Thailand’s economic recovery is intact but key drivers — exports and tourism spending — are weaker than expected, its central bank governor said, flagging a downward revision to this year’s growth forecast.
In remarks recorded on Aug 17 and played at a business seminar on Wednesday, Bank of Thailand chief Sethaput Suthiwartnarueput also reiterated that the benchmark rate was approaching a “neutral” level — one that is neither restrictive or accommodative.
Southeast Asia’s second-largest economy has been hobbled by slowing global growth and falling investor confidence due to prolonged political uncertainty following elections in May. A new government is, however, expected to be formed soon after Srettha Thavisin this week won a parliamentary vote to become prime minister.
“The picture is not all wine and roses,” Sethaput said, adding that 2023 growth could come below the central bank’s 3.6% forecast and a revised figure would be published in September.
Exports have been hurt by a slower-than-expected recovery in China and tourism spending has also been softer than thought. Thailand expects 29 million foreign visitors this year, he said. That compares with pre-pandemic levels of nearly 40 million foreign visitors.
The central bank has raised its key rate seven times to 2.25% since last August to tame inflation and help the economy.
Sethaput said inflation was coming back towards its target range of 1% to 3%, but there was a risk that the El Nino weather pattern could push up food prices.
“Our policy objective is to get the landing right,” Sethaput said, adding the central bank would focus on medium-term considerations, including helping growth reach 3%-4%.
Thailand’s economy grew 1.8% in the April-June period on the year and 0.2% on the quarter, sharply slowing from the previous three months, according to Reuters.
That has prompted the government planning agency — which complies gross domestic product data and has separate forecasts to the central bank — to cut its 2023 growth projection to 2.5%-3.0% from 2.7%-3.7%.
Last year’s growth was 2.6%.