Sunday 24 July 2022
Bangkok Bank signaling the global financial volatility of the negative economy Believe this year, Thailand raised the policy interest rate 3 times, totaling 0.75% to 1.25%, extracting inflation – weak baht. Recommend to accelerate the tourism sector, build infrastructure, attract foreign investment in Thailand
Mr. Kobsak Pootrakool, Executive Vice President and company secretary Bangkok Bank Public Company Limited said in a special lecture on the topic “Economic Turbulence 2022: How to deal with crises in the economy,” which is part of the High-level Economic Correspondents Development Program (OBEC) Year 2022 organized by the Association of Economic Journalists that The current economic situation that has problems in the form of a crisis overlapped with a crisis. Both the situation of international conflicts from the Russo-Ukraine war That resulted in the energy price crisis and the global food crisis. This is a major cause of high inflation problems around the world. Both are important pressures for central banks in various countries to consider raising interest rates. Led by the US Federal Reserve, or the Fed, to raise interest rates to at least 3.80%. to solve the inflation problem and many liquidity problems that were previously injected with liquidity extraction from the system. Thus affecting the volatility of asset prices and the global financial market. At the same time, the interest rate hike will affect the economy in emerging markets (Emerging Market), especially countries with relatively high foreign debt burden. As we see the situation in Sri Lanka, Lao PDR and Myanmar, there is a risk of negative economic recession or recession in the next 1-2 years.
While the economic situation in Thailand, Mr. Kobsak said that although the situation has improved from the relaxation of measures to prevent the spread of the Covid-19 virus. causing the tourism sector to begin to recover However, there are still inflation risks that cause product prices and production costs to rise. The export sector began to grow at a slower pace due to the purchasing power of the destination country. and the volatility in the global financial market that affects the investment sector and the exchange rate. therefore assessed that The Monetary Policy Committee (MPC) should consider raising the policy rate by 0.25% in the remaining 3 MPC meetings this year, which is expected to cause the policy rate to gradually increase from Current 0.50% to 1.25% at the end of this year
“Currently, Thailand has set a very low interest rate of 0.50% for a long time. to support the economy during the COVID-19 epidemic Compared to the period of the economic crisis in the past The policy interest rate at that time was still at 1.25%, so now the COVID-19 factor has begun to loosen The economy is recovering Especially the foreign tourism sector that has continuously recovered. At the same time, the new factor that comes in with more weight is high inflation The baht depreciated quite a lot. and international reserves that have begun to decline considerably Therefore, it should be an important factor in determining the policy interest rate in the second half of this year.”
Mr. Kobsak said that the volatility situation in the world financial market including negative economic conditions will continue for a while may have a ripple effect Thailand still has regarding a year to prepare for the situation. The key challenge is have to look for a new set of economic engines to replace the export sector domestic consumption and Thai travel to Thailand that shouldn’t have enough strength It recommends focusing on the growing foreign tourism sector. The investment in the space structure was previously approved. should drive and implement investment seriously Including foreign direct investment (Foreign Direct Investment), which sees ASEAN as a very attractive area for investors who are looking for alternatives. In addition to China and Europe that are in trouble.
