We started off this year with heightened volatility in the global financial markets, mainly due to concerns over China's economic slowdown, declining oil and commodity prices, and monetary policy divergence among major central banks.
Amid the fragile global financial climate, the Thai financial markets have been relatively resilient compared to those of other emerging markets, thanks to Thailand's strong external position. The current account position last year registered a surplus of 9% of GDP, and is projected to remain at that level in 2016. Our international reserves have been at a healthy level, standing at around three times of the short-term external debt and 1.3 times the total external debt. Foreign holdings of the Thai government and Bank of Thailand bonds outstanding are less than 9%, compared with more than 30% in some other emerging markets in the region. External debt of the corporate sector has been relatively low and mostly belongs to large companies, which manage their exchange rate risk sufficiently well.
In 2016, the Thai economy is projected to gradually recover, driven mainly by government spending and the tourism sector. In addition, the Thai economy has benefited from expanding investment in certain sectors, notably those related to telecommunication and alternative energy. Exports of goods to CLMV countries, which now account for around 10% of our total exports, have supported economic growth and have potential to grow further, despite a recent slowdown due to transitory factors. On the other hand, amid fragile and gradual global economic recovery, exports of goods and private consumption remain subdued. Against the backdrop of low inflationary pressure, monetary policy will remain accommodative to support Thai economic recovery.
In the longer term, as the Thai economy is in need to upgrade growth potentials and increase competitiveness, the Bank of Thailand will contribute to this process of economic transformation by taking a proactive role in financial sector development policy.
Under the Financial Sector Development Plan Phase 3, our motto is to promote a “competitive, inclusive, connected, and sustainable" financial system. After five years, the Bank of Thailand expects to see growing financial innovation with more diverse players, both banks and non-banks, especially those offering digital financial services. These services will allow a new segment of customers to gain access to financial services through new channels. SMEs and entrepreneurs, for example, could pitch their ideas to a wider group of investors through crowd funding and peer-to-peer lending platforms.
On the road to enhancing regional connectivity, under the ASEAN Banking Integration Framework, we encourage banks to further extend their regional presence to support expanding economic activities, or to use Thailand as a springboard to expand their business in regional countries, leveraging Thailand's established legal framework, financing facility, infrastructure, logistics, and IT capability.
Another plan we are working on is the Payment Systems Roadmap. The plan is aimed at promoting safe and efficient electronic payment services with new technologies and innovation, with a view to reducing transaction costs, improving governance standards, and being supportive of expanding economic activities. In particular, integrated payment channels, such as mobile phones, internet, debit and credit cards, and e-money along with a competitive fee structure, will support e-Commerce/m-Commerce and benefit both businesses and consumers alike.
The last area is the plan to deepen Thailand's financial markets by allowing greater flexibility and diversification in products and services offered to residents and non-residents and to support the growth and development of the Thai economy. So far, a number of regulations on foreign-exchange management have been relaxed for greater flexibility and lower transaction costs, and we plan to further relax foreign-exchange regulations this year.
In essence, the Bank of Thailand is committed to creating financial infrastructure and nurturing the financial eco-system to help lift up growth potentials of the Thai economy. We aim to promote financial innovation, financial inclusion, and financial literacy as strong foundations for sustainable economic development.*