BANGKOK, May 26: Thailand was strong enough to weather volatile global markets due to its low foreign debt and lower foreign investment in stocks and bonds, the central bank chief said on Thursday, though its economy is one of the most sluggish in Southeast Asia. Volatility in capital flows and exchange rates will continue in the face of monetary policy divergence among major countries, Bank of Thailand Governor Veerathai Santiprabhob said while attending an investment forum. “In the big picture, we don’t have to be concerned about global economic volatility because we have better buffers than other emerging markets,” he told reporters. Thailand has low foreign debt while foreign holdings in Thai stocks and bonds are not high, reducing the risk from outflows, Veerathai said. The Bank of Thailand’s foreign exchange reserves are close to a three-year high, providing an additional defence. Veerathai said the central bank was sticking by its forecast that exports would fall just 2 percent in dollar terms this year, despite an 8 percent fall in April from year ago levels. “There were some one-off items in the first few months of the year. April is also an unusual month because of annual factory shutdowns for holidays in Thailand,” Veerathai told Reuters on the sidelines of the forum. “We should not focus on just one month’s exports … The April figure is still in line with the central bank’s view that exports will fall 2 percent this year,” he said. Exports, which account for about two-thirds of Thailand’s economic output, have contracted over the past three years due to tepid global demand and structural problems at home. Falling exports and sluggish domestic demand have impeded the military government’s attempts to revive Southeast Asia’s second-largest economy since seizing power in May 2014 to end months of political unrest. The central bank has forecast 2016 economic growth of 3.1 percent, up from 2.8 percent last year. It is due to offer a fresh forecast next month. Thailand’s economy grew 0.9 percent in January-March on the quarter and 3.2 percent on the year, but the recovery has remained fragile.. Indonesia grew 4.92 percent in the same quarter, while Philippines expanded 6.9 percent and Malaysia grew by 4.2 percent. Veerathai said the baht was moving in line with regional currencies. Assistant Governor Chantavarn Sucharitakul also told reporters on Thursday that the Chinese yuan’s weakness had not had a big impact on regional currencies, whose performances were mainly driven by expectations that U.S. interest rates will rise. (AGENCIES)
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