Bank of Thailand puts stability above stimulus
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Bank of Thailand puts stability above stimulus

Policies must support sustained growth

Mr Sethaput says the central bank has projected a 3.6% GDP growth rate for Thailand in 2023.
Mr Sethaput says the central bank has projected a 3.6% GDP growth rate for Thailand in 2023.

Amid the ongoing recovery pace, the economy no longer requires any stimulus measures, but the country requires normalisation and the implementation of economic measures to support economic stability and potential growth for the longer term, says the governor of the Bank of Thailand.

According to Sethaput Suthiwartnarueput, governor of the central bank, Thailand's economy has been recovering and the recovery pace remains intact, mainly supported by recovering domestic consumption and the tourism sector.

The Bank of Thailand forecasts the GDP growth rate for 2023 would be 3.6%.

Mr Sethaput said the economy has already emerged from the worst conditions of the pandemic's impact, when it contracted by 12.3% in the second quarter of 2020 compared with a 2.1% growth rate in 2019.

"Stability, particularly fiscal stability, is more critical than stimulus [right now] for Thailand's economy. Thailand needs economic policies that support economic fundamentals and promote sustained growth in the long run," said the governor when asked about a spate of populist policies, including cash handouts, proposed by several political parties for the May general election.

Mr Sethaput noted that in the past many populist policies only benefitted the economy in the short term. At the same time, such generous policies created negative side effects on the country's economic structure.

"We can still have populist policies, but they should be focused on providing a safety net for Thai citizens at an appropriate level," he said.

The Bank of Thailand has projected a 3.6% GDP growth rate in 2023, with expectations of a 2.9% growth rate in the first half, followed by a rise to 4.3% in the second half.

It also predicted foreign tourist arrivals for the year would reach 28 million, with 12 million in the first half of the year and the remaining 16 million in the second half.

In 2019, prior to the pandemic, Thailand welcomed an average of 110,000 international travellers per day, but this number dropped to zero during the second and third quarters of 2020. At present, the daily average stands at around 66,000.

During the worst situation in the second quarter of 2020, the number of unemployed and underemployed workers increased to 6.2 million. However, this figure decreased to 2.6 million in the fourth quarter of 2022.

According to Mr Sethaput, non-farm income, excluding the government's subsidy measures, is expected to grow by 7.6% in the first half and by 6.2% in the second half, on a year-on-year basis.

Meanwhile, farm income growth is expected to be 1.6% in the first half, but will decline by 6.1% in the second half due to the high base effect.

The export sector is expected to be impacted by global economic uncertainties and the US economic slowdown, according to the central bank.

The bank has forecast a 7.1% contraction in the value of exports in the first half of this year, followed by a growth of 4.2% in the second half.

However, the reopening of China is expected to benefit Thailand and the region more in the service sector than in exports.

Moreover, Thailand's inflation rate has declined to within the central bank's target range of 1-3%. The bank predicts that the headline inflation rate for this year will be 2.9%, while the core inflation rate will be 2.4%.

Thailand's headline inflation rate peaked at 7.86% in August of last year, while core inflation peaked at 3.23% in December of the same year.

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