Thailand recovery intact, interest rates gradually normalizing, central bank governor says

BANGKOK: Thailand’s economic recovery is unscathed, with growth likely at 2.9% in the first half of the year and 4.2% in the second, the central bank governor said Wednesday.

Bank of Thailand Governor Setaput Stewartnarept said at a press conference that the central bank will continue the gradual normalization of interest rates to support the economy’s potential growth and curb inflation.

He added that while Thailand is expected to receive 29 million foreign tourists this year, exports, the main driver of growth, will remain flat for the year, despite an increase in the second half.

The central bank is expected to raise interest rates again at its next meeting on Aug. 2 as the economy continues to recover even though inflation has fallen.

Thailand’s annual headline inflation rate fell to a 22-month low of 0.23%, well below the central bank’s target range of 1-3%. The core rate in June was 1.32%.

The BOT has raised key interest rates by a total of 150 basis points to 2% since August to curb inflation. The company has previously said core inflation remains high.

In May, the central bank kept its economic growth forecast at 3.6% this year and 3.8% next year. The economy will grow by 2.6% in 2022.

Southeast Asia’s second-largest economy posted a better-than-expected 2.7% year-on-year expansion in the first quarter as its key tourism sector gained strength.