Thai PM says central bank should cut rates to help economic revival
Thai Prime Minister Srettha Thavisin said the central bank should cut its key interest rate by at least a quarter point this week to support government efforts to revive Southeast Asia’s second-largest economy.
“Given the inflation numbers, which are still negative, my expectation is perhaps not even 0.25 (point cut), maybe 0.5, because it’s long overdue. It should have been cut since late last year,” Srettha, 62, said in an exclusive interview.
The Bank of Thailand has so far resisted government pressure to ease policy, holding it benchmark interest rate at 2.50% in February, the highest in more than a decade. Most economists expect rates to be held at its next review on Wednesday.
The prime minister, who came to power last August, said the economy might have expanded less than 1% in the first quarter of 2024, following the annual 1.7% growth in the previous three months.
Srettha said a major boost in domestic consumption is also needed, vowing to forge ahead with his government’s flagship “digital wallet” handout scheme worth 500 billion baht ($13.67 billion) in the fourth quarter to revive the economy.
“Hopefully by the first quarter of next year, we will see some results,” he said in the interview on the resort island of Samui on Sunday.
The plan has come under fire from some experts who say it is fiscally irresponsible and fixing Thailand’s economy requires addressing structural problems.
Srettha ruled out using a loan bill to finance the scheme, without elaborating on plans to fund the initiative that more than 50 million people will be eligible for.
Srettha, who described himself as a salesman for the country, has spent a third of his time in office overseas promoting Thailand as an investment destination, offering tax and business incentives for foreign firms.
“Since taking over the office, we have had nearly 10 Chinese EV firms that will be coming here, big data centres... from Amazon, Google, Microsoft and the whole world,” he said. “If I hadn’t gone out to try to sell Thailand, they might have gone to Indonesia, Malaysia, Singapore, Vietnam.”
Thailand’s push for clean energy is also important in attracting investment, the prime minister said, as the country targets sourcing half its energy from clean sources such as solar and wind by 2040.