Rally to hit GDP, loan expansion

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Rally to hit GDP, loan expansion
Published: 26/04/2010 at 04:35 PM
Bangkok Post: Online news: Economics

The mass anti-government rally at Bangkok's Ratchaprasong commercial district has not significantly affected the country's loan expansion yet, Bank of Thailand (BoT) assistant governor Sorasit Soontornkes said on Monday.

Mr Sorasit said loans in the country were still on the rise, but the central bank will need to examine the political impact on each business sector and see whether they could proceed as usual.

"Loan expansion has not been substantially hit but the political rally may cut the banks' revenues due to business operators' lower takings.

"The economic figures should be out in the second quarter. If the impact is severe the BoT may call a meeting with commercial banks to manage the situation," the assistant governor said.

He said the BoT was concerned by the red-shirt rally of the United Front for Democracy against Dictatorship (UDD) at Ratchaprasong intersection.

"If the rally carries on there could be more non-performing loans," he said.

The were no signs that there would be more NPLs but the BoT will have to come up with measures to deal with the potential problem.

"Even commercial banks are scared [of more NPLs] and this is why loan terms have been extended and the debt structure has been adjusted," Mr Sorasit said.

The intensifying political turmoil and the prolonged anti-government rally in Bangkok's Ratchaprasong commercial district could reduce this year's gross domestic product by 0.64%, or about 50 billion baht, according to the economic ministers' latest forecast.

Deputy government spokesman Putthipong Punnakan said a meeting of the council of economic ministers was held on Monday morning to evaluate the political impact on the economy.

"The country's economic growth could be cut by 0.64% this year if the mass demonstration by the red-shirts does not last for more than three months," Mr Putthipong said.

The council assessed that the country's GDP for 2010 would grow by 4.5%, he said.