By The Nation
It also urged the MPC to be cautious on interest rate decisions.
Newly-appointed Managing Director of the International Monetary Fund(IMF) Kristalina Georgieva said Thailand and Asean are exposed to potential risks from the US-China trade dispute.
She made the comment during the “BOT-IMF High-Level Conference” at the Bank of Thailand’s headquarters in Bangkok today. Georgieva also attended the Asean Summit and Related Summits, held November 2-4.
Central bank governor Veerathai Santiprabhob said IMF members had benefited from structural reforms advocated and safety net provided by the world fund.
The IMF also supported Asean in creating the Chiang Mai Initiative, an emergency lending fund for Thailand and countries in the region to deal with external risks, he said.
He said IMF’s risk assessment also helped policy makers in management. The IMF estimated that damages from the trade war would amount to about $700 billion, or reducing global gross domestic product by 0.8 percentage point this year.
The IMF has recently downgraded its previous forecast of global economic growth to 3 per cent this year and 3.4 per cent next year. It also revised down its forecast for Asean to 4.6 per cent this year and 4.8 per cent next year. Asean growth rate was 5 per cent on average last year.
There are some signs of relief to the US-China trade war, Georgieva said in referring to market expectation of a deal in the next few months but risks remain.
Geopolitical tensions and uncertainty of Brexit also pose risks to the global economy, she noted.
She called for Asean and other countries to stimulate their economies productively in order to slow down decline of the global economy.
She said Thailand has both fiscal and monetary resources to deal with a global slowdown, citing the country's more than $200 billion in international reserves.
She said the central bank’s monetary policy committee, which will meet today (November 6), should save some munitions to deal with future risks. Implementing of monetary policy should be conducted carefully, she said.
Thailand has also faced challenges in managing its monetary policy as low interest rates led to capital inflow into the country and caused the baht to appreciate. This capital flow constraints the effectiveness of the central bank's monetary policy, she noted.
She said Thailand had been successful in reducing poverty since 1997, reducing the number of people below the poverty line from 67 per cent to less than 10 per cent.
Asean as a whole has make progress in moving towards the goal of sustainability development, she said.
Asean economic expansion has contributed 10 per cent of global growth, the same rate as the US while the European Union leads with 11 per cent, this suggests Asean economy is a key part of the global economy, she said.
Georgieva also welcomed Asean leaders at the Asean Summit in Bangkok as they sought closer cooperation in topics ranging from economy, global climate change to plastic wastes .
She told the 15 countries under the Regional Comprehensive Economic Partnership (RCEP) that cooperation should not only cover free movement of goods, but should also include free trade in services, free movement of labour, and e-commerce.