July 9 2024: Thailand requires stronger economic growth as the current potential growth rate of about 3% is inadequate for long-term sustainable expansion, the central bank governor stated on Tuesday.
Bank of Thailand Governor Sethaput Suthiwartnarueput emphasized the need for structural reforms to increase the potential growth rate during 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 forecasted that Southeast Asia’s second-largest economy will grow by 2.6% this year and 3% next year. Last year’s growth of 1.9% lagged behind regional peers due to weak exports, high household debt, and borrowing costs.
Sethaput assured that the central bank would ensure inflation and living costs remain manageable. “Households most impacted by inflation and living costs are grassroots households as they have no assets, no cushions,” he noted.
He also mentioned that the current household debt at around 91% of gross domestic product was higher than desirable, but there was “no magic solution” to debt problems.
Prime Minister Srettha Thavisin has been advocating for a rate cut to revive the economy. Despite this pressure, the BOT maintained its key interest rate steady at 2.50% for the fourth consecutive meeting last month. The next rate review is scheduled for Aug. 21.
Last week, Sethaput stated there was currently no need to cut the key rate but mentioned that the central bank was ready to adjust it if the outlook changed. On Monday, Deputy Finance Minister Paopoom Rojanasakul emphasized that fiscal and monetary policy should be better aligned to stimulate growth.
