Bank of Thailand’s new governor said he’s looking into new measures to boost the economy as it faces a long and uneven road to recovery from the coronavirus pandemic.
The policy response to the economic crisis should be long term, factoring in challenges likely to arise over the next two years, Governor Sethaput Suthiwart-Narueput told reporters at his first press briefing since taking office this month.
“All reasonable options are on the table,” Sethaput said when asked about using yield-curve control and other central bank tactics. “We need to use all tools that we have to address the many challenges,” he said, without providing details.
Southeast Asia’s second-largest economy is on track this year for its worst-ever contraction, as the Covid-19 crisis hammers its tourism industry. Policy makers are also facing escalating pro-democracy protest movement, which Sethaput said will affect confidence, consumption and investment.
Thailand’s central bank, which has estimated it will take at least two years for the economy to return to pre-pandemic levels, cut interest rates three times this year to a record 0.5%.
Sethaput will chair a meeting of the rate-setting panel as governor for the first time on
November 18. The monetary authority has said that it would preserve available policy space and use it at the right timing. As well, Sethaput said in an interview published this week on the Bank of Thailand’s website that he wants to avoid excessive monetary and fiscal policies to handle crises.
The central bank last month revised its economic forecast for this year to a 7.8% contraction, compared with a previous projected decline of 8.1%. Still, it will be the nation’s worst performance ever, official data show.
Sethaput said debt relief measures extended by the government and the central bank will be more targeted and flexible going forward as the economic recovery will not be uniform. The nation’s financial sector and foreign reserve are stable enough to handle any shocks, he said.
The baht has rallied almost 6% from this year’s low in April, prompting the central bank to warn that the nation’s recovery could be stunted if the currency were to strengthen quickly. Thailand has grappled with currency appreciation for a number of years, though there was some respite in the first quarter during the global sell-off caused by the pandemic.
“If the nation wants to address strengthening baht, we need to find a way to recycle current account surplus, such as promoting investment abroad,” Sethaput said Tuesday.
The central bank plans to further ease overseas investment rules by early next year and allow more capital outflows so as to temper gains in the baht, officials said last week. The measures may include increasing the limit on foreign currency deposits and allow money transfer between foreign currency deposits held by individuals and companies, according to Deputy Governor Mathee Supapongse.