THAILAND - Prime Minister Yingluck Shinawatra yesterday instructed economic ministries and agencies to closely monitor the US government shutdown, the US quantitative easing and the European economic situation for possible detrimental impacts on Thailand's currency and exports in the rest of this year. The US shutdown topped the agenda of the economic cabinet meeting. Also attending were the Bank of Thailand, the National Economic and Social Development Board and the Board of Investment.
Government Spokesman Teerat Ratanasevi said Yingluck was concerned about the rapid changes in external factors and their consequences on the economy, particularly on small- and medium-sized enterprises. The NESDB and the Finance Ministry were assigned to form a working group to oversee small and medium enterprises.
Deputy Prime Minister Kittiratt Na-Ranong said after the meeting that exports and foreign exchange rates were crucial issues, as the fourth quarter is normally the high season for Thailand's exports. The country aims to achieve 4-per-cent growth in shipments this year, after managing only 1-per-cent growth in the first eight months.
"External factors and the domestic floods are under our observation," he said.
Most economists see limited direct impact from the US shutdown, which has cut off funding for non-essential federal tasks since Tuesday. The centre of attention now is the US administration's negotiations with the Republicans for an increase in the US$16.7 trillion debt ceiling. Without approval by the middle of this month, the US would default on its debts for the first time in its history.
Under these circumstances, the US Federal Reserve is widely expected to maintain its bond-buying programme at the current rate of $85 billion a month to boost the economy. This will further propel liquidity into emerging markets, and may boost the Thai stock market as well as the dollar/baht exchange rate as in the first four months of this year.