(June 19): Thailand is attracting capital inflows partly at the expense of Indonesia, as investors seek markets with stronger fiscal fundamentals and lower perceived risks, according to its finance chief.
Investors have been drawn to Thailand’s fiscal discipline and policy continuity as concerns over fiscal and financial stability risks weigh on Indonesia, Finance Minister Ekniti Nitithanprapas told reporters late Thursday in Bangkok.
Thailand has attracted about US$2.7 billion in net foreign inflows into its bond and equity markets this year. By contrast, investors have pulled roughly US$4.2 billion from Indonesian assets as the rupiah slid to a record low and concerns mounted over President Prabowo Subianto’s economic policies.
The flows have coincided with a 26% gain in Thailand’s benchmark stock index this year, while Indonesian equities have fallen about 29%, ranking among the world’s worst-performing markets.
The Thai finance minister said he expects the Thai economy to grow about 2% this year and that political stability will support investment and help sustain economic momentum.
That forecast matches S&P Global Ratings’ projection released Thursday. The ratings agency said a stronger mandate for the government following February’s election could lead to “more stable coalitional dynamics” that potentially support the policy making environment.
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Moody’s Ratings upgraded the country’s outlook to stable from negative in April, citing easing risks from US tariffs and stronger domestic investment momentum, while affirming its Baa1 sovereign rating.
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