Director of the BoT’s Office of Macroeconomics Songtham Pinto said the 4.8% growth forecast this year would be driven largely by domestic spending. The central bank believes the recent flooding situation will not affect the country’s long-term production capacity since the production sector will soon resume normal operation in these 1-6 months.

Service in the private sector and tourism, which are expected to receive a short-term blow from the flooding, will rebound in 1-2 months due to the government’s stimulus packages. Private investment is expected to rise following long repairs of buildings and machineries damaged by the floods.

Government spending on many projects, such as the rice mortgage scheme and the minimum wage hike, will continue to be the main growth stimulus this year, according to the BoT.

In 2011, Thailand saw a mere 1.8% economic expansion after the twin disasters in Japan and severe flooding in many provinces across the Kingdom. The inundation also caused shrinkage of 48% in the production sector, especially in electronics, automobiles and electrical appliances, while exports dropped for the first time since the global credit crunch.

Despite this year’s positive outlook, the central bank has suggested a close monitoring of the situations in major economies, especially the U.S. and the Eurozone, as well as the Thai government’s clarity on future flood prevention.

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Mr. Prasarn Trairatvorakul, Governor of the Bank of Thailand (BOT) said the flooding that expanded into Rojana Industrial Park Phase 2 and 3, the total damage from the agricultural sector. And Rojana Industrial Estate Phase 1. United Rattana Nakorn Industrial Estate and then. The value of lost economic activity up to 1 billion baht.

Mr. Prasarn said that damage from the flood was higher than the Bank had expected the damage, especially in the industrial sector. Compared with a year ago that the damage only to the agricultural sector. The overall economic impact. In late October the bank forecast the economy would be down. And it is possible to cut up to 1% of the estimates. But because the bank has still not finalized the numbers again. And must include the restoration of government measures that will be much. It is an extension of economic growth in the year.

For the preparation of financial institutions are meeting the Bank to monitor the situation closely with commercial banks. The Bank of Thailand, the every other day. The branches of foreign banks are meeting every evening on Friday.

The issues that the Bank is preparing to prevent congestion of cash, checks, payment systems, as well as the preparation of the financial markets. Coordination with financial institutions and foreign currency swap transactions in advance. For trade transactions. Investment has continued to operate.

Kosit, currently Executive Chairman of Bangkok Bank, has warned that the country may in the future run into debts now that the government’s economic policy was aimed at boosting the economy through spending rather than investment promotion.

Kosit said the country’s current savings accounted for only 15 percent of the national GDP. Such percentage is a sharp drop from the country’s savings more than 10 years ago, which represented 25 percent of the national GDP.

He explained that with a little cash left in the state’s coffers, the government may have to seek loans when it has to invest in mega-projects.

Kosit commented that investment projects should be funded by cold money, not loans which could in the end put the country at financial risk. The decline in people’s savings would also pressure commercial banks to launch more fund-raising campaigns.

To increase savings, Kosit suggested that tax adjustment should be carried out to ensure more revenue.

BAAC President Luck Wajananawatch stated that the BAAC Board of Directors had given the green light to the measure to assist customers of the bank who were recently impacted by floods and mudslides. In case of fatality, the BAAC will annul the debt owed by the deceased and also compensate his or her family at 10,000 THB.

For agriculturalists sustaining a loss of more than half of their income because of the disaster, the bank will postpone their loan repayment deadline for another three years, during which no interest will be applied. In addition, new loans will be offered to the group at not more than 100,000 THB for rehabilitation purposes with an interest lower than the normal rate by 3 percent.

The BAAC will confer with the Ministry of Finance about the assistance measures before proposing them to the Cabinet for budget allocation.

Meanwhile, over 30,000 survival kits worth more than 11 million THB have been handed out to flood victims by the BAAC. The bank has contributed to the aid fund for people who lost their homes and will also join hands with public and private agencies in the upcoming rehabilitation effort.

Speaking of the policy of the Pheu Thai-led administration to raise the minimum wage to 300 THB per day and the salary for bachelor’s degree graduates to 15,000 per month, BoT Assistant Governor for the Monetary Policy Group Paiboon Kittisrikangwan admitted that he was still uncertain whether the policy would cause inflation to go up as feared by many.

Despite the Government’s policy statement recently delivered to Parliament, the Assistant Governor noted that the wage and salary hike policy remained ambiguous. He said the Monetary Policy Committee (MPC) would need to look into details of the policy, particularly methods of implementation, related procedures, timeframe as well as its ability to boost the national economy, before the next meeting in October.

BoT Assistant Governor for FIDF Management Tongurai Limpiti stated that all departments of the BoT are collecting information on global and national economy, monetary policy, international reserves management, currency exchange and other operations of the BoT for the new finance minister.

Ms Tongurai noted that the preparation is normal when there is a change of minister. All departments in the BoT such as those on monetary policy, financial institution policy, financial markets operations, payment system policy and the FIDF will report to the new minister the present operational direction and their future guideline.

Ms Tongurai said the BoT is ready to report the mentioned information whenever the minster calls a meeting.

Speaking in a seminar on Thursday, BoT Governor Prasarn Trairatvorakul admitted that the Thai economy is currently in good stability and has been expanding continuously. In order to boost competitiveness of the Thai private sector, he suggested entrepreneurs take this chance of baht appreciation to import capital goods.

Moreover, Thai entrepreneurs are also asked to improve the quality of labour although minimum wage will soon be adjusted up gradually. The governor reasoned that high-quality workers would lift productivity and quality of Thai goods.

Mr Prasarn added that the new government should give importance to research and development, as a tiny portion of budgets, or about 0.2% of the Gross Domestic Product (GDP), is allocated for the matter at present.

BoT’s Onsite Examination Department 1 Senior Director Salinee Wangtal said the government policy to increase loans to small entrepreneurs by government’s banks have forced commercial banks to seek more savings. She said the current situation benefit small entrepreneurs and low income people, who did not have negotiating power, so that they would have a chance to get loans from banks and did not seek non-institutional loans. She explained that helping people’s finance was the mission of financial institutions.

She commented that having high competition was better than having banks colluding for profits of their own.

Ms Salinee admitted commercials banks had to pay tax and spend money supporting the Financial Institutions Development Fund (FIDF), while government’s banks did not; the competition was not fair. She however said commercial banks did not have much impact; they still had profits.

raising the According to BoT Governor Dr Prasarn Trairatvorakul, the election, which went on smoothly and of which the results accepted by both the Democrat and Pheu Thai Parties, will be positive factors for Thailand in having its credibility raised by international rating firms.

The governor added that credit rating companies will also take into account Thailand’s ability to service its debts in their rating consideration.

Dr Prasarn noted that the BoT will monitor populist policies launched by political parties during election campaigns; which will be made clearer in the new government’s policy address to Parliament. He said he will see how much they will affect the financial status of the nation.

Regarding the six urgent policies of the new government and concerns over rising inflation, the governor responded that he will have to look into details of each policy again after they are announced to Parliament, then he will be able to say whether they will have pressure on inflation or the country’s public debt ratio.

Among the six policies are: the revocation of levy on certain types of fuel, minimum wage hike to 300 baht per day, salary hike for undergraduate degree holders to 15,000 baht per month.

Asked about reports that the new government will interfere in the exchange rate policy of the BoT, Dr Prasarn refused to comment, reasoning that his response could affect the present exchange rates.

The BoT has enforced a new rule preventing investors from resorting to this approach, although the BoT still allows these banks to provide loans with inflation derivatives as long as their services are in accordance with the old principle.