Thailand facing 3 core risks: BOT policy committee

[webfact]

Thailand facing 3 core risks: BOT policy committee 

By The Nation

 

 

The Bank of Thailand’s Monetary Policy Committee (MPC) has identified three issues of concern for the country – the rapidly rising baht, a bleak outlook for the financial system, and rising household debt.

 

The concerns were pinpointed in minutes of the MPC meeting on November 18, which were made public on Wednesday (December 2).

 

The minutes raised concern that the rising baht would hit the fragile economic recovery by eroding export profits, in turn affecting investment and employment. The baht is being lifted by capital inflows to Thailand and other emerging markets, driven by monetary easing and higher risk appetite in global financial markets. The baht was also being pressured upwards by long-term structural challenges of low investment causing a high current account surplus, together with the home bias behaviour of Thai investor, it said. 

 

The MPC recommended considering additional short- and long-term measures to rein in the baht.

 

The panel was also concerned the slow and uneven economic recovery could undermine the future stability of the financial system.

Business were more financially fragile, particularly in the tourism sector where economic activity remains much lower than pre-pandemic levels. Meanwhile, SMEs had limited access to credit due to higher credit risks.

 

Households remained vulnerable given high household debt and the slow recovery in income, which affected their ability to service debts. Nevertheless, credit assistance measures had partially relieved liquidity constraints on businesses and households affected by the pandemic, said the minutes.

 

The rising household debt-to-GDP ratio and slow recovery in incomes would delay the deleveraging process, which would have adverse impacts on consumption and economic growth in the medium term, according to the minutes. Household debt to GDP rose to 83.8 per cent in the second quarter this year.

 

Debt restructuring and economic restructuring should thus be accelerated to boost recovery in incomes in the post-Covid environment. Meanwhile an uneven recovery in income among sectors would result in worsening inequality problems and limit sustainable economic growth in the long term. Policy coordination among public agencies would play an important role in distributing liquidity where it is needed, such as by coordinating credit and financial measures implemented by the government and the Bank of Thailand.

 

The MPC viewed that commercial banks, specialised financial institutions, and the Thai Credit Guarantee Corporation, were all playing crucial roles in curbing credit risks. This would help facilitate a broader distribution of ample liquidity in the system and support business adjustment to the post-Covid environment. 

 

The committee voted unanimously to maintain the policy rate at 0.5 per cent to support economic recovery while placing emphasis on the use of more targeted measures.

 

It identified three core risks to the Thai economy going forward: 

 

1. Domestic political uncertainties which could affect consumer and investor confidence. 

 

2. Progress in admitting foreign tourists to Thailand, which would likely be gradual depending on the Covid-19 situation in foreign countries and also vaccine development.

 

3. Heightened financial vulnerability of households and businesses following the phase-out of the support measures.

 

Source: https://www.nationthailand.com/business/30398982

 

-- © Copyright The Nation Thailand 2020-12-03

 

- Whatever you're going through, the Samaritans are here for you

- Follow Thaivisa on LINE for breaking COVID-19 updates

[Flying Saucage]

3 minutes ago, webfact said:

The Bank of Thailand’s Monetary Policy Committee (MPC) has identified three issues of concern for the country – the rapidly rising baht, a bleak outlook for the financial system, and rising household debt.

 

They "forgot" to ment the main issue of concern, which are the incompetent and corrupt generals running and continuously raping the country and its economy.

[yellowboat]

1 hour ago, webfact said:

1. Domestic political uncertainties which could affect consumer and investor confidence. 

Or to put it another way, the kids hate us.  The military doing the bidding of the 1% is what is causing all the turmoil.  As soon as cha cha is gone, the courts are free of political intrigue, the appointed senators are fired and differences with Thai institutions are put to rest, Thailand will be the envy of the world.  The young of Thailand are the country's only hope it seems.

[topt]

2 hours ago, yellowboat said:

As soon as cha cha is gone, the courts are free of political intrigue, the appointed senators are fired and differences with Thai institutions are put to rest,

and then you woke up..........

[Enzian]

 When they talk about "a bleak outlook for the financial system" in the first sentence, they don't mean what we usually mean by financial system, namely the banks and related institutions and systems. They're talking about the real economy, particularly the myriad of small businesses that make up the bottom half of the real economy. Of course, if that sector can't meet its obligations, then the banks will be affected. I suspect they are more concerned about the banks than about the people who owe the banks money, but that would be normal here. The game lately has been to get regular people to accept pain in order to maintain the reputation of the county for future possible tourism.

[Isaan sailor]

All talk and no actions.  Let the factories close—maybe then we’ll see some action.

[hotchilli]

Many households are up to their eyes in debt, just hanging on by a thread. If the economy does not change aided by the baht then many will be going to the wall early next year. With tourism still at zero many are going to be on the streets as debts are called in.

Watch the fall-out next year as the only package Paryut & Co can come up with is lets go halves.

And more and more are unemployed.

 

[digger70]

7 hours ago, webfact said:

Thailand facing 3 core risks: BOT policy committee 

What a smart man he is , He said that he knows the problem .

The biggest Problem with that is that he hasn't got the Guts to Do something about it ,Or he's being held Back from Higher Up. Either way nothing's going to happen Just waiting till the sh!t hits the fan .    ????

[Tropicalevo]

7 hours ago, hotchilli said:

With tourism still at zero many are going to be on the streets

Tourism will be zero for at least the next 6 - 9 months.

Hard times ahead.