Arkhom: Full economic recovery before any rate hikes

Arkhom: Full economic recovery before any rate hikes

A roadside vendor prays for better sales in Silom, Bangkok's central business district, on Sept 7, 2021. (Photo: Somchai Poomlard, Bangkok Post)
A roadside vendor prays for better sales in Silom, Bangkok's central business district, on Sept 7, 2021. (Photo: Somchai Poomlard, Bangkok Post)

Thailand cannot contemplate any interest hikes until its economy is fully recovered, and fiscal and monetary policy will continue to support businesses and an economic recovery, Finance Minister Arkhom Termpittayapaisith said on Wednesday.

The government is aiming for 4% economic growth this year while trying to develop new growth engines such as startups and digital technologies, the finance minister told a business seminar.

Southeast Asia's second-largest economy grew 1.6% last year, among the slowest rates in the region, recovering from a 6.2% contraction in 2020.

During coronavirus outbreaks, fiscal policy will play a major role and monetary policy should be accommodative to allow the government to spend more, he said.

"The question is in 2022, if the Fed (United States Federal Reserve) raises interest, rates shall we follow? We have to be confident that our economy is fully recovered," Mr Arkhom said.

Fiscal and monetary policy will facilitate the business sector to grow and get through a Covid-19 crisis, he said.

At the seminar, Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow said the country's economy is expected to grow 3% to 4% this year, helped by increased investment and a reopening to foreign tourists.

The government will continue to cap energy prices to maintain the country's competitiveness, Mr Supattanapong added. 

Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow explains how to rehabilitate the Thai economy at the Bangkok Post Forum 2021 ‘Resilient Thailand: Ways to Bounce Back’ on Oct 7, 2021. (Photo: Bangkok Post)


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