Bangkok: The governor of the Bank of Thailand has raised alarms about the Thai economy being "on the brink of collapse," predicting that the most significant downturn will occur after the fourth quarter of this year.
According to Thai News Agency, Mr. Sethaput Suthiwatanaruput, the Governor of the Bank of Thailand (BOT), expressed his concerns during the 'Meet the Press 1/68' event, highlighting the uncertainty caused by US tariff measures. He stated that the impact of these measures has generated significant economic unpredictability, with the BOT anticipating two potential scenarios based on the outcomes of Thai-US negotiations. Despite the uncertainty, the impact is expected to be long-term, though not as severe as the COVID-19 pandemic or the 1997 financial crisis.
Currently, investment shows signs of slowing, with expectations that the economy's lowest point before recovery will be reached post-fourth quarter. The severity of the economic impact is contingent upon the success of negotiations with the United States. The BOT identifies the export sector to the US as the most vulnerable, particularly in industries such as electrical appliances, automotive parts, processed food, machinery, and electronics.
The BOT stresses the importance of implementing trade measures to combat the influx of foreign goods that cannot be exported to the US, which could adversely affect SME businesses. Recommended measures include anti-dumping strategies and stringent product standard inspections.
Dr. Sethaput detailed the BOT's monetary policy efforts, noting that the Monetary Policy Committee (MPC) has reduced the policy interest rate twice this year to address the economic slowdown. Although the current policy rate is deemed appropriate, the BOT is prepared to lower it further if conditions change. Monitoring the baht's movement to prevent it from fluctuating too rapidly is also a priority, as past fluctuations were attributed to a weaker dollar and rising gold prices.
The BOT has introduced initiatives such as the 'You Fight, We Help' project to assist debtors, refuting claims that the BOT's lending criteria have led to commercial banks' reluctance to issue loans. The BOT emphasizes that loan approval is more dependent on customers' credit risk.
Specific measures, such as concessional or soft loans, are recommended for sectors genuinely affected by the tariffs, rather than broad-based financial aid like that provided during the pandemic. The BOT governor also advocates for revisiting the remaining phases of the 10,000-baht digital wallet project due to evolving challenges like the trade war.
The governor expressed skepticism about establishing entertainment complexes, suggesting that Thailand should focus on promoting tourism through ventures like Wellness Centers, given the global uncertainties and Thailand's existing expertise in health tourism.