Thailand is strong enough to weather volatile global markets due to its low foreign debt and lower foreign investment in stocks and bonds, the central bank chief said on Thursday, though the economy is one of the most sluggish in Southeast Asia.
Volatility in capital flows and exchange rates will continue in the face of monetary policy divergence among major countries, Bank of Thailand governor Veerathai Santiprabhob said while attending an investment forum.
"In the big picture, we don't have to be concerned about global economic volatility because we have better buffers than other emerging markets," he told reporters.
Bank of Thailand governor Veerathai Santiprabhob (Bangkok Post file photo)
The country has low foreign debt while foreign holdings in stocks and bonds are not high, reducing the risk from outflows, Mr Veerathai said. The Bank of Thailand's foreign-exchange reserves are close to a three-year high, providing an additional defence.
Mr Veerathai said the central bank was sticking by its forecast that exports would fall just 2% in dollar terms this year, despite an 8% fall in April from year ago levels.
"There were some one-off items in the first few months of the year. April is also an unusual month because of annual factory shutdowns for holidays," Mr Veerathai told Reuters on the sidelines of the forum.
"We should not focus on just one month's exports ... The April figure is still in line with the central bank's view that exports will fall 2% this year," he said.
Exports, which account for about two-thirds of Thailand's economic output, have contracted over the past three years due to tepid global demand and structural problems at home.
Falling exports and sluggish domestic demand have impeded the government's attempts to revive Southeast Asia's second-largest economy.
The central bank has forecast 2016 economic growth of 3.1%, up from 2.8% last year. It is due to offer a fresh forecast next month.
The economy grew 0.9% in January-March on the quarter and 3.2% on the year, but the recovery has remained fragile. Indonesia grew 4.92% in the same quarter, while Philippines expanded 6.9% and Malaysia grew by 4.2%.
Mr Veerathai said the baht was moving in line with regional currencies. Assistant governor Chantavarn Sucharitakul also told reporters on Thursday that the Chinese yuan's weakness had not had a big impact on regional currencies, whose performances were mainly driven by expectations that US interest rates will rise.