Economy seen up 3.0 to 3.5% this year, says finance minister

Economy seen up 3.0 to 3.5% this year, says finance minister

Above-target consumer prices reinforce expectations of a further interest rate hike from the BoT

Many people buy vegetarian food at Bangkok's Chinatown in Yaowarat district on Sept 24, 2022. This year, the Vegetarian Festival was held from Sept 26 to Oct 4. (Photo: Apichart Jinakul)
Many people buy vegetarian food at Bangkok's Chinatown in Yaowarat district on Sept 24, 2022. This year, the Vegetarian Festival was held from Sept 26 to Oct 4. (Photo: Apichart Jinakul)

The Thai economy is still expected to grow 3.0 to 3.5% in 2022, while a weak baht is helping exports, Finance minister Arkhom Termpittayapaisith said on Wednesday.

But supply chains problems, such as in the automobile and electronics sectors, are also affecting exports, Mr Arkhom told a business seminar.

The minister's growth projection was matched by the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) and compared with 3.3% growth predicted by the Bank of Thailand (BoT).

According to JSCCIB, the country's economy is expected to grow 3.0% to 3.5% this year, a slight improvement from a previous forecast of 2.75% to 3.5%, helped by a pickup in the vital tourism sector.

The leading joint business group said that the number of foreign tourists is expected at 9 million to 10 million this year.

- Inflation rate slows -

Thailand's headline inflation rate was less than expected in September, decelerating from the previous month, Commerce Ministry data showed on Wednesday, but above-target consumer prices reinforced expectations of a further interest rate hike in November.

The headline consumer price index (CPI) rose 6.41% in September from a year earlier, helped by easing energy prices and last year's low base, and down from August's 7.86% increase, which was a 14-year high, according to the data.

The reading compared with a forecast rise of 6.60% in a Reuters poll, and the central bank's target range of 1% to 3% for headline inflation.

The core CPI index, which strips out energy and fresh food prices, was up 3.12% in September from a year ago, also less than a forecast rise of 3.20%, and followed August's 3.15% rise.

Inflation may fall further in the fourth quarter of this year due mainly due to government support measures for energy and food prices, the ministry said.

It forecast headline inflation to average between 5.5% and 6.5% this year.

BoT governor Sethaput Suthiwartnarueput said the central bank will adopt a gradual and measured approach to bring inflation back to target.

Last week, the BoT raised its key interest rate by a quarter point to 1.00% to contain inflation. It will next review the rate on Nov 30, when most economists expect a further, gradual hike.

The BoT predicts average headline inflation of 6.3% this year before falling to 2.6% next year. It forecasts the core rate at 2.6% this year and 2.4% next year.

In the January-September period, headline inflation was 6.17% and the core rate was 2.26%.

Government spokesman Anucha Burapachaisri said after the cabinet meeting on Wednesday that the government will not intervene in the central bank's work regarding inflation, interest rates and the baht currency.

The Finance Ministry has been asked to provide information for the BoT's consideration, said Mr Anucha.

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