The US national debt has surpassed $40 trillion, impacting Thailand’s economy through exchange rates and debt servicing costs. Rising US yields affect global capital flow, impacting Thai markets and assets. Thailand’s relatively conservative debt position offers some stability, but monitoring US fiscal trajectory remains crucial.
The New Fiscal Milestone in the United States
The United States has exceeded all expectations by surpassing $40 trillion in total gross national debt, a figure that is hard for many to comprehend. This milestone, reached ahead of schedule, translates to roughly $117,000 per person and $297,000 per household. The enormity of this debt now rivals the combined economic output of major countries like China, Germany, Japan, the UK, and India combined.
Impact on Thailand and the Global Economy
For Thailand, closely linked to the US dollar system, this milestone has far-reaching implications. It affects the baht’s exchange rate and the country’s cost of servicing its own public debt. The US debt has doubled in less than a decade, growing from $19.4 trillion to $40 trillion. Interest payments on this debt now exceed the entire US national defense budget, indicating significant fiscal strain.
Rising Yields and the Potential Global Effects
Elevated US yields attract capital to dollar assets, impacting emerging markets like Thailand. The increase in Treasury yields affects Thai bond markets, with the 10-year government bond yield nearing 2.3%. The interest-rate gap between the Federal Reserve and the Bank of Thailand influences the baht’s performance. While Thailand’s fiscal position looks more conservative compared to the US, global dynamics and fluctuating yields pose challenges that policymakers, businesses, and investors must monitor closely.
Source : US National Debt Hits $40 Trillion: What Rising Treasury Yields Mean for Thailand