Economy may grow 3.0-3.5% this year - Arkhom

Economy may grow 3.0-3.5% this year - Arkhom

A buyer selects eggs at Bang Kapi market in Bangkok on March 15, 2022. Prices of eggs and other essentials have soared due to the spike in oil prices. (Photo: Varuth Hirunyatheb)
A buyer selects eggs at Bang Kapi market in Bangkok on March 15, 2022. Prices of eggs and other essentials have soared due to the spike in oil prices. (Photo: Varuth Hirunyatheb)

Thailand's economy could grow 3.0%-3.5% 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.

Southeast Asia's second-largest economy will, however, be supported by strong exports, which could grow 5%-6% 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%-3.5% 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%-4.5% this year, after expanding just 1.6% 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%-4% on average this year, slightly above the central bank's 1%-3% 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% 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.

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