The Bank of Thailand and commercial banks are collaborating to assist vulnerable customers, with Prime Minister requesting lower lending rates. Thailand’s economy is projected to grow 2.8% in 2024.
Efforts to Support Vulnerable Customers
The Bank of Thailand (BoT) is collaborating with commercial banks to adjust their business models in order to provide assistance to vulnerable customers. Prime Minister Srettha Thavisin urged commercial banks to reduce lending rates to protect those in fragile financial situations. Despite this, the Monetary Policy Committee of the Bank of Thailand decided against cutting the rates, keeping them at 2.5%. The country’s economic growth projection for 2024 has been revised down to 2.8% from the initial estimate of 3.2%.
Adapting Business Models
To aid vulnerable borrowers, the BoT has emphasized the flexibility of banks in modifying product offerings and interest rates based on economic conditions, market dynamics, and cost of funds. Thailand’s household debt-to-GDP ratio stands at 91%, higher than the average among emerging economies. Prime Minister Thavisin had pressured the central bank to lower borrowing costs, but the policy rate remains unchanged at 2.5%, highlighting the economy’s continued growth trajectory.
Prospects for Economic Growth
Thailand’s largest commercial banks have agreed to reduce borrowing costs for vulnerable groups and small businesses following the prime minister’s request. The lenders will lower the minimum retail rate for loans by 25 basis points for six months. The country faces challenges such as low productivity and a large proportion of low-skilled jobs, impacting overall economic growth. However, sectors like cryptocurrency, technology, and tourism show promise for improving Thailand’s economic prospects and breaking out of the middle-income trap.