January 17, 2014 00:00 By Sarun Kijvasin
As 'shutdown' wreaks economic havoc, MPC to meet as scheduled next week
The Finance Ministry expects the prolonged political protest to drag down economic growth to only 3.1 per cent this year, while the Bank of Thailand insists its Monetary Policy Committee will meet on January 22 as scheduled.
Finance Minister Kittiratt Na-Ranong yesterday conceded the anti-government rallies had eroded confidence, domestic consumption and tourism, while gross domestic product is forecast to expand by only 3.1 per cent if the protests are protracted.
If the protests disrupt or delay the February 2 election, that could drag down GDP growth to 2 per cent, he said.
The Fiscal Policy Office has pegged next year’s GDP expansion at 4 per cent.
DBS Vickers Securities (Thailand) said the February 2 election was now more likely to be delayed.
The Election Committee has asked Prime Minister Yingluck to postpone the polling, citing the possibility of violence breaking out if the snap election proceeds as scheduled.
Markets expect the central bank to lower its 2014 growth forecast to below 4 per cent at next Wednesday’s meeting of the MPC, which will review the latest developments.
The MPC will gauge the impacts from the protests on economic activities before setting the policy interest rate, said BOT spokeswoman Roong Malikamas, who insists the MPC meeting remains on track.
Whether the temporary shutdown of the central bank’s headquarters would be extended beyond today depends on the situation, she said.
“Now it’s close to the MPC meeting and the silent period. The January 22 meeting will remain. However, the meeting venue cannot be disclosed,” she said.
The BOT’s business continuity plan (BCP), which was activated on Monday, continues as usual.
The money markets continued their normal functions with narrow-range movements for money-market rates.
The baht has been stable, appreciating slightly from last week.
The BOT has been in frequent discussions with commercial banks, which continue providing services to the general public.
Most of the banks can provide full services but have reduced the number of branch closures in the protest areas.
“Commercial banks’ branches total more than 2,000. On the first day [of the “Bangkok shutdown” on Monday], about 123 branches, or about 5 per cent of all branches in Bangkok, were closed. On the second day, only 2 per cent were closed,” she said.
About 35 automated teller machines encountered difficulties.
No irregularities were found in the payment system, while commercial banks’ cash withdrawals from Monday-Wednesday had eased, as people had taken out money in preparation for the shutdown.
The central bank moved its back office to spare sites and its banknote service operation to Krungthai Bank’s Central Pinklao branch.
“As discussed with banks, they insisted on their BCPs and no obstacles or problems for communicating with the central bank have been found yet.
“The public has not reported any problems to the central bank’s hotline,” Roong said.