Foreigners urged to capitalise on Thai turnaround

Foreigners urged to capitalise on Thai turnaround
International Monetary Fund managing director Christine Lagarde at the Global Policy Agenda meeting in New York.

"The Bank of Thailand has implemented an accommodative monetary policy since the beginning of the year, while price and financial stability were also carefully monitored to ensure they were not compromised.

The accommodative stance has shored up demand up until now, with businesses gradually upgrading and adding capacity during the downturn, and as we enter recovery, they have retained the ability to resume production at normal levels," he said at "Thai Forum".

"Recent economic data is supportive, showing that consumption and tourism have started to pick up and stimulus measures from the government have risen," he added at the roadshow, hosted by the Stock Exchange of Thailand.

American institutional investors with assets under investment of more than US$4.5 trillion attended the event.

Prasarn told investors to concentrate on Thailand's economic growth next year since the country is now focusing on restoring its normal growth, which pushed the central bank to step in with policy that shores up demand.

"The country is now at an important juncture. Political uncertainty has subsided and some promising government plans have been put in place. Therefore, there is no better time for domestic and international investors alike to capitalise on the new wave of growth," BOT Governor Prasarn Trairatvorakul said at "Thai Forum 2014" in New York.

Prasarn explained the return of government spending should help encourage the private sector to increase their investment next year while saying the World Bank's estimation for the country's domestic consumption in each quarter of 2015 is lower than the BOT's projection.

As for the high level of household debt, the BOT governor said that a mid-term fix for the problem could be done via the increase of financial literacy along with the aim to level economic and income opportunities while gunning to lower inequality and proper redistribution in the long-term.

The BOT's team also clarified to foreign investors that the central bank would issue bonds to fund the government's infrastructures projects and BOT has revealed that foreign investors are interested in private bonds that are issued in currencies besides the baht.

International Monetary Fund managing director Christine Lagarde said emerging markets should brace for two things as advanced economies continue with monetary normalisation - a welcome strengthening of external demand and the possibility of negative spillovers via capital flow volatility.

The comment was made at the Global Policy Agenda meeting in New York, which is presented semi-annually to the IMF's International Monetary and Financial Committee.

"Exchange rates should generally act as a shock absorber," Lagarde said. "Intervention can help counter disorderly conditions, including disruptive short-term exchange rate movements, provided reserves are adequate."

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