The public and private sectors should consider investing now, given the low interest rates and cheaper foreign goods, says the head of the Bank of Thailand.
Central bank governor Prasarn Trairatvorakul said the current time was appropriate for both the government and business operators to invest, thanks to low borrowing costs, while the slowdown in global economic growth and foreign exchange volatility have led to lower prices of foreign products.
Prasarn: Keeping eye on monetary policy
The interest rate for a 10-year loan term, standing at 2.6%, is substantially conducive for investment, he said.
"If the economy improves in the coming period and the government speeds up major projects on infrastructure investment and accelerates budget disbursement into the [economic] system, then greater cash flow will be directed to the business sector and consumers, which will in turn enhance spending power," said Mr Prasarn.
He said large corporate bodies could also raise funds through the issuance of debentures as an alternative channel for capital mobilisation from the financial market.
Besides investing in the government's infrastructure projects, obtaining loans to improve manufacturers' production capacity and fine-tuning technological development to meet global demand are other aspects which should be accelerated, he said.
Mr Prasarn earlier said that there was potential for the monetary policy to be eased further if economic activities became subdued or were not in line with the central bank's 4% growth forecast for this year. However, the effectiveness of easing the monetary policy must be considered in terms of growth in the credit market and consumer spending relative to household debt levels.
The central bank's Monetary Policy Committee maintained its 2% policy interest rate for a seventh straight meeting to support the momentum of economic recovery since making a 25-basis-point rate cut in March last year. The committee will reconvene its meeting on March 11.
Regarding proposals to use the central bank's foreign reserves for public investment, he said that foreign reserves are deemed national assets and the central bank is still shouldering considerable outstanding debts stemming from the management of foreign exchange and foreign reserves. Consequently, whether it is appropriate to use foreign reserves without resolving debt management should be contemplated.