Thai central bank head says 3% potential growth rate not high enough
2024.07.09 04:48
BANGKOK (Reuters) -Thailand needs stronger economic growth as the current potential growth rate of about 3% is not high enough to help the economy expand sustainably in the long term, the central bank governor said on Tuesday.
The potential growth rate can be raised by structural reforms, Bank of Thailand Governor Sethaput Suthiwartnarueput told a seminar.
“It’s not enough. 3% is a growth rate we see in rich countries,” he said.
“As a low-income country, we need higher long-term, sustainable growth”.
The central bank has forecast Southeast Asia’s second-largest economy will grow 2.6% this year and 3% next year.
Last year’s growth of 1.9% lagged regional peers due to weak exports, high household debt and borrowing costs.
Sethaput said the central bank would ensure inflation and living costs were not too high.
“Households most impacted by inflation and living costs are grassroots households as they have no assets, no cushions,” he said.
He also said current household debt at around 91% of gross domestic product was higher than desirable, but there was “no magic solution” to debt problems.
For months, Prime Minister Srettha Thavisin has called for a rate cut to revive the economy.
Despite the pressure to ease policy, the BOT held its key interest rate steady at 2.50% for a fourth straight meeting last month. The next rate review is on Aug. 21.
Last week, Sethaput said there was currently no need to cut the key rate, but the central bank was ready to adjust it if the outlook shifted.On Monday, Deputy Finance Minister Paopoom Rojanasakul said fiscal and monetary policy should better align to lift growth.
