Thailand’s Economic Recovery Remains Intact Despite Inflation Risks
Thailand’s central bank governor, Sethaput Suthiwartnarueput, reassured the public on Wednesday that the country’s economic recovery was still on track, despite potential inflation risks that could impact growth prospects. Suthiwartnarueput highlighted the inflationary pressures arising from the El Nino weather pattern, which has increased food prices, as well as the surge in oil prices. Additionally, he pointed out that higher wages and government policies would further contribute to inflation in the future.
These remarks come at a time when the new Thai government is actively pursuing stimulus plans to revive the sluggish economy and boost consumer spending. Suthiwartnarueput acknowledged that there were differences of opinion between the central bank and Prime Minister Srettha Thavisin regarding the state of the economy, but emphasized that both parties were engaged in a constructive dialogue.
Despite potential inflation risks, Suthiwartnarueput affirmed that Thailand’s overall financial system remained strong and could withstand external shocks. However, he did express concern over household debt, acknowledging its fragility. Household debt to GDP stood at 90.7% in the second quarter of this year, indicating some vulnerability in this area.
Last month, the Bank of Thailand unexpectedly raised key interest rates to 2.50%, revising its growth forecast for this year downward from 3.6% to 2.8%. However, it raised the growth outlook for 2024 to 4.4% from the previously projected 3.8%. The country had witnessed a growth rate of 2.6% in the preceding year.
Suthiwartnarueput called for a deeper examination of Thailand’s long-term growth capacity and emphasized the importance of limiting fiscal spending. He suggested that improving the ease of doing business and reducing regulations to attract more investment would have a more significant positive impact on the economy.
Thailand’s economic recovery is still on track, despite potential inflation risks. The government’s concerted efforts to stimulate the economy, combined with a strong financial system, provide a solid foundation for growth. However, it is essential for policymakers to carefully manage household debt and focus on the long-term sustainability of the country’s economic growth.