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Asia and Pacific > Thailand

You are looking at 1 - 10 of 101 items for :

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Cover Departmental Papers
Navigating External Shocks in Southeast Asia's Emerging Markets: Key Lessons and Challenges in Applying the IMF’s Integrated Policy Framework
Corinne C Delechat
,
Umang Rawat
, and
Ara Stepanyan
As relatively small open economies, South-East Asian emerging markets (Indonesia, Malaysia, Philippines and Thailand or ASEAN-4) are highly susceptible to external shocks—both financial and real—that could induce large capital flows and exchange rate volatility that could lead to foreign exchange market dysfunction. With the exception of Bank Negara Malaysia, ASEAN-4 central banks mostly have flexible inflation-targeting frameworks for monetary policy implementation. Their main policy objectives include medium-term price stability, sustainable economic growth, and financial stability. Central Banks in ASEAN-4 economies have been early pilots in the operationalization of the IMF’s Integrated Policy Framework (IPF) in 2022-23, given their experience in using multiple policy tools besides the monetary policy rate, including macroprudential measures, foreign exchange intervention (FXI), and capital flow management measures, to achieve their multiple objectives. They have welcomed the IPF as a systematic, frictions-based approach to analyze the use of these multiple tools to manage trade-offs across policy objectives. This paper takes stock of the experience from these pilots, both from the perspective of country authorities and of IMF country teams. It aims at distilling key lessons, which could be used to inform broader IPF operationalization. The IPF conceptual framework and a related quantitative model were used to assess policy trade-offs in ASEAN-4 in the event of adverse external shocks. These applications reaffirmed the importance of using monetary policy to address persistent inflationary pressures stemming from real shocks and allowing the exchange rate to act as a shock absorber. However, a complementary use of FXI could improve trade-offs between price, financial, and output stability when economies are faced with large and financial shocks that result in abrupt spikes in uncovered interest rate parity premia resulting in inefficiently tight financial conditions that could hurt growth or risking to de-anchor inflation expectations. The IPF pilots also highlighted some challenges faced when operationalizing IPF principles, notably regarding the assessment of frictions and shocks that might justify the use of FXI. In particular, country teams at times lacked sufficient information to adequately assess the extent of frictions. Moreover, the time-varying nature of IPF frictions and the non-linear effects of shocks make it difficult to assess situations when benefits of a complementary use of FXI would overweigh its costs.
Keywords:
ASEAN; foreign- exchange intervention; Inflation targeting; Integrated policy framework; capital flows; IPF pilot; market dysfunction; IMF country team; IPF model; Policy mix; IMF seminar participant; Currency markets; Exchange rates; Inflation; Southeast Asia; Global
Cover IMF Working Papers
ASEAN-5: Further Harnessing the Benefits of Regional Integration amid Fragmentation Risks
Nuri Baek
,
Kaustubh Chahande
,
Kodjovi M. Eklou
,
Mr. Tidiane Kinda
,
Vatsal Nahata
,
Umang Rawat
, and
Ara Stepanyan
The ASEAN-5 region, which comprises Indonesia, Malaysia, the Philippines, Singapore, and Thailand, has benefited substantially from its integration to the world economy, particularly through trade. Rising risks of geoeconomic fragmentation could reverse some gains reaped from globalization over the past decades. In this context, advancing regional integration among ASEAN-5 members has the potential to enhance the region’s resilience against external headwinds. This paper shows that despite sizeable progress, particularly in regional trade integration, there is room to advance financial integration, which also lags trade integration in ASEAN-5. Empirical findings from the paper illustrate that a higher degree of regional financial integration could generate sizeable output gains for the region. Using firm-level data, the paper highlights that digitalization, an area where the region is thriving, can support regional integration by helping firms better integrate into global value chains, with the benefits being stronger for small and medium sized enterprises. The results also suggest that digitalization can help firms move up the value chain through the production of more sophisticated products, often coined as higher export sophistication.
