Thai finance minister says pace of monetary tightening still “reasonable”

THAILAND’S economy could grow faster than forecast this year as a revival in tourism quickens, while the pace of monetary tightening to stave off inflationary pressures remained “reasonable”, the country’s finance minister said on Monday (Feb 13).

Speaking in an interview with Reuters, Arkhom Termpittayapaisith said the Bank of Thailand had been aligning policy with the needs of the economy rather than mirroring the aggressive pace of tightening by the US Federal Reserve (Fed).

“Our central bank’s interest rate adjustments have been reasonable, not following the Fed but consistent with our economy,” said Arkhom.

“Raising rates too much will sharply drag down the economy that is getting better,” he added.

The Bank of Thailand has raised the key rate by a total of 100 basis points since August to 1.50 per cent, though the tightening cycle has been less aggressive than many of its regional peers as Thailand’s economic recovery has lagged other South-east Asian nations.

It will next review policy on Mar 29, when most economists see a further hike.

Arkhom said he expected Thai gross domestic product may beat a forecast of 3.8 per cent growth this year on a rebound in the crucial tourism sector.

“Tourism is playing a key role in supporting the economy... there is a chance that tourist numbers will beat our forecast of 27.5 million this year,” Arkhom said.

For 2022, he expects the economy to grow about 3 per cent, after the 1.5 per cent expansion in the previous year, which was among the slowest pace in South-east Asia.

The government will report official 2022 GDP data on Friday.

Arkhom played down concerns over the impact on the economy of the strength of the Thai currency.

“The private sector said the baht was too strong but it’s not very strong... the baht is strengthening on the fundamental of the economy that has started to recover,”

The baht has appreciated about 2.2 per cent against the US dollar so far this year, becoming Asia’s second-best performing currency after Indonesia’s rupiah. REUTERS