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Thai Economic Recovery Continues, Assures Central Bank Chief
Published: July 20, 2023 at 4:18 pm
Thailand’s central bank chief stated that the country’s economic recovery remains intact and that gradual policy tightening will help support development and keep inflation under control.
The Bank of Thailand increased its primary interest rate six times since August to 2% to contain inflation and has committed to gradually normalizing monetary policy in line with long-term economic growth expectations.
Governor Sethaput Suthiwartnarueput of the Bank of Thailand expects the second-biggest economy in Southeast Asia to grow 2.9% year-over-year in this year’s first half and 4.2% in the second half, fueled by tourism.
He told the press that the economic and inflation outlook stays in line with expectations and that monetary policy will concentrate more on the outlook than on present data.
About the terminal rate, Sethaput stated that the policy rate had been low for an extended period of time, and the actual rate stayed negative, fueling yield for demand.
In June, Thailand’s yearly headline inflation rate was 0.23%, below the Bank of Thailand’s target ceiling of 1% to 3%. However, Sethaput projected that it would go back to the target range in the near future.
The Bank of Thailand will conduct its next policy review on August 2, when the majority of economists anticipate another quarter-point rate increase to 2.25%. Since August, it has increased the rate by 150 basis points.
Sethaput forecasted that Thailand would receive 29 million international tourists this year.
Thai baht strengthened due to a weak dollar and local politics, according to Sethaput, who added that the currency would stay volatile.
In May, the central bank kept its growth projections for this year and next year at 3.6% and 3.8%, respectively. In the prior year, growth was 2.6%.
The economy grew by a greater-than-anticipated 2.7% in the first quarter compared to last year’s period, as the vital tourism sector strengthened.
Confidence in Thailand’s economic stability might spark an influx of international investments. The country’s tourism sector stands to benefit from this, with potential enhancements to infrastructure and service quality, thus enriching the tourist experience in Thailand.