The Thai financial system has become more vulnerable due to the more-than-expected contraction of the economic outlook in light of the COVID-19 situation, said Bank of Thailand’s (BoT) monetary policy committee’s latest update.
The Committee assessed that the Thai economy would contract by 8.1 percent in 2020 but would expand at 5.0 percent in 2021 in tandem with a gradual improvement in both domestic and external demand.
However, the Bank of Thailand warned that the Thai economy would contract this year more than the previous assessment due to the more-severe-than-expected COVID-19 pandemic which could lead to (1) sharp correction of asset prices in global financial markets, (2) defaults by businesses and households in many countries including Thailand, and (3) corporate bonds being downgraded to non-investment grade.
Additionally, the Committee deemed it important to prepare financial measures to continuously alleviate impacts on household and business borrowers, especially after the phase-outs of the batch of financial and credit measures.
The financial institution…
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