Economic resilience in question: Thailand’s situation amid Middle East conflicts
Sethaput Suthiwartnarueput, the governor of the Bank of Thailand, addressed a business seminar today, emphasising the need for Thailand to bolster its economic resilience to secure sustainable growth. He warned that economic stability should not be taken for granted, particularly considering the potential high-risk side effects that conflict in the Middle East could pose.
Thailand, the second-largest economy in Southeast Asia, experienced a substantial slowdown in the second quarter, with a mere 1.8% year-on-year growth. This sharp downturn from the previous quarter was attributed to weak exports and investment that massively offset the strength in tourism.
The central bank governor remains optimistic that the economy will still meet the forecasted growth for this year. However, he cautioned that the predicted 4.4% growth for the following year may need to be revised downwards if the government reduces its handout plan.
Governor Sethaput also expressed concerns over the high household and public debt today, November 3, despite the country’s enduring external stability.
In an unexpected move in September, the Bank of Thailand’s Monetary Policy Committee raised the key interest rate by a quarter point to 2.50%, marking the highest in a decade. They justified this increase with the expectation that growth and inflation would experience an uptick the following year. The committee is set to review policy again on November 29, reported Bangkok Post.
Since August of the previous year, the rate has seen a total increase of 200 basis points to help curb price pressures.
On October 28, Governor Sethaput reaffirmed his belief that the current policy rate remains suitable for the economy. However, he added that the Bank of Thailand stands ready to make necessary adjustments in response to the escalating global risks and concerns surrounding the Middle East conflict for robust economic resilience.
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