Governor of the Bank of Thailand
Prasarn Trairatvorakul has expressed concern about impacts of the current
political situation on the Thai economy, saying that Thailand’s gross domestic
product is likely to grow by only 3 percent in 2014.
The Bank of Thailand earlier
predicted that the Thai economy would grow by 4 percent, while the Office of
the National Economic and Social Development Board believed that the growth
rate would be around 4-5 percent.
Mr. Prasarn said that if the
tense political situation was prolonged, the country’s economic fundamentals
would be hurt and Thailand’s competitiveness would be affected. However, he
said, Thailand’s investment continues to grow. The Thai baht remains stable,
although it has weakened slightly. The financial system is healthy and
inflation is at a low level. The disbursement of the national budget still
continues as usual, but the spending of investment funds might be delayed.
The Governor asserted that the
best way to deal with the current political situation was through peaceful
means. Moreover, reform should be carried out in a non-violent manner.
In his capacity as Chairman of
the Monetary Policy Committee (MPC), Mr. Prasarn said that MPC, during its
meeting on 22 January 2014, voted 4 to 3 to maintain the policy rate at 2.25
percent per annum. Three members voted to reduce the policy rate by 0.25
percent to cushion the economy against rising downside risks to growth, given
contained inflationary pressure.
He said that the global economy
continued to recover. G3 economies showed signs of gradual improvement, led by
the US economy, which was expanding on the back of stronger domestic demand.
The Chinese economy was expanding steadily, while exports of Asian economies,
particularly in North Asia, had begun to recover at a gradual pace.
Mr. Prasarn said that the Thai
economy in the fourth quarter of 2013 was expected to grow less than previously
assessed as a result of soft domestic demand, leading to lower-than-expected
growth for 2013. The ongoing political situation continued to dent private
confidence, weighing on the overall outlook for growth. Exports expanded at a
subdued pace, despite signs of recovery in some sectors.
He said that MPC deemed the
current stance of monetary policy to be accommodative and appropriately
supportive of economic recovery. The current political situation posed risks to
growth, but sound economic fundamentals should help the economy weather these
short-term risks.
In addition, safeguarding
financial stability remains a cornerstone for economic recovery in the period
ahead. MPC will closely monitor developments in the Thai economy and stand
ready to take appropriate actions as warranted.
(thailand.prd.go.th)