Central bank governor foresees growth rate higher in 2020
The Thai economy will grow next year but its rate of growth is likely to be well below its potential, says Veerathai Santiprabhob, central bank governor.
Speaking at the Thailand Economic Outlook hosted by Krungthep Turakij newspaper, Veerathai said today (December 23) GDP will expand 2.8 per cent next year. “The growth would be higher next year than this year, but it remains below potential of 3.5-4 per cent,” he told the seminar’s participants.
Exports would return to growth next year and drive the economy forward, he said.
The central bank recently cut its growth forecast to 2.5 per cent this year and predicted exports of goods and services to contract by 4.8 per cent in 2019 before returning to growth of 1.4 per cent next year.
As for the appreciation of the baht, Veerathai blamed the structure of the Thai economy.
Structural issues have emerged during economic slowdown; labour and baht appreciation are by-products of the underlying forces, he said.
“When we get a cough, it may be caused by inflammation inside our body and while medicine will relieve the symptoms, it cannot cure the real illness,” he said alluding to how cuts in the policy rate would not restrain baht appreciation.
Exporters and businesses have long complained about the rising baht against the US dollar and other key currencies, while academics say the large current account surplus combined with weak investment have been the real cause of baht appreciation. The baht has risen about 7 per cent against US dollar since early this year.
The central bank cut the policy rate twice this year, bringing it to the low level of 1.25 per cent.
The cut partly aimed to deter investors from parking their money in Thailand hoping to gain from the strengthening baht but has done nothing to make the baht weaker.
