Bank Of Thailand Warns Of Heightened Risks To Financial Stability Ahead

The Bank of Thailand warns that the Thai financial system may face higher risks going forward due to (1) the debt serviceability of households and small and medium-sized enterprises (SMEs) and (2) the ability to raise fund through the bond market by the corporate sector.

• The central bank says that "the Thai economy should continue to expand, driven mainly by tourism and private consumption, translating to an improvement in income and financial positions of both household and corporate sectors." However, "a particular pocket of households remains vulnerable due to their slower-than-expected income recovery and rising cost of living."
• "The corporate bond market faces higher risk from an increase in both the amount of corporate bond defaults compared to the previous year and the number of companies receiving negative rating actions on credit rating and credit outlook."
• These comments were included in the readout of a recent meeting between the BoT's Monetary Policy Committee and the Financial Institutions Policy Committee.