BOT senior director Don Nakornthab said that, based on the decision to keep the benchmark interest rate unchanged at the MPC’s last meeting, it would be necessary to keep monitoring economic conditions. He noted the increased uncertainties on the domestic political front, as well as those arising from Britain’s unclear terms for its exit from the European Union, the global economic slowdown and the US-China trade war.

 However, Don said the MPC’s unanimous decision to maintain the policy rate has not put an end to the consideration of a further rate rise. Such an increase would be based on the current economic conditions. As such, the committee’s view has not changed much compared with its assessment of a month one or two earlier.

The country’s rate of economic expansion and level of inflation will be assessed, while its financial stability will be reviewed.

 “If a shock occurs in other countries, the global economy may slow down or fall into a recession and Thailand would follow suit,” Don said. “Similarly, the Federal Reserve has indicated that an expected (US) rate hike may not happen and that there could be a rate cut if a shock occurs and leads to a recession. But there’s less chance to see a rate cut. It’s the same for Thailand. If the world does not face a shock, it’s difficult to see a rate cut,” Don said.

The markets and the central bank have been closely monitoring local political developments, which may raise concerns and create an impact on the overall economy, he said, referring to the aftermath of the general election.

Thailand could face risks to the economy in a later stage if a political agreement fails to materialise, and this could lead to conflicts on the streets outside the parliament, he said. But if a new government is formed smoothly, this would be unlikely to affect the overall economy.

Kalin Sarasin, chairman of the Thai Chamber of Commerce, said that the private sector remains concerned over the possibility of the suspension of the country’s administration during the two months in which it will operate without a new government.

 “We don’t want to see a vacuum period. This [current] government has full authority and should continue the country’s administration until the new government comes to take over,” he said. “We don’t want [the current government] to cease administration as there could be impact on the business sector and investors’ confidence.”

Anuphong Assavabhokhin, chief executive officer of developer AP Thailand, believes the unresolved election outcome has not yet affected foreign investors’ confidence, as they have continued to invest in the country. However, if political chaos erupted, this could change.

Siri Ganjarerndee, chairman of Tris Rating, said that he wants to see continued public investment, in line with the announced budget for infrastructure works as planned, as well as the efficient use of the national budget.

 “Every credit rating agency is not interested in who will form the government, but instead pays attention to the capacity for economic management. But politics remains a factor for close monitoring,” he said.

Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said that if the formation of the new government is delayed, decision-making on private-sector investment and foreign investment in Thailand may be affected.

The bank will cut its forecast for this year’s economic growth within the next week, based on higher internal and external risks, he said.

Source: http://www.nationmultimedia.com/detail/Economy/30366730