Thai minister projects economy to grow 3.0%-3.5% this year, interest rate to stay low

[BANGKOK] Thailand's economy could grow 3.0 per cent-3.5 per cent this year, less than an earlier forecast due to soaring oil prices driven by the Russia-Ukraine war, and the key interest rate should remain low to underpin recovery, the finance minister said on Monday (Mar 28).

South-east Asia's second-largest economy will, however, be supported by strong exports, which could grow 5 per cent-6 per cent this year, and by improved tourism as the government plans to ease more pandemic-related curbs, Arkhom Termpittayapaisith told Reuters in an interview.

"Growth of 3.0 per cent-3.5 per cent should be achievable this year, and 2023 should be better", as several government infrastructure projects will be completed, he said.

In February, the state planning agency predicted the economy would grow 3.5 per cent-4.5 per cent this year, after expanding just 1.6 per cent last year, among the slowest rates in the region.

The economy is also expected to grow in the first quarter both on the year and on the quarter, Arkhom said.

Monetary policy should continue to support the recovery as the government tries to manage higher inflation, which is expected to be 3 per cent-4 per cent on average this year, slightly above the central bank's 1 per cent-3 per cent target range, he said.

"On the monetary side, don't raise rates too soon," he said, referring to the central bank.

The central bank has left its key interest rate at a record low of 0.50 per cent since May 2020 to maintain support for the economy.

It is expected to keep policy unchanged when it meets on Wednesday.

The current level of the baht is "appropriate" and supports exports, Arkhom said.

"The baht may swing, but at 33 baht per dollar, everyone should be happy".

The government has sufficient funds to help the economy and there was no need for further borrowing yet, he said. REUTERS