Continuing capital outflows are a minor concern, as the fundamentals of Thai listed firms remain solid and they are expected to stage a comeback with the full global recovery, says Supachai Panitchpakdi, secretary-general of the UN Conference on Trade and Development.
He suggested Thailand develop its infrastructure and balance trading and real sector investment during this period of uncertainty.
Worries over capital flow reversals are mounting after the Thai stock market entered a bear market when the Stock Exchange of Thailand index fell by more than 20% from its 2013 peak.
The foreign investor selling spree was spurred by anxiety over the US Federal Reserve's potential pullback of monthly asset purchases this year, plus Thailand's economic slowdown and the risk of a US-led military strike against Syria.
Year-to-date, foreigners have yanked more than 100 billion baht from the Thai stock market.
But Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong has played down the concerns, saying the market's high volatility is easing as almost all the hot money has flown out.
Mr Supachai threw his support behind the Fed's planned stimulus curbs, saying continued quantitative easing could feed bubbles in Thailand and elsewhere.
Thai trade will run a deficit this year, but the country retains hefty foreign reserves and enjoys a growing economy, he said.
Mr Supachai warned the Bank of Thailand against cutting the policy rate, as inflation is expected to flare up in the next two years as the developed world recovers, stoking oil demand.
Thailand's current policy rate is on a par with others in the region, and a rate cut could leave the country's economy at risk of a bubble.
"In my opinion, I agree with the Bank of Thailand keeping the rate steady, as the rate has nothing to do with foreign exchange," said Mr Supachai.
On infrastructure, he urged the state to avoid a go-it-alone strategy and use public-private partnerships.
Mr Supachai also voiced concern that some of government programmes, particularly the rice pledging scheme, could blunt the country's competitiveness.
About the author
- Writer: Nuntawun Polkuamdee
Position: Business Reporter