Thailand on track to grow by 3.2 percent

Policy rate low

BANGKOK, Oct 25, (RTRS): Thailand’s economy is on track to grow 3.2 percent this year and next and there is no need for further monetary policy easing, a deputy central bank governor said, amid concerns mourning for King Bhumibol Adulyadej will crimp tourism and consumption.

The 88-year old king died on Oct 13 and the junta has declared a year of mourning, urging people to curtail festivities during the first 30 days of his death.

The king’s passing may have a shortterm impact on certain businesses such as tourism and entertainment, but it has not affected the country’s economic fundamentals, said Deputy Bank of Thailand Governor Mathee Supapongse.

“It’s consumers’ mood and behaviours that have changed but not their spending capability,” he told Reuters in an interview.

Tourist arrivals could be fewer than the central bank’s current forecast of 33.6 million this year, but that was also because of a Thai crackdown on cheap tour packages for Chinese tourists, Thailand’s largest number of visitors.

Tourism accounts for about 10 percent of Thailand’s GDP, and the industry has been a rare bright spot for an economy that has struggled to gain traction since the army seized power in May 2014 to end political unrest. Pivotal exports and domestic consumption have stubbornly been sluggish.

The central bank has forecast economic growth of 3.2 percent for this year and in 2017. “That’s still on track,” he said.

However, the economy may grow better than forecast next year as investment and exports are expected to improve, he said.

Southeast Asia’s second-largest economy grew 2.8 percent last year.

With growth on track, inflation returning to the target range and improving economic indicators, further monetary policy easing may not be necessary, said Mathee, who is also on the central bank’s Monetary Policy Committee (MPC).

“Looking ahead and as the economy is still on a recovery path, it may not be in a situation where we need to use policy space,” he said.

“The current monetary policy stance is considered sufficiently accommodative for the economic recovery. The policy rate remains relatively low,” he said.

The MPC has left its policy interest rate steady at 1.50 percent since April 2015. The rate is just 25 basis points above the record low reached during the global financial crisis.

The central bank next reviews monetary policy on Nov 9, right after Americans elect their next president. Most economists expect no policy change at that meeting but some think a cut is possible due to a weak economic outlook.