This resulted in a continuous spiral of currency depreciation that dramatically increased the real burden of the foreign-currency liabilities. It had kept interest rate low so that the amount of money supply in the economy would be high which would encourage domestic consumption and investment.
The Bank of Thailand, however, should be reconstructed so that it became independent to the government in its policy making since politics was proved to be a crucial source of the unhealthiness of the economy.
Good balances in economic components are the only immunity as well as medicine to such an attack. So there occurred the first massive speculative attack in the Thai history on May Plus the economy had possessed a characteristic of high saving rates situated at around Ten years ago, if you traveled along Chao-Pra-Ya river, a main river in Bangkok, you would see only vast rice fields along both sides of the river.
The rapidity with which the crisis happened has prompted Sachs and others to compare it to a classic bank run prompted by a sudden risk shock.
The economy did expand, however, not quite healthily. Thai people had earned more income and had become more and more proud of the growth of their economy.
But it had not been shown to them how serious the country had become indebted, and how recklessly capital had been transferred and used in the economy.
However, Thailand lacked the foreign reserves to support the USD—Baht currency peg, and the Thai government was eventually forced to float the Baht, on 2 Julyallowing the value of the Baht to be set by the currency market.
In addition, financial systems were to become "transparent", that is, provide the kind of reliable financial information used in the West to make sound financial decisions. Domestic imbalances quickly emerged as growth rates slowed and then turned sharply negative in early This delay had a serious consequence as it exacerbated the situation of bank run.
Although operational restructuring of the corporate sector has been somewhat slow, much progress was achieved with corporate debt restructuring. The recovery was also accompanied by reduced vulnerability of the financial system. The IMF created a series of bailouts "rescue packages" for the most-affected economies to enable affected nations to avoid defaulttying the packages to currency, banking and financial system reforms.
Thai economythe Bank of Thailand had a necessity to inject dollars into the system using its stock of foreign reserves. Seeing that a loose monetary did not work, the government later on had switched to tighten its monetary policy.
Final Remarks on the Future of the Thai Economy. The external current account turned into large surpluses, allowing a buildup of international reserves. A large part of the capital had been put into non-productive sectors especially real estate.
The collapse of the economy was a very tough lesson for the Thais. They had stuck to the goal held since the first time of capital account liberalization, a goal which had aimed at the expansion of the economy. Anticipation of further devaluation of the ringgit heightened.
The dynamics of the situation were similar to that of the Latin American debt crisis. This sort of phenomenon also happened to some other provinces in Thailand which had grown to be cities as the economy had expanded so much that Bangkok could not alone accommodate all the businesses and industries.
During the past three decades, the Malaysian government has implemented a number of medium- to long-term development plans, starting with the year New Economic Policy—a development plan that strived for greater economic well-being for the ethnic Malays, or bumiputras—and followed by the National Development Policy in the early s.
Thus, Thailand could not gain much terms of trade after the devaluation of the baht to help improving its economy.
It would take long for the economy to recover. Critics, however, noted the contractionary nature of these policies, arguing that in a recessionthe traditional Keynesian response was to increase government spending, prop up major companies, and lower interest rates.Welcome to Thailand's Ministry of Finance.
presided over the honorary plaque presentation ceremony to honor the government officials who will retire in the fiscal year ofin which Mr. Prasong Poontaneat, Permanent Secretary of Ministry of Finance, gave a report regarding, at Vayupak 4, Ministry of Finance, September 14 Thailand: An Economic Evaluation.
growth trend consistently slowed down to % by signaling to many investors that Thailand’s economy was beginning to falter. After the crisis the GDP had a negative growth of –% in but fiscal policy, in a now floating exchange rate regime, the currency would be expected to.
Fiscal Policy In Thailand Financia Fiscal policy in Thailand Financial Crisis On July 2, Thai government had to devalue the Baht and started operating a managed float for the Baht exchange rate.
The sections that follow review policy issues and aspects of economic management that have been associated with Malaysia's progress from a major crisis to a strong recovery, and their implications for the future. Section II presents a comparative review of the country's policies and performance during –; Section III describes the study.
Download Citation on ResearchGate | Thailand, Financial Crisis and Monetary Policy | This article interprets the financial crisis that started. In Julywhen Thailand floated the baht, Mongolia was adversely affected by the Asian financial crisis of and suffered a further loss of income as a result of the Russian crisis in Policy Analyses in International Economics, no.
Washington, DC: Institute for International Economics.Download