Thai central bank to hike inflation forecast above 2%
The Bank of Thailand is expected to raise its 2022 inflation forecast from 1.7 per cent to between 2 and 3 per cent, a senior official said.
Sakkapop Panyanukul, BOT’s director of Economics and Policy, said the raise was due to drastic changes in the economic situation. He cited the 20 per cent increase in global oil prices plus the rising cost of pork.
“As a result, the BOT estimates inflation may rise above 2 per cent,” Sakkapop said.
He added that it could exceed 3 per cent during the first half of 2022 but inflation would remain within that target for the year overall.
January’s inflation rose to 3.2 per cent due to price increases for oil and pork, he added.
The price of oil has since risen further following Russia’s invasion of Ukraine and retaliatory measures taken by many countries.
On the economy, the BOT expects Thai GDP to exceed its initial projection of 3.4 per cent in 2022, Sakkapop said.
He added that the bank would wait for March’s economic figures before revising its GDP projection.
At the current rate of expansion, Thailand would return to pre-Covid-19 levels of growth by early 2023 or late this year, he said. However, that recovery would be slower in certain industries, including textiles-clothing and hospitality, which are short of around one million workers following the Covid-19 crisis, Sakkapop said.
However, the economy was on an upwards trajectory after rebounding from 6.1 per cent contraction in 2020 to 1.6 per cent growth in 2021, he added.
He said that 2021’s growth was driven by exports expanding by 125 per cent.
But Thailand’s economy would take a year longer to recover than many others due to its high dependence on tourism, which constitutes up to 12 per cent of the country’s GDP, Sakkapop explained.
He said the BOT is helping businesses by keeping its policy rate at a historic low of 0.50 per cent and by encouraging banks to restructure firms’ debts.
He said the debt restructuring policy saw commercial bank loans grow by 6.5 per cent but non-performing loans stay low at 3 per cent.
