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Bank of Thailand rules out rate cut in the near future

The economic growth projection for this year in the country might require adjustment downwards due to the underperformance of exports, even though there is a recovery being bolstered by tourism and consumer spending.

  • The governor of the Bank of Thailand has dismissed the possibility of reducing interest rates in the immediate future, indicating a shift in monetary policy direction.

  • The projected economic growth for the current year might require downward revision owing to sluggish exports, even though the rebound is being sustained by tourism and consumer spending.

  • The central bank's primary emphasis will now be on assessing the future economic landscape and attaining equilibrium that guarantees stability; consequently, the forthcoming policy meeting may entail a reduction in the GDP growth projection for 2023.

Despite sluggish exports, the contributions of tourism and consumption have provided growth support, although there may be a necessity to revise down the growth projection for this year. Inflation is decreasing at a rate surpassing expectations, prompting the central bank to base interest rate decisions on the economic outlook, rather than short-term data.

The Monetary Policy Committee will consider the long-term perspective and aim to achieve an optimal balance for the economy. The central bank's relatively cautious stance on interest rates could potentially strengthen the baht, which has demonstrated one of the weakest performances among Asian currencies.

The governor envisions the economy expanding by over 3% in both 2023 and 2024, despite the ongoing political deadlock. However, a downward adjustment to the growth forecast for this year might be necessary, settling within the mid-3% range.

Although global challenges have impacted exports, sustained recovery is expected due to private consumption and tourism. The country is projecting approximately 29 million foreign arrivals this year, in contrast to the record-high of 40 million in 2019. The most recent rate hike by the central bank is anticipated to be the final one for the time being.


As the governor of the Bank of Thailand maintains a cautious approach towards interest rates, the country grapples with ongoing economic challenges. The decline in exports has raised concerns, prompting a potential adjustment to this year's growth forecast.

Nevertheless, Thailand has displayed resilience through its robust tourism sector and strong domestic consumption.

Conversely, inflation has been declining at a pace surpassing expectations. This unexpected decrease has led the central bank to shift its focus from short-term data to the broader economic outlook when determining interest rate policies. This strategy aims to ensure stability and strike a balance that benefits the economy in the long term.

While the central bank's relatively cautious stance on interest rates has positively impacted the baht, it has also contributed to the currency's underperformance compared to its Asian counterparts. Despite this, the governor maintains an optimistic outlook for the economy, projecting growth exceeding 3% for both 2023 and 2024, despite the ongoing political deadlock.

Despite challenges impacting Thailand's export sector due to global factors, the nation draws strength from resilient private consumption and ongoing tourism support to fuel its recovery. With expectations of fewer foreign arrivals this year compared to the record highs of 2019, approximately 29 million visitors are projected to contribute to the economy's vitality.

It's noteworthy that the recent rate hike by the central bank is likely to mark the conclusion of current adjustments. Prioritizing a long-term economic perspective and a dedication to stability, the Bank of Thailand is cautiously navigating forthcoming challenges to ensure sustained growth and prosperity for the country.

In essence, while Thailand's economy confronts hurdles and uncertainties, its capacity for resilience and adaptability shines through. By striking a harmonious equilibrium between addressing immediate concerns and planning for the future, the nation maintains an optimistic outlook for its journey towards recovery and prolonged economic advancement.

Source: Carlos Fuitzer

Credit Photo: Bangkok post


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