(CTN News) – The central bank intends to meet the 2.6% growth target this year through steady growth, underpinned by domestic demand, tourism, manufacturing and exports.
The Bank of Thailand (BOT) anticipates the economy to begin stabilizing in the third quarter, owing to faster growth and the possibility to meet the 2.6% expansion target this year.
Senior Bank of Thailand executives expressed their optimism at the second Monetary Policy Forum of the year on Wednesday.
Manufacturing and Exports Revitalize Bank of Thailand’s Projections
At the forum, central bank directors also underlined that the current benchmark interest rate of 2.5% per year was appropriate for present economic conditions, despite the government’s repeated calls for a cut of at least 25 percent.
Piti Disyatat, assistant Bank of Thailand governor of the Monetary Policy Group, stated that, unlike the economic slowdown late last year, the first and second quarters of this year had shown accelerated recovery.
This rebound will help the economy return to quality growth from the third quarter until early next year.
He noted that the third quarter could see sustained growth in numerous areas, including expansion, inflation, and finances.
Piti stated that the Bank of Thailand’s Monetary Policy Committee expects the economy to grow steadily, however at a low rate due to various issues limiting growth, such as fundamentals and income distribution.
Speaking at the same forum, Pranee Sutthasri, senior director of the Bank of Thailand’s Macro Economy Group, predicted that Thailand would grow by 2.6% this year due to increased domestic demand and tourism revenues.
Furthermore, she stated that the manufacturing and export sectors have begun to recover, and that numerous drivers of growth, such as government spending and exports, will begin to stabilize.
“Thailand’s economy is expected to gradually improve in the second, third and fourth quarters,” Pranee told Reuters.
Overall, she said, the MPC expects Thailand’s economic risks to fall this year as consumption rises, private sector investments increase, and government budget disbursements accelerate beginning in the second quarter.
She also paraphrased the MPC as saying that the policy rate of 2.5% per year is still appropriate for the current economic situation, and that the existing rate will assist decrease risks to long-term economic stability.
Surat Thaenboon, senior director of the Bank of Thailand’s financial policy group, said the central bank’s 1-3% inflation target was working well to control inflation in line with the Thai economy.
He argued it would be too hazardous to boost the inflation target too high, as requested by the administration.
He also stated that the interest rate cannot be utilized to solve large household debts, but he did admit that it could be a factor in debt reduction.
“We don’t consider the monetary policy as a tool for solving household debts, and don’t set policy rates to try and lower the household debt ratio,” Surat said the crowd.
Furthermore, he stated that the Bank of Thailand has been working to keep home debts from deteriorating and has developed certain ways to assist some vulnerable groups with large household debts.