Key takeaways from KSS seminar with a speaker from the BoT (Prompt Act)
(16/09/2019 - 08:10)
  • What’s new?

Last Friday (September 13), we hosted a seminar entitled “Monetary policy amid the global trade disturbance” for institutional investors.  We were honored to have speaker Khun Suchot Piamchol from the Bank of Thailand (BoT) share his views and discuss about the trade war, monetary policy and the economic outlook for Thailand.

 

  • Analysis

The seminar presented three main topics:

  1. Who will win or lose in the global trade war? The extended trade war between China and the US have started to hurt both countries as recent data show wider trade deficits and a slowing global economy. Economists have been revising down 2019-2020 economic growth for the US. China would see less damage than the US after recent economic reforms to boost domestic demand to reduce the direct impact from the trade war. The extended trade war has also affected the respective countries’ trading partners and could lead to a deeper and more protracted recession. Meanwhile, concerns about the slowing global economy and the resumption of monetary policy easing through both traditional and non-traditional measures (Quantitative Easing) might be partly due to the extremely low bond yield environment. The latter has triggered a fears of a bond market bubble but there is no conclusive evidence pointing to that for now. 
  2. New round of monetary policy: Slowing global growth, coupled with escalating trade tensions, have led the global central banks  to adopt more aggressive monetary policy easing. Nonetheless, some economists and market participants believe QE and lower interest rates would only borrow growth from the future. That said, it would make an exit strategy more complicated.
  3. Thailand economic outlook: The key concern at this point is that 2020 growth will continue to be weighed down by falling international exports. This implies  the economy will need to rely more on fiscal stimulus and a sustainable services sector (tourism). Another concern is the appreciating THB might trigger additional measures from the central bank to rein in the currency.

 

The main question raised by participants was whether the monetary and fiscal measures would be effective in stimulating the Thailand and global economies. There were also concerns the strong THB might adversely affect Thailand’s tourism sector.