The Bank of Thailand has announced that it will maintain the policy interest rate at 2.50 percent.
Key Takeaways
- The Monetary Policy Committee in Thailand has decided to maintain the policy rate at 2.50 percent, considering the current economic recovery and its impact on inflation and financial stability.
- The Thai economy is expected to experience more balanced growth in the coming years, driven by domestic demand, the tourism sector, and a recovery in merchandise exports.
- Inflation is projected to increase next year, in line with the economic recovery and supply pressures, but it is expected to remain within the target range.
Despite a slowdown in merchandise exports, the Thai economy is continuing to recover, supported by domestic demand, the tourism sector, and a recovery in exports. Inflation is expected to increase next year due to economic recovery and supply pressure.
Headline inflation is projected to stay within the target range
The overall financial system remains resilient, but there is a need to monitor credit quality for certain sectors. Financial conditions have tightened somewhat, but it is not hindering the economic recovery. The Committee expects the Thai economy to gradually recover and inflation to be within the target range.
The Committee projects growth of 2.4 percent in 2023 and 3.2 percent in 2024
The Committee projects a growth rate of 2.4 percent in 2023 and 3.2 percent in 2024. However, when taking into account the government’s digital wallet scheme, the growth projection for 2024 is revised to 3.8 percent, down from the previous assessment of 4.4 percent. The overall trajectory of the economy indicates a steady recovery, driven by a strong expansion in private consumption, particularly in the services sector, as well as improvements in employment and labor income.
Merchandise exports and tourism has been slower than anticipated
However, the recovery of merchandise exports and tourism has been slower than anticipated, mainly due to sluggish growth in China and a delayed rebound in global electronic demand. Looking ahead, it is expected that growth will become more balanced as tourism continues to recover and merchandise exports start to expand. Nonetheless, it is important to note that certain structural obstacles may limit the positive impact of the global demand recovery on Thai exports.
