BOT points to growing global risks
With no end in sight to the Israel-Hamas conflict and the ongoing slowing of the Chinese economy, Bank of Thailand Governor (BOT) Sethaput Suthiwartnarueput says Thailand must join the rest of the world in focusing on maintaining stability.
He noted that this approach is recommended by such international financial institutions as the International Monetary Fund (IMF), which emphasises controlling inflation within certain limits. Meanwhile, on the fiscal front, efforts are being made to create fiscal buffers by reducing expenditure, increasing revenue, and reducing trade imbalances to prepare for volatile situations.
Increasing risks include the slowing of the real estate sector and the impact of international trade disputes on global trade. While acknowledging that evaluating the impact of these risks is challenging due to the unpredictable repercussions of the events in the Middle East, Sethaput said that they will certainly affect trade and exports to Israel, are likely to push up oil prices and could lead to a resurgence of inflation.
Stressing that fiscal authorities should build fiscal buffers to prepare for these challenges. Sethaput made the point that care should be taken to ensure that monetary policies, especially interest rates, remain stable so as not to create unnecessary uncertainties in the market. Efforts are being made to manage inflation, he added, and measures to provide ongoing assistance will also be put in place.
“There are signals from several credit rating agencies and markets expressing concerns. If the rating falls, they are worried about reducing the rating, similar to what happened with the IMF. They want to see a decrease in trade imbalances. Stability is now viewed with a medium-term perspective. The main goal is to recover from the crisis, to find ways to be flexible and recover, to withstand various impacts, and to be able to adapt," the Thai central bank governor said.
