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  • Economy may miss forecast if virus outbreak prolonged - BoT minutes

    Thailand's economy faced significant downside risks and limited policy room should be preserved to be used for the most effective time, the central bank's minutes of its last meeting showed on Wednesday.

    A prolonged coronavirus outbreak could cause Southeast Asia's second-largest economy to underperform the baseline projection, squeezing business liquidity and slowing employment, the meeting minutes said.

    On June 23, the Bank of Thailand's (BoT) Monetary Policy Committee left its policy rate unchanged at a record low of 0.50% for a ninth straight meeting to help support the economy as it struggles with the country's latest and biggest Covid-19 outbreak that emerged in April.

    The committee would "stand ready to use the limited policy space at the most effective timing", the minutes said.

    At the meeting, the BoT cut its 2021 economic growth forecast to 1.8% from 3.0% and its 2022 outlook to 3.9% from 4.7%.

    The recurring outbreaks increased labour market fragility and "recovery would be W-shaped" and slower than in the past, the minutes said.

    The committee would ensure that exchange rate movements would not hinder the economic recovery, the minutes said.

    The impact of the US monetary policy outlook on domestic long-term government bond and equity prices would be limited due to low foreign participation in the long-term Thai government bond market and continued underweighting of Thai stocks in recent periods, the minutes said.: https://www.bangkokpost.com/business...ed-bot-minutes

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    • The week ending July 9th, 2021 the Thai Baht was being exchanged at 32.11 baht to every 1 US dollar.

      • Committee cuts GDP forecast to 0 - 1.5% amid latest outbreak

      A private sector council has cut Thailand's economic growth projection this year to 0 - 1.5%, mainly due to the prolonged Covid-19 outbreak.

      The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) decided to slash the country's gross domestic product (GDP) forecast for this year to 0 - 1.5% in Wednesday's meeting from an earlier estimate of 0.5 - 2%.

      Payong Srivanich, chairman of the Thai Bankers Association (TBA), said the prolonged outbreak and spread of the virulent Delta variant had led to stringent measures by the government to contain the outbreak. The stronger measures have impacted economic activities, employment and labourers' income.

      Moreover, travel restrictions and quarantine measures will significantly impact domestic tourism in the third quarter of this year. At the same time, it will also affect the country's reopening.

      Meanwhile, the improvement of Thai exports, in line with global economic recovery, is the only engine supporting the country's economic growth this year.

      JSCCIB has revised up its Thai export growth forecast to 8 - 10% this year, up from 5 - 7% previously. However, the Thai economy still needs both fiscal and monetary policies to support growth.

      Recently, the Bank of Thailand (BoT) slashed the country's economic growth forecast for this year to 1.8% from an earlier projection of 3% due to low foreign tourist arrival estimates and low domestic demand due to the third wave of Covid-19.

      Mr Payong said the prolonged outbreak has affected the business confidence index conducted by the central bank. The survey in June found that most business operators believe recovery would occur in the second half of 2022, a delay of six months made by an earlier projection.

      Given the downside risk, the private sector council has proposed to increase loan guarantees by Thai Credit Guarantee Corporation (TCG) under the BoT's soft loan scheme from the existing guarantee ratio at 40% of credit line and waive fees for the first to the third year.

      The Federation of Thai Industries (FTI) proposed in the meeting on Wednesday that the TCG increase the credit guarantee ratio to 70%. The incentive should be offered to only small and medium-sized enterprises (SMEs) affected by Covid-19.

      The JSCCIB has also proposed the central bank to separate non-performing loans (NPLs) prior to Covid-19 from current NPLs or businesses that have been impacted by the pandemic as financial assistance should focus on SMEs which are struggling due to the outbreak.

      The FTI chairman, Supant Mongkolsuthree, said the government should speed up vaccine procurement and distribution. In particular, labourers in the manufacturing sector and factories have to be vaccinated to maintain the country's export sector, which is a key engine for the Thai economy amid the crisis.

      The private sector has provided the government assistance with 25 vaccination centres, which have the capacity to administer 80,000 doses per day, however, it has had not received vaccines at these centres. So, the government needs to speed up vaccinations as this is a key factor to help the country overcome the high infection rates.

      "If the government cannot manage to vaccinate or reopen as planned, there might be no foreign tourism and it is possible there might be 0% GDP growth or even a contraction this year," Mr Supant said.

      In addition, the Thai Chamber of Commerce chairman, Sanan Angubolkul, said the government should have a clear stance on alternative vaccines as a third booster dose. This will build the confidence of Thais, foreign tourists and offshore investors and support the Thai economic momentum.: https://www.bangkokpost.com/business...atest-outbreak

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      • The week ending July 16th, 2021 the Thai Baht was being exchanged at 32.28 baht to every 1 US dollar.


