BoT: Debt crisis in Europe may eventually hurt Thai economy


BANGKOK, 31 May 2012  – The Thai central bank has expressed worries that the debt crisis in Europe may eventually hurt the local economy in the end. 

Bank of Thailand (BoT) Assistant Governor Paiboon Kittisrikangwan said that the ongoing debt crisis in the European Union (EU) has been increasingly intensified.

Accordingly, it is possible that the impact of the problem in Europe will hit Thailand through 2 channels; that is, trade & tourism and finance.

Mr. Paiboon said that Thai exports have experienced the hit in the first quarter of 2012, when the value of Thai goods shipped to the EU shrank 16.3% year-on-year.

He added that, unless the situation in the EU is under control soon, the ripple effect may come to Thailand through its major trade partners, such as China, Japan and the US.

The BoT’s Assistant Governor predicted that the Thai export growth in 2012 will end up at around 8-9%.

Mr. Paiboon also stated that the Thai tourism industry may not be able to evade the impact of the EU debt crisis, as tourists from this region represent 19% of the total number of visitors to Thailand.

Regarding the effect of the crisis through financial markets, he said that the situation may force European commercial banks to adjust down their balance sheets, a scenario that will hit Thai businesses, which made borrowings in foreign currencies, and the value of the baht.