5-9-2023 (BANGKOK) The Governor of Thailand’s central bank, Sethaput Suthiwartnarueput, announced on Tuesday that the country’s economic growth and inflation for this year are expected to be lower than previously projected.
Just last month, Governor Sethaput had expressed concerns that 2023’s economic growth might fall below the central bank’s initial forecast of 3.6 percent. A revised growth figure will be published later in September. Thailand’s economy experienced a growth rate of 2.6 percent in the previous year.
Governor Sethaput also mentioned that inflation is anticipated to gradually return to within the target range. A Reuters poll predicts an increase of 0.61 percent for the month of August, with data expected to be released later on Tuesday.
Regarding the current policy interest rate, Sethaput stated that it is close to a neutral level. The central bank had raised its key interest rate for the seventh consecutive time to 2.25 percent on August 2. The next monetary policy review is scheduled for September 27.
Sethaput explained, “A neutral rate means it helps inflation stay in a sustainable range, and GDP grow at its potential of 3-4 percent without creating financial imbalances.”
To combat rising prices, the Bank of Thailand has increased the key interest rate by 175 basis points since August of the previous year.
Governor Sethaput remained optimistic about Thailand’s economic recovery, emphasizing that it is still on track. He also noted that the country is expecting 29 million foreign arrivals throughout the year, emphasizing the significance of tourism as a key driver of the economy, accounting for approximately 12 percent of GDP before the pandemic.
During a virtual appearance at a Fitch economic seminar, Sethaput acknowledged that the second-quarter GDP performance had been disappointing. Thailand’s economy registered a growth rate of 1.8 percent year-on-year and 0.2 percent quarter-on-quarter for the April-June period, a significant slowdown from the previous quarter’s figures of 2.6 percent and 1.7 percent, respectively, mainly due to a decline in exports.
