schemes, it is natural that some loans are going to become npls. financial stability remains sound with banks'robust capital buffers, high liquidity, and high provisioning levels relative to npls. furthermore, s & p expects npl to be 3. 3 % and 3. 5 % in 2024 and 2025 respectively, lower than previous forecast of 5 % for 2024. some high yield corporate bonds may face delayed payments and rollover difficulty due to idiosyncratic reasons, but not a systemic problem. moreover, the scope of impact is limited since high yield bonds only account for 7 % of the whole market and holders are concentrated in high net - worth individuals. thb volatility is high compared to regional peers from various reasons. ( thb depreciated about 6 % year - to - date ) 2 / 4 bis - central bankers'speeches the uncertain magnitude of advanced economies'monetary policy direction has contributed to the volatility. concerns on the domestic front last year led to 9. 9 billion usd outflow from equity and bonds markets. ( 2024 year - to - date outflow dropped down to 1. 6 billion usd ). however, external stability remains safe and solid, given current account surplus, high international reserves, and low external debts. part iii : if the economy continues to recover, why do people feel like it isn't? despite ongoing economic recovery, many people, especially low - income group, might not feel better off since growth is distributed unevenly. 40 % of consumption growth last year were contributed by only 10 % of households, especially high - income group. from sectoral perspective, spending was also concentrated in services ( services contributed about 80 % of consumption growth ), especially in hotel and restaurant which involves only 8 % of total employees or around 3. 2 million persons. hence, workers in other sectors might not feel the recovery as strongly as the workers in these sectors. on the income side, non - farm employee's income improved by 10 % compared to pre - covid level. but the income growth distribution was concentrated in certain groups. 9 million self - employed workers are still worse off with 9 % lower income than the pre - covid level. ( as of q4 / 23 ) furthermore, high debt burdens and high costs of living make people feel worse off. ( household debt is at 90. 9 % of gdp in q3 / 23, higher than sustainable threshold at 80 % /

pre - covid = 84 % in q4 / 19 / peaked = 95. 5 % in q1 / 21 ) part iv : policy responses the most important agenda for thailand is longer - term structural reforms, dealing with increased investment to improve productivity and competitiveness. to do that, we need to sign more ftas to gain access to the new markets and streamline regulations to ease business burdens. for the bank of thailand ( bot ), our priority is to get the monetary and financial policy right by striking balance between growth, inflation, and financial stability. after covid, the bot raised the policy rate in gradual and measured fashion to 2. 5 %, which is the third lowest country besides switzerland and japan. looking ahead, to adjust the policy rate we also have to look beneath the headlines to ensure that the rate is appropriate for supporting long - term sustainable growth. in terms of credit condition, the credit mechanism is still working. total loan outstanding declined partly from debt repayments, while new loan has been expanding. however, credit allocation is uneven, especially for smes. shrinking credit to smes may reflect risk appetite of banks. the appropriate mechanism to address this problem is a more comprehensive credit guarantee scheme. 3 / 4 bis - central bankers'speeches in the longer term, the bot is laying the foundations for the future financial landscape, particularly digital and green economy to ensure sustainable growth. on digital front, we are issuing virtual bank licenses2, which is intended to encourage a new form of competition in the banking landscape. open data is a potential game changer in trying to increase competition. this policy aims to build a mechanism that allows consumers to exercise their rights to conveniently and securely transfer their data stored at one provider to another so that consumers can apply for and receive better services from any providers. on transition to green economy, we are setting the direction for financial sector to support economic transition towards environmental sustainability ( from brown to less brown ) such as financial products and services that would accommodate businesses, particularly smes, in making their environment - related transitions. 1 seasonally adjusted by bot 2 we expect the virtual bank to commence operation in 2026. 4 / 4 bis - central bankers'speeches