(Bloomberg) — Bank of Thailand is focused on aiding economic growth and tourism recovery amid subdued inflation and is less worried about the U.S. Federal Reserve’s monetary actions, Governor Sethaput Suthiwartnarueput said.
The policy maker’s decision will be influenced more by domestic considerations and “less dictated by the Fed,” Sethaput said in an interview with Bloomberg Television’s Kathleen Hays, Rishaad Salamat and David Ingles. There’s an “upside” to the BOT’s growth estimate of 0.7% this year but 2022 — when the monetary authority projects a 3.9% expansion — is fraught with uncertainty, he said. The forecasts will be reviewed at the Dec. 22 rate meeting.
Thailand’s economy is expected to be Southeast Asia’s worst performer this year, pressured by weak local demand and tourist arrivals. The omicron variant adds more risk to the nascent economic recovery, any new variants in the future could impact the growth estimates, he said.
Prime Minister Prayuth Chan-Ocha’s government has put together two borrowing packages worth 1.5 trillion baht ($44.9 billion) in 2020 and 2021 to combat the economic fallout from the pandemic, while the central bank cut its policy interest rate to a record low of 0.5%, where it has kept it for the past 12 meetings.
The central bank and Finance Ministry both have said the economy bottomed out in the July-September quarter, when new Covid cases peaked at more than 20,000 a day. The seven-day average of new infections has dropped steadily since August, to around 3,900 now. At least 69% of Thailand’s population have received at least one dose.
Inflation accelerated to 2.71% in November, the fastest pace since April, on higher oil and vegetable prices. The government has subsidized prices of diesel and cooking gas to lower the burden on the public but the central bank expects price gains to remain near the lower bound of the 1%-3% target range this year and next.
The weak baht also pushes up oil costs for Thailand, a net importer. The baht has weakened more than 10% against the dollar so far this year, the worst performer among major Asian currencies tracked by Bloomberg.
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