(Jan 27): The baht is set to extend its rally as the Chinese reopening buoys the outlook for tourist arrivals, helping propel Thailand’s growth this year to the highest in five years, according to the nation’s Finance Ministry.

The Thai currency is forecast to average 32.50 to a US dollar this year, stronger than the 36.68 the ministry predicted in October, officials said at a briefing in Bangkok on Friday. The baht averaged 35.07 to a dollar last year and tumbled to a 16-year low before staging a sharp recovery with the dollar weakening and foreign tourist arrivals gathering momentum with the scrapping of pandemic-era travel curbs.

Thailand is likely to generate 1.2 trillion baht (US$36.5 billion) in tourism revenue from an estimated 27.5 million travelers to the Southeast Asian nation this year, the ministry said. That’s significantly higher than the 360 billion baht in receipts last year from 11.2 million visitors, it said.

The baht has gained more than 5% so far this year, the best start to the year in at least 17 years. While that’s unnerved the nation’s exporters, the central bank has remained unfazed and ruled out any special measures to temper the rally for now, saying the moves are “reasonable” and “not disorderly.”

A stronger currency and a global economic slowdown will hurt Thai exports this year, the ministry said while slashing its growth forecast for overseas shipments to 0.4% from 2.5% in October. Imports are set to drop 0.1% this year, compared with a prediction of 3% growth earlier.

The Finance Ministry maintained its gross domestic product growth forecast of 3.8% for this year but cut its estimate for expansion last year to 3% from 3.4% earlier because of the lower-than-expected exports and a slowdown in public investment. The government will report 2022 GDP on Feb. 17.

While the buoyancy in tourism from Chinese reopening is seen as a tailwind to growth, monetary policy tightening in major economies, geo-political conflicts and the global economic slowdown are among the risk factors, Pornchai Thiraveja, director of the Fiscal Policy Office at the ministry, told a briefing.

The current-account surplus is now seen at $3.1 billion this year, down from US$5.6 billion estimated in October, the ministry said. The shortfall was US$19.8 billion last year, more than the US$13.9 billion estimated in October, it said.

The baht fell as much as 0.7% against the dollar on Friday and is poised for its first weekly decline this year.