Thailand’s central bank says the growth outlook is below potential by Reuters

By Orathai Sriring and Chayut Setboonsarng

BANGKOK (Reuters) – Thailand’s monetary policy committee makes decisions based on the economic outlook when it reviews rates and would adjust them if the current assessment changed, the central bank chief told a business forum on Wednesday.

Bank of Thailand Governor Sethaput Suthiwartnarueput noted that the policy interest rate of 2.5 percent was among the lowest in the world and said structural factors had hampered the country’s economic growth.

The BOT expects Southeast Asia’s second-largest economy to grow 2.6 percent this year and 3 percent in 2025, noting that the recovery has been uneven.

“It’s not a big number,” he told the forum.

“We are not satisfied with a long-term growth rate at that low level … and not enough to lead to the rise in living standards and welfare that is needed.”

The central bank last week held interest rates steady for the fifth consecutive meeting, despite persistent calls from the government for a rate cut. The next rate review is on October 16.

The BOT was prepared to adjust rates if the outlook changed, Sethaput said, adding that there needed to be “policy optionality” with buffers to maintain resilience in the face of uncertainty and shocks.

There has been growth in tourism, but other sectors such as manufacturing have grown more slowly, he said, attributing the divergence to structural issues including demographic changes.

The central bank also saw signs of worsening credit quality and Sethaput said there could be a contraction in credit in the small and medium enterprise (SME) segment.

“We are careful on the credit front,” he said.

Lowering the household debt-to-GDP ratio from over 90 percent to a preferred level of 80 percent would take time, he said.