BANGKOK: Thailand should see economic growth of 3.0%-3.5% this year, driven by its key export and tourism sectors, a recovery that is best supported by gradual interest rate hikes, its finance minister said on Wednesday.
Arkhom Termpittayapaisith in an interview with Reuters said that a weak baht was helping exports, which should grow 8% this year, and tourism. “The main drivers of growth are tourism and exports (private) consumption is also growing, but not too quickly,” he said on the sidelines of a meeting of finance officials from the Asia-Pacific region.
The economy was expected to grow 3.7% next year, Arkhom said, adding he expected tourist arrivals of 8-10 million this year, which should double to 20 million in 2023, about half of the pre-pandemic figure.
Recent flooding in Thailand had not impacted the economy much, he said.
Arkhom said the Bank of Thailand (BOT)’s headline inflation target range of 1%-3% was still appropriate, despite consumer prices still exceeding the target.
Arkhom said the baht was still moving in line with regional peers, adding the central bank would only manage excessive moves in the currency.
The baht has been hovering at a 16-year low against the dollar and depreciated about 12% against the greenback so far this year.
Southeast Asia’s second-largest economy is expected to return to its pre-pandemic levels late this year or early next year, the central bank predicts, lagging neighbours as tourism has only recently begun to recover.
Last year’s economic growth of 1.5% was among the slowest in the region, but the April-June period saw expansion of 2.5% from a year earlier and 0.7% from the previous quarter.
World Bank forecasts Thai GDP growth at 3.1% this year
Arkhom said third-quarter economic growth should be faster as more foreign tourists returned. Last month, the BOT raised its key interest rate for a second straight meeting, by a quarter point to 1.00%.
Arkhom on Wednesday reiterated that rate hikes should be gradual and not aggressive as “we need to be confident that the economy will recover and (rates) won’t add much costs to businesses”. The BOT will next review policy on Nov. 30, when economists expect another hike.
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