(Repeats late Wednesday item without changes)

* Governor Sethaput says BOT sees rising bad debt levels

* Says interest rates seen by many as blunt tool

* Says economy may shrink q-on-q in third quarter

BANGKOK, Aug 12 (Reuters) – Thailand’s central bank will focus on creating conditions for expanding debt relief and credit for firms to boost the flagging economy, the bank’s chief said, adding that already low interest rates had become a blunt tool for many policymakers.

Governor Sethaput Suthiwartnarueput also told Reuters in an interview that, while an economy under pressure from the country’s worst coronavirus outbreak yet might shrink in the third quarter from the second, he did not expect it to contract in 2021 as a whole.

Curbs to contain COVID-19 have crippled activity in Thailand’s dominant in tourism sector, which in a normal year accounts for 11-12% of GDP and 20% of employment, though…

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