        • COVID-19 Crisis Lowers Thailand’s Growth, Continued Support for the Poor Needed

        Thailands economy continues to take a heavy toll due to the COVID-19 pandemic and is projected to expand modestly at 2.2 percent in 2021, revised down from the 3.4 percent growth projected in March, according to the World Banks latest Thailand Economic Monitor "The Road to Recovery" published today.

        COVID-19 Crisis Lowers Thailand’s Growth, Continued Support for the Poor Needed

        Continued assistance to the poor and vulnerable, including informal workers, will be necessary as COVID-19 continues to impact Thailand's economy.

        The weaker outlook reflects the impact of the ongoing third wave of the virus on private consumption, and the likelihood that international tourist arrivals will remain very low through the end of 2021. Thailand recorded 40 million tourist arrivals in 2019, but the expected number of tourist arrivals in 2021 has been revised sharply downward from a previous forecast of 4-5 million to just 0.6 million.

        "The economic shock associated with COVID-19 has adversely affected employment, incomes, and poverty, but the government's comprehensive social protection response has been impressive in mitigating its impact," said Birgit Hansl, World Bank Country Manager for Thailand. "Thailand's fiscal space is still sufficient to allow supporting measures to protect the poor and most in need in the months to come."

        Thailand has performed relatively well in terms of the scale and speed of its fiscal response. The government expanded what was previously a relatively modest set of cash transfer programs to implement one of the largest such responses to COVID-19 in the world. Preliminary simulations suggest that more than 780,000 additional people could have fallen into poverty in 2020 if the government had not scaled up social assistance.

        "The crisis in 2020 demonstrated Thailand's ability to leverage its robust and universal digital ID, sophisticated and interoperable digital platform, and a number of administrative databases to filter eligibility for new cash transfer programs. Going forward Thailand would need to consolidate these efforts and be better prepared to respond to crisis through setting up a social registry." said Francesca Lamanna, Senior Economist at the World Bank.

        Economic activity is not expected to return to its pre-pandemic levels until 2022, with the GDP growth rate projected to rise to 5.1 percent. However, the pace of recovery will depend on Thailand's vaccination progress, the effectiveness of fiscal support, and the extent to which international tourism resumes. Exports of goods are expected to support the Thai economy in 2021, due to recovering global demand for automotive parts, electronics, machinery, and agricultural products. Risks are further tilted to the downside as the COVID-19 recovery might be delayed due to new COVID-19 variants becoming resistant to treatments or vaccines.

        "Adequate testing-tracing-isolation and further progress on vaccinations will be necessary to avoid the need for lockdowns, spur a sustained increase in domestic mobility and consumption, and allow the country to reopen to foreign tourists," according to Kiatipong Ariyapruchya, World Bank Senior Economist for Thailand. "In the long-term, reforms that lower trade costs and barriers could help maximize the benefits of the ongoing recovery of global economic activity."

        The report also recommends that the government will need to invest in strengthening Thailand's social protection system. In the years to come it should be a priority to provide adequate support to vulnerable people, while ensuring that this support is targeted effectively to limit the overall fiscal burden. The crisis also further underscores the need to ensure that the social protection system covers the large informal sector at all times, not only during crises.: https://www.nationthailand.com/business/40003277

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        • The week ending July 23rd, 2021 the Thai Baht was being exchanged at 32.44 baht to every 1 US dollar.


          • Central bank says outbreak to cut GDP by up to 2%

          The latest coronavirus wave to hit Thailand is expected to reduce gross domestic product by 0.8-2.0% this year, the Bank of Thailand said on Thursday, as the country tackles its biggest outbreak of the virus to date.

          The current Covid-19 wave has seen daily record infections, which the Bank of Thailand (BOT) said had became more severe and prolonged than previously expected.

          Stricter containment measures have caused economic activity to plummet to levels close to those reached during a 2020 lockdown and is likely to fall further, senior director Chayawadee Chai-Anant told a briefing.

          GDP could drop by as much as 2.0% if the current curbs do not reduce infections and the outbreak drags on throughout the year," she said, adding a base case was for a 1.2% GDP fall.

          "That's only an impact on GDP. But there could be more fiscal measures, together with other factors such as exports to support the economy," Ms Chayawadee said.

          The economy faces higher risks than projected in June and the impact on activity is likely to be prolonged, she said, without giving specific GDP forecasts. "The situation is still fluid".

          In June, the BOT cut its GDP growth forecasts for the year to 1.8% from 3.0%, and a 2022 outlook to 3.9% from 4.7%. It is due to release new projections in September.

          The central bank has fully implemented accommodative monetary policy and fiscal policy will be necessary to support the economy going forward, Ms Chayawadee said. The central bank has left its key rate at a record low of 0.50% since the middle of last year.

          If the government raises the public debt to GDP ceiling, it should not be a worry if it maintains fiscal discipline, she added.: https://www.bangkokpost.com/business...dp-by-up-to-2-

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