Bank of Thailand dampens 2020 hopes
Bank of Thailand Governor Veerathai Santiprabhob speaks during an interview with the Bank of Thailand in Bangkok, October 4, 2019 (Reuters file photo)
The central bank has not closed the door on further easing of monetary policy if the economic situation is worse than expected, the governor said on Monday, calling next year’s growth prospects “disappointing”.
Although the economy is expected to perform better next year than this year, its pace is still unsatisfactory and below its potential, Veerathai Santiprabhob told a business seminar.
Last week, the Bank of Thailand (BoT) lowered its 2019 economic growth forecast to 2.5% from 2.8%, and next year’s outlook to 2.8% from 3.3%.
It also left its key rate unchanged at a record high of 1.25% after two cuts this year.
Mr Veerathai said the forecast for economic growth of 2.8% for next year was “disappointing.”
A “satisfactory” level of growth should be around 3.5% -4% per year, the governor said in a speech in Bangkok on Monday.
He said a big risk to the economy was declining employment, adding that a number of manufacturers were relying on temporary workers and some were reducing working hours.
The BoT lowered its growth forecast for this year and into 2020 last week, given the weaker global backdrop, trade disruptions and a stronger currency.
Mr. Veerathai also made the following comments on the baht:
“The central bank actively manages the exchange rate. Without our actions, the baht would be much stronger than the current level.
“Nevertheless, we are careful of any excessive interference as there would be side effects. It would also expose Thailand to more accusations as a currency manipulating country.
“The country’s foreign exchange reserves have increased dramatically because the BoT is buying a lot of dollars to slow down the strength of the baht.”