BoT says Thai economy remains strong

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Despite a slight increase in non-performing loans (NPLs) by commercial banks and high household debt levels, Thailand’s general economy remains stable, a spokesman for the Bank of Thailand (BoT) said last week.

Spokesman Chirathep Senivongs Na Ayudhya said the public should not worry about an announcement made earlier by rating agency Standard and Poor’s on Thailand’s economic growth, saying it could be unstable and negatively affect financial institutions.

The central bank, he said, asserts that the country’s economy is still stable and financial institutions are performing normally even as nonperforming loans during the third quarter stood at 2.34 percent, up slightly from 2.15 percent at the end of 2013, which was considered as “not too high and steady,” Chirathep said.

Commercial bank reserves for possible NPLs at the end of September stood at 135 percent, displaying their financial strength, he said.

Household debt, which stood at 83.5 percent of gross domestic product at the end of the second quarter this year, although high, was not a major factor impacting the country’s economic recovery, he said.

But it should serve as a warning to the government not to stimulate the economy through more borrowing. There are signs that household debt has declined since the end of 2013 and it would continue to fall with the country’s economy improvement in 2015.

Chirathep said the BoT’s Monetary Policy Committee still has no plan to ease its policy rate as it must consider the country’s latest economic figures when it meets for the last time this year on December 17.