Economic engines 'not as strong as before'

Economic engines 'not as strong as before'

Tourists return to popular destinations in Bangkok such as the Emerald Buddha Temple on Saturday. (Photo by Wichan Charoenkiatpakul)
Tourists return to popular destinations in Bangkok such as the Emerald Buddha Temple on Saturday. (Photo by Wichan Charoenkiatpakul)

Thailand's economic engines may not be as strong as before and the important tourism sector may take longer to normalise, its central bank governor said on Thursday.

Factors that will be key to future growth are the digital economy and sustainability, Bank of Thailand governor Sethaput Suthiwartnarueput told a business seminar, discussing the post-pandemic economy.

"The growth story ahead must focus on inclusive growth to make the economy more resistant to challenges," he said.

After 40 years, Southeast Asia's second-largest economy still has a similar structure, relying on exports of the same sectors such as autos, petroleum and petrochemicals, electronics and tourism, while the global context has changed, he said.

"Exports and foreign direct investment have lagged behind Vietnam, while its ageing population will also weigh on growth," Mr Sethaput said.

Tourism, which typically accounts for 11-12% of gross domestic product, could take a long time to return to pre-pandemic levels when there were 40 million foreign visitors, he said.

"If we don't rush to upgrade these economic engines, we may see the economy growing at a slower rate," he said.

The central bank forecast growth of just 0.7% this year and 3.9% next year, following a 6.1% contraction in 2020 when the pandemic devastated tourism.

The public sector will have to adjust to facilitator mode with clear policies while letting market forces drive the business sector and the economy, Mr Sethaput said.

The central bank will also be a facilitator, relaxing strict rules to support businesses and a shifting of focus next year towards "resiliency" to meet the needs of financial users, he added.

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