Thai potential economic growth rate of 3% not satisfactory, minister says
2024.07.08 02:51
BANGKOK (Reuters) – Thailand’s current potential economic growth rate of 3% is not satisfactory and prolonged below-target inflation is dangerous for the economy, a deputy finance minister said on Monday.
Paopoom Rojanasakul made the comments on a local YouTube channel where he blamed fiscal and monetary policies not working well enough together for growth not yet reaching its potential.
“We still don’t work well enough together… so (things) don’t work as they should,” he said.
“I would like us to work together and have a similar way of thinking about managing the economy,” he said, referring to the government and the central bank.
The government has been in disagreement with the Bank of Thailand (BOT) for months over interest rates, with Prime Minister Srettha Thavisin calling for a rate cut to kick-start Southeast Asia’s second-largest 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 highest level in over a decade, saying the level was consistent with the economy and inflation.
Last week, BOT Governor Sethaput Suthiwartnarueput said there was no need currently to cut the key rate but the central bank was ready to adjust it if the outlook shifted.
Paopoom said inflation running below the central bank’s target range of 1% to 3% for a lengthy period was a problem for the economy.
The annual headline inflation rate has been below the central bank’s target range for more than a year, except in May, which was driven by a temporary low base.
The government wants to adjust the current inflation target range, which has been in place since 2020, saying a change should raise the chance of a rate cut.
Sethaput said last week changing the inflation target would put at risk credibility, inflation expectations and borrowing costs.