Keywords:
Trade integration; financial integration; digitalization; fragmentation risks; goods export sophistication; firm level result; firm growth; firm Growth; external finance dependence; Financial sector development; Exports; Global; Asia and Pacific
Cover IMF Working Papers
A Multi-Currency Exchange and Contracting Platform
Mr. Tobias Adrian
,
Federico Grinberg
,
Mr. Tommaso Mancini Griffoli
,
Robert M. Townsend
, and
Nicolas Zhang
Cross-border payments can be slow, expensive, and risky. They are intermediated by counterparties in different jurisdictions which rely on costly trusted relationships to offset the lack of a common settlement asset as well as common rules and governance. In this paper, we present a vision for a multilateral platform that could improve cross-border payments, as well as related foreign exchange transactions, risk sharing, and more generally, financial contracting. The approach is to leverage technological innovations for public policy objectives. A common ledger, smart contracts, and encryption offer significant gains to market efficiency, completeness, and access, as well as to transparency, transaction and compliance costs, and safety. This paper is a first step aiming to stimulate further work in this space.
Keywords:
Cross-border payments; multilateral platforms; digital money; CBDC; programmability; encryption; exchange-market illiquidity; risk sharing; market design; hedging risk; cross-border payment; Smart contracts; Currencies; Currency markets; Financial statements; Global
Cover FinTech Notes
Towards Central Bank Digital Currencies in Asia and the Pacific: Results of a Regional Survey
Mrs. Sarwat Jahan
,
Ms. Elena Loukoianova
,
Mr. Evan Papageorgiou
,
Ms. Natasha X Che
,
Ankita Goel
,
Mike Li
,
Umang Rawat
,
Yong Sarah Zhou
, and
Ankita Goel
Drawing on survey responses from 34 Asian economies and country case studies, this note takes stock of recent developments related to central bank digital currencies (CBDCs) and crypto assets in Asia. The survey finds that there is significant heterogeneity in terms of stage of development, but the emergence of private crypto assets has created an impetus to consider CBDCs. While most countries are engaged in research and development, with some at advanced stages of testing and pilots, very few countries are likely to issue CBDCs in the near-to-medium term, reflecting the still considerable uncertainties. Still, country experiences so far provide some key insights for others in their journey in this area.
Keywords:
Blockchain; cash; central bank digital currency; crypto asset; distributed ledger technology; payments; Asia-Pacific region; fact XI pic; fact II interest in CBDC development; fact III central banks; fact IX challenge; fact XII; Central Bank digital currencies; Virtual currencies; Digital currencies; Payment systems; Financial inclusion; Asia and Pacific; Pacific Islands; Global
Cover IMF Working Papers
We Are All in the Same Boat: Cross-Border Spillovers of Climate Risk through International Trade and Supply Chain
Are assets in a landlocked country subject to sea-level rise risk? In this paper, we study the cross-border spillovers of physical climate risks through international trade and supply chain linkages. As we base our findings on historical data between 1970 and 2018, we observe that globalization increased the similarity of countries’ global climate risk exposures. Exposures to foreign climatic disasters in major trade partner countries (both upstream and downstream) lower the home-country stock market valuation for the aggregate market and for the tradable sectors. We also find that exposures to foreign long-term climate change risks reduce the asset price valuations of the tradable sectors at home. Findings in this paper suggest that climate adaptation efforts in a country can have positive externalities on other countries’ macrofinancial performance and stability through international trade.
Keywords:
climate risk; financial spillover; supply chain; financial stability; WP; risk exposure; disaster damage; spillover index; exposure measure; assets ratio; expected return; Climate change; Stock markets; Foreign currency exposure; Financial sector; Natural disasters; Global
Cover IMF Working Papers
External Financing Dependence and Corporate Saving in ASEAN5
Xin Li
Using firm-level data on ASEAN5, this paper studies the differential effects of macro-financial and structural factors on corporate saving behavior through the lens of external financing dependence. The finding suggests that non-financial corporations in ASEAN5 have been subject to binding financial constraints over the past two decades. Greater capital account openness or exchange rate depreciation reduces the average saving rate of industries with low dependence on external funds, while it increases the saving rate of industries with high dependence on external funds. The effects are greater for export-oriented industries. An improvement in banking sector competition, banks’ lending efficiency, or policy clarity is associated with lower saving rate of firms across the board.
