Euro crisis - biggest risk to Thai economy

The chronic crisis in the Euro zone is cited as the biggest downside risk for the Thai economy, as this could destabilise global financial markets and the global economy, two key committees of Bank of Thailand said.

In their first joint meeting, the Monetary Policy Committee and the Financial Institutions Policy Committee agreed that volatility in the Thai financial market is imminent in the short term, with periodic tight demand and supply for foreign currencies. In the long term, Thailand would inevitably be affected when the Euro crisis drags down the global economy.

In a statement, they said that policy options were discussed at the meeting to mitigate possible impacts on the stability of the Thai economy and financial market. They also urged all parties to prepare for any change.

Generally, the committees considered that the Thai economy remains in good health, thanks to solid fundamentals and the strong financial system. Liquidity is ample to support the economic recovery.

Today marked the first time that these two committees had organised a joint meeting. They exchanged their views on how to stabilise the financial system and jointly evaluated significant risks to the financial system. Both saw the need for such a collaboration, due to their interconnectedness at the macro-economic level and the financial markets. They hoped that the collaboration would lead to a combination of more appropriate and efficient policies. They are scheduled for at least two annual meetings, more if necessary.