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ECONOMY
WASHINGTON : Thailand's economy is resilient despite domestic political uncertainty and global financial market turmoil, the International Monetary Fund said on Wednesday. Thai authorities should monitor signs of rising inflation closely and stand ready to adjust interest rates if necessary, but the Bank of Thailand's policy of keeping interest rates on hold is appropriate, the IMF said in a statement on the conclusion of an Article IV consultation.
''Maintaining the credibility of the inflation-targeting framework should remain a high priority,'' the IMF said.
The IMF projects an average 3.5% rise in Thailand's headline consumer price index in 2008. The Thai economy grew at a pace of 4.75% in 2007, and is projected to expand by 5.3% this year.
Thailand's managed-float exchange-rate system has served the country well, the IMF said. The institution cautioned that use of exchange market intervention should be ''limited''.
Use of exchange-rate hedging by exporters to manage foreign-currency exposure will smooth a transition to greater exchange-rate flexibility, the IMF said.
''Thailand's external competitiveness remains intact, owing to productivity gains and successful efforts to diversify Thailand's export markets,'' the IMF said.
Domestic demand is expected to be the main engine of growth in 2008 as contributions from exports slow due to weakening demand from some of Thailand's trading partners, the IMF said.
IMF directors said they back a decision not to put in place limitations on foreign ownership in some business sectors.
Prime Minister Samak Sundaravej is under pressure over a rise in the cost of living and the capital is bracing for more demonstrations today. REUTERS
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