The unanimous decision to maintain the interest rate at 0.5% per annum by the Monetary Policy Committee (MPC) signals all parties to prepare for the economic challenges ahead. The MPC also predicts that it will take no less than 2 years for overall economic activities to return to pre-COVID levels.

Yesterday's (September 23, 2020) actions by the Monetary Policy Committee (MPC) sent a clear signal for all parties to adjust and prepare for the economic situation they will face in the future, with a unanimous decision to keep the interest rate at 0.5% per annum. The MPC assessed that Thailand's economy this year is expected to contract less than previously estimated, from -8.1% to -7.8%. However, in 2021, the Thai economy is projected to grow at a slower rate than previously anticipated, leading the MPC to revise its GDP forecast for next year down to 3.6% from the earlier estimate of 5%.

The primary reason for the low economic growth is mainly due to COVID-19. With the pandemic still ongoing and no end in sight, the world remains cautious about the risks of a second wave, impacting Thailand's main source of income from foreign tourists. The number of tourists, once expected to be 16 million per year, has now dropped to only 9 million. The MPC also predicts that it will take no less than 2 years for overall economic activities to return to pre-COVID levels.

The MPC recommends that the government implement targeted and timely measures to accelerate employment support, economic restructuring, and continuous economic recovery, while emphasizing supply-side policies to support economic restructuring. We agree with this proposal; ideally, workers and the general public should develop themselves and enhance their digital skills, while entrepreneurs must adapt their business models and support budget allocations for employee skill development to align with the new global context.

Looking back to September 16, during the meeting of the Economic Situation Administration Committee due to the impact of COVID-19, led by Mr. Suphan Mongkolsuthee, as the chairman of the Federation of Thai Industries (FTI), a request was made to extend the private sector's debt moratorium for 2 years after the 6-month debt suspension measure ends this September. They also requested that debtors in the moratorium program pay 10% of the total interest due. The FTI cited liquidity issues caused by COVID-19, leading to demands from various parties, particularly bankers, who disagreed with the 2-year debt moratorium, viewing it as too long.

However, today, as COVID-19 continues to be a global issue, with the UK returning to a 6-month lockdown and international travel still paralyzed, the timeframe that both the MPC and FTI agree on—2 years for the economy to return to normal—may be accurate. This is a pressing matter for all parties to consider. We must ensure that this signal does not become a source of pressure but rather a cue for Thai people, businesses, and the government to adapt quickly if they wish to survive as winners in the new world. In this new environment, we can no longer live or work in the old ways. Remaining stagnant may equate to moving backward.

SOURCE : www.bangkokbiznews.com