The Bank of Thailand has maintained its GDP growth forecast for next year at 4.4%, inclusive of the government’s economic stimulus measures, says assistant governor Piti Disyatat.
The Monetary Policy Committee (MPC) voted on Sept 27 to raise its benchmark interest rate by a quarter-point to 2.5%, the highest level in a decade.
The MPC also cut its growth forecast for 2023 from 3.6% to 2.8%, yet hiked its outlook for next year from 3.8% to 4.4%.
Prime Minister Srettha Thavisin and Deputy Finance Minister Julapun Amornvivat predicted the government’s planned 560-billion-baht digital wallet policy, as well as the expansion of domestic trade and investment schemes, will lead to economic expansion of 5% next year.
Mr Piti said the government’s planned stimulus measures next year will produce a fiscal multiplier of 0.3-0.6%, meaning for every 100 baht spent the GDP will increase by 30-60 baht.
He said the gradual policy rate hikes by the MPC since August 2022 represents an appropriate approach and the current policy rate is close to a neutral level.
The central bank determines policy by focusing on keeping inflation under control and promoting a smooth economic recovery, said Mr Piti.
GDP in the second and third quarter recovered based on domestic demand for private consumption, he said.
Non-farm and farm incomes have also continued to recover, exceeding the pre-Covid level, said Mr Piti.
Foreign arrivals increased dramatically from 5 million at the start of the policy rate normalisation in August 2022 to 20 million at present, he said.
The unemployment rate has been steadily declining from a peak of 6% during the pandemic to 2.6% now, said Mr Piti.
“The economy rebounded as anticipated and continues to recover following our policy of gradual rate hikes,” he said.
SUSTAINABLE PATH
The key variable for sustainable growth is inflation, as inflation was uncomfortably high last year mainly because of rising food and oil prices, said Mr Piti.
“The policy rate sh
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