Economic growth will be slower than expected this year but the current state of the Thai economy is not a “crisis”, Bank of Thailand governor Sethaput Suthiwartnarueput said on Tuesday.
The government’s short-term stimulus measures will not solve the country’s economic problems as structural issues were holding back growth, Mr Sethaput told Reuters.
Prime Minister Srettha Thavisin has frequently used the word “crisis” to describe the economy. A major consumption-led stimulus, in particular the Pheu Thai government’s 500-billion-baht digital wallet programme, is needed to get the economy moving again, he has argued.
The economy grew by just 1.8% last year, down from 2.6% in 2022, a government spokesman said on Tuesday, citing unofficial estimates from the Ministry of Finance.
The National Economic and Social Development Council is responsible for official gross domestic product figures, which are not due to be released until Feb 19.
Mr Srettha has also complained that interest rates are too high, given that inflation has been in negative territory for three months. He has insisted, however, that he is not pressuring the Bank of Thailand to cut rates.
Mr Sethaput has countered that the current inflation readings reflect the impact of the government’s fuel and electricity subsidies and don’t tell the full story about consumer prices.
In any case, he said, he had no concern about negative inflation.
“What we’re seeing is a recovery that is there, but is slower than expected. That’s not the same thing as a crisis,” the central bank chief said in an interview.
“If you want to raise the long-term potential growth rate, you’ve got to do the structural stuff. You’ve got to get productivity up. But the way to get there is not just by engaging in short-term stimulus type measures.”
The central bank’s Monetary Policy Committee left its policy interest rate unchanged at 2.50%, the highest in a decade, at its last meeting in November. It will hold its first rate-setting meeting of 2024 on Feb 7.
Mr Sethaput and Mr Srettha met earlier this month to discuss interest rates, after the latter called for a reduction to stimulate economic activity.
The central bank chief described the meeting as “cordial” and said it was part of his job to withstand criticism, adding it was important to maintain central bank independence.
He said he expects negative inflation in January, February and possibly March, adding the economic growth path had been softer than expected, while justifying the central bank’s current interest rate position.
“There are only two countries in the world … that have lower policy rates than us. And that’s the Japanese and the Swiss,” he said.
- Commentary: 3.2% GDP growth pie in the sky