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Bank of Thailand raises interest rates for second consecutive month

BANGKOK, Aug 25 – The Bank of Thailand (BoT) on Wednesday raised its policy interest rate by 25 basis points to 1.75 per cent after a quarter percentage point increase last month.

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The Bank of Thailand (BoT) on Wednesday raised its policy interest rate by 25 basis points to 1.75 per cent after a quarter percentage point increase last month.

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Bank of Thailand raises interest rates for 2nd consecutive month

Monetary Policy Committee’s Decision on 25 August 2010 Mr. Paiboon Kittisrikangwan, Assistant Governor, Bank of Thailand, announces the outcome of the Monetary Policy Committee (MPC) meeting today, as follows. The global economy continued to recover during the first half of the year, even though the pace of growth for the rest of the year for the US and Japan is expected to decelerate. The European economies have improved, but fragility remains from sovereign debt problem in some economies. Meanwhile, Asian economies continue to grow robustly.

The Thai economy expanded faster than expected in the second quarter, despite decelerating somewhat from the first quarter due to domestic political situation. Private consumption continues to grow favourably, while the tourism industry has shown clearer signs of a speedy recovery. Manufacturing production and capacity utilization have risen, which should lend support to private investment in the periods ahead. Exports have been growing in tandem with global economic recovery, although the pace of growth is expected to slow down in the second half of the year. Inflationary pressure remains low at present, but is expected to rise in 2011 in line with economic expansion and rising costs of production.

There is a small possibility that core inflation could rise above the upper band of the target range. The MPC therefore decided to raise the policy interest rate by 0.25 per cent per annum, from 1.50 to 1.75 per cent per annum, effective immediately.

Demand from businesses have increased rapidly over the years in Thailand

Recent crashes in Thailand’s GDP and export markets, plus the drop in tourism fuelled by recession and last year’s domestic political turmoil, have dispelled illusions that the country is insulated from the effects of the global downturn. Numerous indicators of economic health are hitting the red, foreign investment is evaporating, unemployment is surging, and credit lines are freezing up. Thailand’s government still says there is a possibility of positive growth this year, despite facing a rougher ride than in the 1997 Asian financial crisis as conditions infest the real economy on a broader scale.

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

What measures has SET taken to support listed companies’ compliance with ESG standards?
PAKORN PEETATHAWATCHAI:

PAKORN: When we first began promoting ESG-compliant investments, we were met with little interest. We attributed this to a lack of clear data to showcase the economic benefits of ESG investment, and perhaps limited clarity as to what constitutes a sustainable or ESG-compliant investment. The launch of the THSI list and, subsequently, the SETTHSI Index, was designed to address this. Our most recent data, comparing returns for the SETTHSI Index with the broader SET and SET100 indices from April 2020 to April 2021, underscores the economic benefits of these investments: the group compliant with ESG standards outperformed the other two indices on every data point. 

As of May 2021 Thailand was home to CG and ESG assets under management totalling BT54.8bn ($1.7bn) across 50 funds – up from 23 funds in 2019. Meanwhile, of the BT187.1bn ($5.9bn) raised in green, social and sustainability bonds since 2018, BT136.4bn ($4.3bn) was raised in 2020 – 83% from the government and the remainder from development banks and private players. This rising demand, in a move to manage risk and generate returns, has been complemented by growing supply and promotion: supply from ESG-compliant businesses aiming for resiliency and sustainable growth, as well as promotion from regulators highlighting investment opportunities with good CG and SD practices. Indeed, the pandemic has been a catalyst in shifting the view of ESG compliance from a luxury to a requirement in the new normal.

In what ways can enhanced standard-setting and regulatory mechanisms overcome the remaining barriers to improved ESG performance?

PAKORN: A multi-stakeholder approach is crucial for enhanced ESG performance – not only in Thailand, but around much of the globe. This can also help to address the standout incumbent challenge: access to reliable, wide-ranging ESG data. For example, the 2020 update to the 56-1 One Report established clear ESG standards and triggered online and offline capacity-building programmes to support listed firms’ compliance. SET is developing an ESG data platform with a structured template to promote the availability of comparable data, maximise value added from corporate sustainability disclosures, and foster collaboration between the business value chain and stakeholders. This is expected to support Thai companies along their ESG journey in an economically sustainable way, result in a greater number of sustainability-focused products and services, drive sustainable investing in the Thai investment community and ultimately “make the capital market work for everyone”, as outlined in the SET’s vision.
 

 

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Economics

Youth unemployment hits new highs in Thailand due to COVID-19 restrictions

BANGKOK, Thailand (ILO news) – Joblessness among young men and women in Thailand has reached a level unseen in recent years due to the impact of the COVID-19 pandemic, according to a new brief from the International Labour Organization (ILO).

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Coronavirus disease 2019 (COVID-19) WHO Thailand Situation Report - 22 February 2021

The Thailand labour market update  found that youth employment fell by 7 per cent in the first quarter of 2021 (from the fourth quarter 2019). The youth unemployment rate increased by 3 percentage points for both men and women, reaching a high of 6 per cent and 8 per cent, respectively.

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