By Orathai Sriring and Kitiphong Thaichareon
BANGKOK – Thailand’s economy could grow 3.0%-3.5% this year, less than an earlier forecast due to soaring oil prices driven by the Russia-Ukraine war, and the key interest rate should remain low to underpin recovery, the finance minister said on Monday.
Southeast Asia’s second-largest economy will, however, be supported by strong exports, which could grow 5%-6% this year, and by improved tourism as the government plans to ease more pandemic-related curbs, Arkhom Termpittayapaisith told Reuters in an interview.
“Growth of 3.0%-3.5% should be achievable this year, and 2023 should be better,” as several government infrastructure projects will be completed, he said.
In February, the state planning agency predicted the economy would grow 3.5%-4.5% this year, after expanding just 1.6% last year, among the lowest rates in the region.
The economy is also expected to grow in the first quarter both on the year and on the quarter, Arkhom said.
He expected 3 million foreign tourists this year, compared with 40 million in 2019, before the pandemic battered an industry that generally accounts for about 12% of gross domestic product.
Monetary policy should continue to support the recovery that is not yet in full recovery, while the government tries to manage higher inflation, which is expected to be 3%-4% on average this year, slightly above the central bank’s 1%-3% target range, he said.
“On the monetary side, don’t raise rates too soon,” he said, referring to the central bank. The economy is expected to fully recover in 2023, he added.
The central bank has left its key interest rate at a record low of 0.50% since May 2020 to maintain support for the economy. It is expected to keep policy unchanged when it meets on Wednesday.
The current level of the baht is “appropriate” and supports exports, Arkhom said.
“The baht may swing, but at 33 baht per dollar, everyone should be happy.”
The government has sufficient funds, with 75 billion baht available under the current borrowing plan, to help the economy and there was no need for further borrowing yet, he said.
The country’s public debt to GDP ratio is expected at 62% at the end of the current fiscal year to September, and rise to 67% in fiscal year 2026, Arkhom said.
Last year, the government increased the public debt ceiling to 70% of GDP from 60% to provide room for borrowing if needed.
(Additional reporting by Satawasin Staporncharnchai; Editing by Kanupriya Kapoor and Alison Williams)