Keywords:
ASEAN countries; corporate saving; external financing need; export-orientation; financial constraint; capital account openness; exchange rate depreciation.; WP; saving rate; high-tech company; Level analysis; tech firm; firm's use; precautionary saving theory; saving behavior; use of external finance; exchange rate depreciation; Financial sector development; Commercial banks; Capital flows; Currencies; Precautionary savings; Global
Cover IMF Working Papers
Capital Flow Data – A Guide for Empirical Analysis and Real-time Tracking
Mr. Robin Koepke
and
Simon Paetzold
This paper provides an analytical overview of the most widely used capital flow datasets. The paper is written as a guide for academics who embark on empirical research projects and for policymakers who need timely information on capital flow developments to inform their decisions. We address common misconceptions about capital flow data and discuss differences between high-frequency proxies for portfolio flows. In a nowcasting “horse race” we show that high-frequency proxies have significant predictive content for portfolio flows from the balance of payments (BoP). We also construct a new dataset for academic use, consisting of monthly portfolio flows broadly consistent with BoP data.
Keywords:
WP; flow data; portfolio flow; debt flow; flow proxy; IMF balance of payments statistic; portfolio flows; fund flows; balance of payments; coincident indicators; IIF data; IMF balance of payments data; Capital flows; Stocks; Balance of payments statistics; Flow of funds; Emerging and frontier financial markets; Africa; Global
Cover IMF Working Papers
Revisiting the Determinants of Capital Flows to Emerging Markets--A Survey of the Evolving Literature
Mrs. Swarnali A Hannan
This paper documents the evolution of gross and net capital flows to emerging market economies and surveys the large literature on the potential drivers. While the capital flow landscape has been shaped by the evolution of both global and country-specific factors, the relative importance of these factors has varied over time and differs depending on the type of capital flows. The findings from the survey of the literature thus underscores the importance of policies in both source and recipient countries in shaping capital flows.
Keywords:
Capital flows; emerging markets; push and pull factors; literature survey; novel high frequency portfolio-capital dataset; understanding capital control; differential vis-à-vis; capital openness; interest rate differential vis-à-vis; push factor; evolving capital flow landscape; gross capital flow; high frequency portfolio-capital dataset; capital allocation; Emerging and frontier financial markets; Capital inflows; Capital controls; Global financial crisis of 2008-2009; Global
Cover IMF Staff Country Reports
Thailand: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper examines the impact of key structural fiscal reforms on growth and other macro variables in Thailand. The study simulates the impact of: a public infrastructure push; labor market policies, including an increase in the pensionable age and in provision of childcare services; and a change in the composition of taxes from income taxes to value added tax to shed light on the desired composition of additional taxes to be levied in the longer term. The results indicate that structural reforms enabling higher infrastructure investment, stronger labor participation, and more efficient taxation can raise growth significantly and contribute to addressing domestic and external imbalances.
Keywords:
ISCR; CR; financial condition; ASEAN economy; rule; loan; portfolio investment; monetary policy transmission mechanism; retirement age; inflation objective; infrastructure investment; Financial integration; Macroprudential policy; Macroprudential policy instruments; Financial sector stability; Regional integration; Global; Asia and Pacific
Cover IMF Staff Country Reports
Indonesia: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper focuses on various challenges and opportunities related to reaping Indonesia’s demographic dividend. Demographic trends can impact growth through various channels. These include the size of the labor force, productivity, and capital formation. Indonesia’s growth is set to have a sizeable tailwind from demographic trends. The paper suggests that Indonesia should seize the window of opportunity to reap the demographic dividend, as aging is projected to start kicking in less than 15 years. In the long-term, Indonesia can grow old before becoming rich. The rapid speed of aging implies that Indonesia, similar to many Asian economies, may face the prospect of becoming old before becoming rich. Given Indonesia’s favorable demographic trends, policies should focus first on maximizing the demographic dividend. Reaping the demographic dividend requires appropriate policies to raise productivity and create enough quality jobs for the growing working-age population. Investing in human capital early on, including education and health care, is essential to improve the productivity of the workforce and increase the size of the demographic dividend.
Keywords:
ISCR; CR; Indonesia; IMF staff estimate; VAT; workforce; export; VAT threshold; financial market; workforce training; old-age dependency ratio; population share; equity-enhancing priority expenditure; export destination; growth strategy; Exports; Capital markets; Infrastructure; Aging; Financial inclusion; Global; Asia and Pacific; Africa