Thailand's recovery should be intact, says central bank governor

The central bank governor said on Tuesday that Thailand's economic recovery should be intact despite global volatility, while efforts to contain inflation won't disrupt the country's growth path.

Southeast Asia's second-largest economy is starting to recover, as the tourism sector has just started to recover after collapsing during the Pandemic.

The Bank of Thailand Sethaput Suthiwartnarueput said that the economy is expected to grow 3.3 per cent this year and 3.8 per cent next year, boosted by increased consumption and tourism.

Headline inflation, at a 14 year high of 7.86 in August, should return to the BOT's target range of 1 per cent to 3 per cent next year, he said.

Sethaput stated that rate hikes would be gradual to contain inflation and ensure a smooth takeoff, but the BOT was ready to adjust if needed.

He said that there was no need for fast and aggressive rate hikes.

The BOT raised its key interest rate by a quarter point to 1.00 per cent last week to tame inflation expected to average 6.3 per cent this year and 2.6 per cent next year. The rate will be reviewed on November 30, when economists predict a further hike.

Sethaput said the BOT had not been behind the curve on policy and raised rates before the economy returned to pre-pandemic levels, expected late this year or early next year.

The BOT expects to have 9.5 million foreign tourist arrivals this year and 21 million next year. In 2021, that was compared to 428,000 visitors and nearly 40 million in pre-pandemic 2019.

He said that the baht has been driven by dollar strength and in line with regional currencies, as it hovered around a 16 year low against the dollar.

Is there any lack of stability if asked the baht at 38 per dollar? He said that external stability was strong with high foreign reserves and that the answer is NO.

The BOT has acted to curb excessive moves in the baht while not going against the market, Sethaput said.