Thailand : IMF Executive Board Concludes 2016 Article IV Consultation with Thailand

• Published in: MENA Report
• Format: Newsletter
• Language: English
• Published: Camden Disco Digital Media, Inc 09.06.2016
• Subjects: Directors; Economic development; Inflation; Monetary policy; Reserve assets; Trans-Pacific Partnership Agreement; Thailand
• ISSN: 2219-0112

Executive Directors recognized the resilience of the Thai economy in the face of external and internal challenges and the strength of its policy making institutions. Directors viewed Thailands external position as strong, underpinned by high international reserves and low foreign debt. The current account surplus is expected to narrow over time as domestic demand strengthens and terms-of-trade shocks reverse. Directors noted, however, that the ongoing recovery is modest and subject to downside risks while core inflation remains low due to weak demand. Against this backdrop, Directors encouraged the authorities to secure a strong and lasting recovery through an expansionary policy mix, steps to safeguard financial stability and structural reforms to boost growth potential. Directors noted that the current accommodative monetary policy stance is appropriate. Going forward, while there is room for further easing, this should balance support for the economy against financial stability concerns and the need to preserve policy space. Directors commended the high standard of transparency achieved by Thailands monetary policy framework and suggested that communicating a determination to steer inflation toward the medium-term target would enhance the effectiveness of monetary policy transmission. Directors recommended maintaining exchange rate flexibility as the first line of defense against external shocks.