the European Union (EU) agreed to resume negotiations on a free trade agreement (FTA), after talks collapsed in 2014. The conclusion of an FTA would boost the EU’s access to trade and investment in Southeast Asia’s second-largest economy, while Thai exporters would benefit from lower tariffs. Under the FTA, sectors such as machinery and appliances, electronics, and vehicle manufacturing stand to be among the key beneficiaries.

If the two sides complete a deal, it would mark the EU’s third FTA with an ASEAN member state, following agreements with Singapore and Vietnam. Moreover, the EU has pursued trade talks with Indonesia, the Philippines, and Malaysia in recent years.

(Sources: ASEAN Briefing; The Bangkok Post)

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