On April 30, Vitai Ratanakorn, Governor of the Bank of Thailand (BOT), addressed the issue of economic slowdown caused by the impact of the conflict in the Middle East, which has resulted in energy price and inflationary pressures. He stated that Thailand is not currently in a state of stagflation, as the inflation rate is not expected to remain persistently high and long enough to affect the country’s economic structure.
Economically, stagflation must encompass key conditions: low economic growth combined with a persistently high and rising inflation rate over the long term. If inflation remains high for an extended period, it will have long-term adverse effects on the overall economy.
The governor noted that, compared with many countries, stagflation often has an impact on employment, resulting in rising unemployment rates. However, to date, Thailand has not seen clear signs of declining employment.
Vitai further explained that during the Monetary Policy Committee meeting on April 29, the issue of stagflation was not brought up for discussion. Although some parties believe Thailand has entered stagflation simply by observing slow economic growth and high inflation, this may be a misunderstanding, as an essential characteristic is the inflation rate must remain persistently and continuously high.
