Thai Central Bank Expects Economy to Expand as Uncertainties Remain

According to the minutes of the Bank of Thailand’s monetary policy meeting on April 10, 2023, Thailand’s economy is predicted to expand at a quicker rate in 2024 compared to 2023, driven by strong private consumption and a resurgence in tourism, while the financial system remains resilient. However, uncertainties continue to linger.

At the meeting, the Bank of Thailand revised its 2024 economic growth forecast to 2.6% from a previous projection of 2.5%-3.0%. This is much lower than the 4% projected by the Thai government.

This came after a shrinkage of economic growth by 0.6% in the final quarter of 2023 from the third quarter. Full-year growth came in at 1.9%, which was slower than expected by economists, and also below 2.5% rise in 2022.

During the meeting, the committee voted 5-2 in favor of maintaining the one-day repurchase rate at 2.50%, the highest level in over ten years, for the third consecutive session. While the majority opted for unchanged rates, two members advocated for a reduction of a quarter-point.

The upcoming assessment of interest rates is scheduled for June 12.

The policymakers noted that rising household debt is one of the concerns for the Thai central bank as some groups of small business, low-income households face tighter credit conditions. Meanwhile, the current inflation rate that is hovering close to the lower bound of target range is not a concern.