Thailand: MPC raises alarm on headwinds

• The central bank on 18 Aug 21 released the edited minutes of the Monetary Policy Committee (MPC) meeting last week, which revealed the financial position of businesses, especially those in the service sector, became more vulnerable, which could lead to widespread business closures and layoffs.
• Sethaput Suthiwartnarueput, the central bank governor, said in a media conference on 16 Aug 21 employment has been declining, both in terms of higher unemployment and fewer working hours per day.
• The combination of unemployed workers and employees working fewer hours reached 3 million in 2Q21, up from 1 million before the pandemic. During the pandemic roughly 1.6 million unemployed people have returned to their hometowns, he said. Most have shifted from the service sector to agriculture, earning a lower income.
• The minutes also revealed the MPC believes significant downside risks remain for the economy, given the outbreak in Thailand and other countries could become more severe.
• Meanwhile, two members of Thailand’s monetary policy committee who pushed unsuccessfully for a rate cut earlier Aug 21 argued preemptive action was needed because of the risks of an economic slowdown in the period ahead, minutes of the meeting showed.
• On 4 Aug 21, the committee voted 4-2 to keep the Bank of Thailand’s (BoT) one-day repurchase rate at a record low of 0.50%, with two dissenters wanting a quarter point cut. The BoT also cut its 2021 GDP growth outlook to 0.7% from 1.8%.
• It was the first split decision since a rate cut in May 20, raising some expectations of a rate cut at the BoT’s next meeting on 29 Sep 21.

External Link : https://www.bangkokpost.com/business/2167499/mpc-raises-alarm-on-headwinds

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