Minutes from the Thai central bank reveal growing economy with lingering uncertainty

According to the minutes of the Bank of Thailand’s April 10 monetary policy meeting, the country’s economy is expected to grow faster in 2024 compared to 2023. This growth will be supported by private consumption and tourism, but uncertainties still remain. During the meeting, the monetary policy committee voted 5-2 to keep the one-day repurchase rate steady at 2.50%, the highest it has been in over a decade. Two committee members were in favor of a quarter-point cut. The next rate review is scheduled for June 12.

The committee members believe that the current policy rate is appropriate for sustaining growth and fostering macro-financial stability in the long term. However, uncertainties surrounding the Thai economy are still significant, particularly related to export recovery, government budget disbursement, and fiscal stimulus measures. The Bank of Thailand adjusted its 2024 economic growth forecast to 2.6%, up from the previous projection of 2.5%-3.0%. The government, on the other hand, forecasts 4% growth for this year.

Prime Minister Srettha Thavisin, who also serves as the finance minister, has been openly challenging the central bank over its monetary policy and has been advocating for rate cuts to help the economy deal with issues such as high household debt and China’s economic slowdown. The government recently approved a 500 billion baht ($13.5 billion) digital wallet stimulus scheme, which is expected to contribute 1.2 to 1.8 percentage points to economic growth in 2025.

Thailand’s economy unexpectedly contracted by 0.6% in the final quarter of 2023, with full-year growth coming in at 1.9%, lower than expected and below the 2.5% growth seen in 2022. Despite these challenges, the government and the central bank are working on measures to support economic growth in the coming years.