MPC may lower growth forecast

MPC may lower growth forecast

Protests pose new, increasing risks

The Bank of Thailand's Monetary Policy Committee (MPC) may cut this year's 4% GDP growth forecast, as downside risk is increasing on the back of the political turmoil.

"The MPC will assess domestic factors such as public expenditure, exports and private spending in evaluating its economic growth forecast," said central bank spokeswoman Roong Mallikamas.

The MPC will convene its first meeting of the year on Jan 22.

Mrs Roong said external factors look more promising, while the economic threat from domestic politics is rising.

The MPC is committed to pro-growth policies, said Mrs Roong.

Regarding the 2-trillion-baht infrastructure bill awaiting a Constitution Court ruling on its constitutionality, the MPC will further evaluate specific aspects of the bill.

Mrs Roong said passage of the rate cut at the MPC's final meeting of 2013 in late November has helped to ease people's burden to some degree.

The MPC at that time lowered its policy interest rate by 25 basis points to 2.25% in a bid to help the lacklustre economy regain momentum.

At that same meeting, the rate-setting committee slashed its 2014 economic growth projection to 4% from 4.8%.

However, the political situation has steadily deteriorated since late October.

Despite rising food and gas prices, inflation is not expected to threaten the economy in the period ahead, said Mrs Roong.

Meanwhile, the central bank's Financial Institutions Policy Committee is in the initial stage of assessing foreign bank applications to set up local subsidiaries.

Mrs Roong said the entire process will be completed within three months.

The central bank last June laid out criteria allowing a maximum of five foreign banks to convert their branches into subsidiaries, with approvals expected to be completed by mid-2014.

The move is aimed at liberalising the Thai financial market.

Besides requiring 20 billion baht in paid-up capital, qualified foreign banks must have a good reputation, a strong financial position, solid earnings, and robust risk management and corporate governance.Qualified banks will be allowed to open up to 20 branches and 20 off-premises ATMs nationwide.

At present, foreign banks are restricted to a maximum of three branches.

Do you like the content of this article?