BoT expects 3% GDP growth thanks to increase in foreign arrivals
The central bank forecasts the gross domestic product will expand by 3 per cent this year thanks mainly to an expected increase of foreign tourists, its governor said.
Bank of Thailand (BoT) governor Sethaput Suthiwartnarueput made the remark while speaking at the annual investment conference “Thailand Focus 2022: the New Hope” held by the Stock Exchange of Thailand on Wednesday.
Sethaput said the BoT is optimistic that the number of foreign arrivals would rise to around 8 million this year, compared to the initial projection of 6 million.
He noted that 3.2 million foreign tourists have already visited the country in the first half of 2022, so it would not be hard to see 8 million for the whole year.
“For this reason, the central bank expects GDP growth to be 3 per cent this year and 4.3 per cent next year,” Sethaput said.
Tourism revenue constituted about 12 per cent of GDP and the employment of tourism workers constituted about 20 per cent of overall employment, so tourism was a key factor driving the Thai economy, he pointed out.
Sethaput however admitted that geopolitics and new possible Covid variants could be negative factors that might cause the country to miss its tourism target.
The BoT governor also admitted that the ratio of household debt was worrying as it had risen to 30 per cent of GDP. He noted that this debt increased by 10 per cent during the Covid crisis.
Sethaput said it would take time to address the issue of household debt because economically vulnerable groups would slowly improve their financial situation.
The central bank would have to ensure that rising inflation does not affect vulnerable groups, he added.
The bank has come up with some measures to help debtors, including a plan to hold a debt settlement fair on September 26, the BoT governor said.
He made it clear that the bank would not be hawkish in raising the policy interest rate, but the rate would be gradually increased to minimise the impact on SMEs and household debtors.
On August 10, the central bank’s Monetary Policy Committee raised the policy rate by 0.25 percentage point from 0.50 to 0.75 per cent.
Sethaput said the BoT would gradually employ monetary measures to ensure a smooth takeoff of the economy.
He acknowledged that the baht is now fluctuating but the situation would improve once the US Federal Reserve sends clear signals on its monetary policy.
Sethaput said there were signs of baht speculation, with about 48 billion baht of foreign funds sweeping into the country since the beginning of the year.
“The central bank does not want to see the baht fluctuating, but a weakening baht was caused partly by the strong US dollar, which we cannot control. So we have to let it move in accordance with the market,” he added.