BOT governor dismisses stagflation fears, saying Thai inflation is not persistently high
Bank of Thailand Governor Vitai Ratanakorn says Thailand is not yet facing stagflation, arguing that inflation has not remained high for a prolonged period despite weak growth concerns and mounting pressure on factories.
BOT says inflation has not become a long-term structural threat
Bank of Thailand Governor Vitai Ratanakorn has dismissed concerns that Thailand is already facing stagflation, saying current economic conditions do not yet meet the key definition of the term.
Vitai said stagflation requires more than weak economic growth and higher prices. In economic terms, he said, the condition must involve persistently high inflation over a prolonged period, with price pressures lasting long enough to affect the broader economic structure.
He said Thailand has not reached that point because inflation has not stayed high continuously for a long duration.
Weak growth alone does not mean stagflation, governor says
Vitai said some observers may have concluded that Thailand is entering stagflation because growth remains weak while costs have risen. However, he stressed that the central issue is whether inflation remains high and entrenched over the long term.
“During Monetary Policy Committee meetings, the issue of stagflation has not been raised for discussion,” he said. “Although many parties believe Thailand has already entered this state based only on low growth and high inflation, this may be a misunderstanding. The core condition of stagflation is that inflation must remain high consistently and for a long period.”
He added that Thailand has not seen clear signs of a sharp deterioration in employment, which is often associated with stagflation in other economies.
Industrial pressure keeps stagflation debate alive
The governor’s comments come as Thailand’s industrial sector faces rising concerns over factory closures, higher energy costs, raw material shortages and weak demand.
The Federation of Thai Industries has warned that manufacturers are under heavy pressure, with factory closures in January and February rising 58.43% from a year earlier, while new factory openings fell 60.14%. Capacity utilisation in February stood at 58.21%, below the 60% level, reflecting weak industrial activity.
Manufacturers have also been hit by higher production and transport costs, including rising diesel prices and shortages of key raw materials such as plastic resin, chemicals and aluminium. The FTI warned that these cost pressures could push up product prices and increase inflationary pressure if global energy tensions persist.
BOT sees no immediate stagflation signal
Despite these pressures, Vitai said Thailand is not in a long-term stagflationary state because inflation has not remained high on a sustained basis.
He said the central bank would continue to monitor economic conditions closely, but the current situation does not point to the kind of prolonged inflation shock normally associated with stagflation.
The BOT’s position contrasts with concerns from parts of the private sector, which fear that higher costs, weak purchasing power and fragile industrial activity could weigh further on growth if external pressures continue. The Joint Standing Committee on Commerce, Industry and Banking has projected Thailand’s economy to grow by 1.2-1.6% this year, with inflation at 2-3%.
