Bank of Thailand dims 2020 hopes

Bank of Thailand dims 2020 hopes

Bank of Thailand Governor Veerathai Santiprabhob speaks during an interview at the Bank of Thailand in Bangkok, Oct 4, 2019. (Reuters file photo)
Bank of Thailand Governor Veerathai Santiprabhob speaks during an interview at the Bank of Thailand in Bangkok, Oct 4, 2019. (Reuters file photo)

The central bank has not shut the door to further monetary policy easing if the economic situation is worse than expected, the governor said on Monday, calling next year's growth outlook "disappointing."

Although the economy is expected to perform better next year than this year, its pace is still unsatisfactory and below potential, Veerathai Santiprabhob told a business seminar.

Last week, the Bank of Thailand (BoT) lowered its 2019 economic growth forecasts to 2.5% from 2.8%, and next year's outlook to 2.8% from 3.3%.

It also left its policy rate unchanged at a record low of 1.25% after two cuts this year. 

Mr Veerathai said next year’s economic growth forecast of 2.8% is “disappointing.”

A “satisfying” level of growth should be about 3.5%-4% a year, the governor said in a speech in Bangkok on Monday.

He said a big risk to the economy is lower employment, adding that a number of manufacturers are relying on temporary workers, and some are reducing work hours.

The BoT last week lowered its growth forecasts for this year and in 2020, given the weaker global backdrop, trade disruptions and a stronger currency.

Mr Veerathai also made the following comments about the baht:

“Central bank is actively managing the exchange rate. Without our actions, the baht would be much stronger than the current level.

“Still, we are careful of any excessive interference because there would be some side effects. It would also expose Thailand to more accusations as a currency manipulating country.

“The country’s foreign currency reserves have jumped significantly because BoT buys a lot of dollars to slow the baht’s strength.”


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