The Bank of Thailand (BoT) says it is ready to work with the new government on coordinating fiscal and monetary policies now that most stimulus measures introduced during the Covid-19 pandemic are being wound down.
The Bank of Thailand (BoT) says it is ready to work with the new government on coordinating fiscal and monetary policies now that most stimulus measures introduced during the Covid-19 pandemic are being wound down.
Speaking at a monetary policy forum on Wednesday, assistant governor Piti Disyatat said fiscal policy measures devised by the Finance Ministry played a crucial role in supporting the economy during the pandemic.
The central bank also took an accommodative monetary policy stance, keeping interest rates at rock-bottom levels, to support borrowers during challenging times.
As the economy bounces back and reaches pre-pandemic levels, the ministry and the central bank are gradually phasing out stimulus measures.
Mr Piti said the outlook for the economy remains positive, with domestic consumption and the tourist sector fuelling growth.
The BoT forecasts domestic product will grow by 3.6% this year and 3.8% next year. Domestic consumption growth is expected to be 4% in 2023 and 3.1% in 2024, while foreign tourist arrivals are forecast to reach 28 million this year and 35 million in 2024 — not far from the record 40 million seen in 2019.
“With the positive trend of foreign tourist arrivals, the BoT may later review both the number of travellers and GDP growth rate for this year,” Mr Piti said.
However, the central bank still needs to monitor the potential risk of inflation given global inflationary trends. Improved domestic consumption and foreign tourist arrivals could also contribute to inflation, mainly through food and service prices.
According to Mr Piti, inflation in Thailand has already peaked; at 2.8% in March, it had moved back within the central bank’s target range of 1-3%.
The BoT expects headline inflation to average 2.9% this year and decline to 2.4% next year. Core inflation, which excludes volatile food and energy prices, is expected to be 2.4% this year and 2% next year.
Mr Piti said some inflation risk remains as business operators might pass on their higher costs to consumers when demand increases, despite having not done so earlier.
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