Bank of Thailand Shifts from Stability Guardian to Economic Growth Driver

 

 

 

Central bank adopts proactive role to tackle structural issues as GDP growth slows to 1.5%, launches debt relief and SME support programmes.

 

Thailand's central bank is fundamentally reshaping its role from maintaining stability to actively driving economic growth as the country faces mounting structural challenges and slowing GDP expansion.

 

The Bank of Thailand (BOT) has launched aggressive measures to assist retail debtors through its "Close Debt, Move Forward" programme whilst supporting SME lending to facilitate business transformation into new industries. 

 

The institution is also tackling issues affecting baht stability by preparing to regulate online gold trading and using legal powers to trace digital currency transactions, particularly USDT, to combat grey capital flows.

 

Governor Vitai Ratanakorn, speaking at the CEO Day hosted by Krunthep Turakij on Thursday, warned that Thailand's economy this year faces significant headwinds, with GDP growth projected at just 1.5%, down from 2.2% last year.

 

The slowdown stems primarily from plummeting exports, which are forecast to grow merely 0.6% compared to 12.8% previously, shaving approximately 0.4% off GDP.

 

Government spending delays during the caretaker administration period have further dampened growth by 0.2-0.3%.

 

"Thailand's economic potential has declined from 4% historically to around 2.7% currently, which is both saddening and challenging," Vitai noted.
 

 

 

 

 

 

The central bank has identified gold trading as a major factor behind excessive baht strength. 

 

On days of significant appreciation, gold shops using online applications accounted for 45% of dollar selling pressure, surging to 62% in August.

 

The BOT is collaborating with the Finance Ministry to obtain regulatory authority over gold trading applications to monitor transactions and prevent currency volatility, though it will not regulate the entire gold business.

 

Concerns extend to digital assets, with USDT usage in Thailand appearing excessive at 50% of trading volume, with over 40% conducted by non-residents. 

 

The central bank has reinterpreted decades-old laws to trace suspicious transaction flows involving both gold and USDT.

 

The institution's debt relief initiative targets non-performing loans below 100,000 baht across approximately 1.1 million accounts, transferring them to asset management company SAM for restructuring. 

 

The programme utilises around 20 billion baht remaining from COVID-19 relief funds.

 

For SMEs, the BOT is partnering with the Thai Bankers' Association to provide transformation loans helping businesses integrate into new S-Curve industry supply chains.

 

 

 

 

Despite Thailand's policy interest rate of 1.25% ranking third-lowest globally after Switzerland and Japan, Vitai emphasised that further cuts must be reserved for emergencies rather than addressing structural problems like low productivity and an ageing society.

 

The governor stressed four core values: standing upright, looking ahead, extending hands, and staying grounded. 

 

The bank now particularly emphasises "extending hands" to solve problems and "staying grounded" to remain close to citizens' concerns.

 

"Thailand has many analysts but too few doers," Vitai observed, noting that structural problems have been analysed repeatedly for decades without concrete solutions.

 

Over the past three months, private sector cooperation has proved excellent, with several programmes including Project Ignite achieving 99% completion.

 

The central bank called on commercial banks and state financial institutions to increase lending despite obstacles, whilst urging the private sector to invest and avoid involvement with grey capital.

 

"No single party can lift the country from this pit," Vitai said. "Making the economy run again requires serious coordination from all sectors."