Thai central bank to revise down forecasts for 2023 growth and inflation
THAILAND’S 2023 economic growth and inflation are expected to be lower than previously forecast due to softer-than-expected exports and tourism spending, the central bank chief said on Tuesday (Sep 5).
South-east Asia’s second-largest economy has been impacted by slowing global growth, a faltering recovery in its main trading partner China, and falling investor confidence due to prolonged political uncertainty after an election in Thailand in May. Thailand’s king swore in the new 11-party coalition government on Tuesday.
Overall, the economic recovery remains intact, with 29 million foreign arrivals still expected throughout the year, Bank of Thailand (BOT) governor Sethaput Suthiwartnarueput said during two economic seminars he addressed on Tuesday.
The economy “is still in recovery, even though it’s weaker than expected”, he said.
“The recovery of tourism remains clear, although spending may not be much as expected,” he added. Tourism is a key driver, accounting for about 12 per cent of GDP before the pandemic.
Updated forecasts due later this month would see downward revisions to the earlier projection for 3.6 per cent economic growth for 2023 and headline inflation of 2.5 per cent, he said. Last year’s economic growth was 2.6 per cent.
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Thailand’s annual headline inflation rate was 0.88 per cent in August, more than forecast but below the BOT’s target range of 1 per cent to 3 per cent. Sethaput said inflation would gradually return to the target range.
Fitch said in a statement that Thailand’s recovery could be constrained by a global slowdown, while the new coalition government’s economic stimulus policies could lead to higher government debt although it would support growth in the short term.
After being sworn in on Tuesday, Prime Minister Srettha Thavisin, who is also finance minister, said his government would focus on addressing people’s needs, as it seeks to boost the economy and deliver key campaign promises.
Speaking virtually at a Fitch seminar, Sethaput reiterated the current policy interest rate was close to a neutral level. Last month, the BOT raised its key interest rate for a seventh straight meeting to 2.25 per cent. It will next review monetary policy on Sep 27.
“A neutral rate means it helps inflation stay in a sustainable range, and GDP grow at its potential of 3-4 per cent without creating financial imbalances,” he said.
At the bank’s seminar, Sethaput said high household debt was a big problem, which would take time to tackle.
Sethaput said the baht was highly volatile, adding “We don’t want to see too much volatility but won’t go against market forces”.
At the Fitch seminar, Sethaput said second-quarter GDP was disappointing.
Thailand’s economy grew 1.8 per cent in the April-June period on the year and 0.2 per cent on the quarter, sharply slowing from the previous quarter’s 2.6 per cent and 1.7 per cent, respectively, as exports slumped.
On Tuesday, the country’s shippers’ council forecast exports would fall 1 per cent this year. REUTERS
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