Mekong Monitor: Thai central bank to keep benchmark interest rate unchanged at 0.5%

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Thai central bank to keep benchmark interest rate unchanged at 0.5%
(23 September 2020) Thailand’s central bank is expected to keep its benchmark interest rate unchanged at 0.5%, as the Thai economy grapples with the COVID-19 pandemic. The governor of the Bank of Thailand Veerathai Santiprabhob recently played down further rate cuts, and argued that fiscal policy can play a greater role in reviving the economy. He recently told a business news outlet that the bank has looked at unconventional policy moves like controlling yield curves but doesn’t think the measures are needed at the moment. While all options, including rate cuts, are available, targeted measures that provide funding to the sectors that need it the most can be more effective, he said. However, a senior economist at Krung Thai Bank in Bangkok stated that she believes Thailand will announce further “unconventional tools” such as quantitative easing, supply-side measures or debt restructuring. The Bank of Thailand projected in June that the Thai economy would contract by 8.1% in 2020.
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Vietnam aviation authority submits detailed plans for flight schedules
(23 September 2020) The Civil Aviation Authority of Vietnam has submitted detailed plans for flight schedules and requirements for airlines to bring international passengers into the country. These requirements are currently awaiting approval from the Ministry of Transport and other relevant authorities. The country has decided to reopen bilateral travel between six Asian nations, including Cambodia, Japan, South Korea, China and Laos. Both national carriers Vietnam Airlines and budget airline Vietjet Air will conduct a total of nine flights a week landing in Hanoi and Ho Chi Minh City.
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Government targets growth of 6.5% for 2021
(22 September 2020) Vietnam’s cabinet has targeted economic growth of 6.5% for 2021, which is similar to its growth level prior to COVID-19. The government expects the economy to rebound in 2021 from the economic slowdown it is currently experiencing due to the pandemic. In 2020, Vietnam’s economy is expected to grow at between 2.0% to 2.5%. The government has also asked the central bank to sustain a monetary policy that controls inflation and promotes economic stability while other ministries were directed to bring in more foreign capital, increase exports and stimulate domestic consumption.
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Myanmar locks down most of Yangon province for two weeks to contain surge in COVID-19 infections
(21 September 2020) Myanmar locked down most of Yangon province for two weeks to contain a recent surge in COVID-19 infections. Under the new stay-at-home orders starting on 21 September, only one family member is allowed to go out for shopping while travel from Yangon to other cities is not allowed save for essential work. Essential services such as banking, healthcare, fuel stations and food outlets will still be allowed to operate as usual. While private sector employees were ordered to work from home, government employees will follow a rotational system. New daily cases jumped to 671 on 20 September 2020, a single day record.
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Laos rating downgraded from B- to CCC, attributed to real default risk
(24 September 2020) Fitch Ratings has downgraded Laos’ rating from B- to CCC, citing “substantial credit risk” on the part of the country. The main reason for the downgrade was attributed to deepening external liquidity pressure as a result of COVID-19, alongside with Laos’ large volume of approaching debt maturities. Around US$500 million of the country’s external debts will mature by the end of 2020, with a further US$1.1 billion over the next four years. The country faces an imminent repayment of about US$200 million to commercial banks in September 2020, and then the equivalent of US$100 million in Thai baht-denominated bonds in October 2020. The ratings agency anticipates that “additional bilateral financing and debt relief could be forthcoming, including from China,” as other options may not be readily available for the landlocked country.
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About Greater Mekong Subregion (GMS)

The Greater Mekong Subregion (GMS) Economic Programme was launched by the Asian Development Bank in 1992 connecting five developing ASEAN countries, namely Cambodia, Laos, Myanmar, Vietnam and Thailand, and Chinese provinces of Yunnan and Guangxi Zhuang Autonomous region. The region has some of the most robust economies sharing the Mekong River Basin thanks to its reform and liberalisation. The subregion is growing at a faster pace than the whole of East Asia and the Asia Pacific as the GDP growth rate for 2017 was at 6.4 percent, according to the World Bank. The population at the subregion as of 2016 is at 340 million while the GDP at PPP is at US$3.1 trillion in 2016. In 2015, trading within the region was at US$444 billion.

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