Thai central bank says growth outlook below potential

BANGKOK: Thailand’s monetary policy committee makes decisions based on the economic outlook when reviewing rates and so would adjust them if the current assessment changed, the head of the central bank told a business forum on Wednesday (Aug 28).
Bank of Thailand Governor Sethaput Suthiwartnarueput noted the policy interest rate of 2.5 per cent was among the lowest in the world, and said structural factors had held back the country’s economic growth. 
The BOT expects Southeast Asia’s second-largest economy to grow 2.6 per cent this year and 3 per cent in 2025, noting the recovery was uneven.
“It’s not a great number,” he told the forum.
“We’re not happy with a long term growth rate at that reduced level … and not enough to lead to an increase in living standards and welfare that is necessary.”
The central bank last week held interest rates steady for a fifth straight meeting, despite persistent calls from the government for a rate cut. The next rate review is on Oct 16. 
The BOT was ready to adjust rates if the outlook changed, Sethaput said, adding there needed to be ‘policy optionality’ with buffers to preserve resilience in the face of uncertainty and shocks.
There was growth in tourism, but other sectors such as manufacturing had been growing slower, he said, attributing the divergence to structural issues, including demographic changes.
The central bank also saw signs of worsening credit quality, and Sethaput said there could be a credit contraction in the small and medium-sized enterprise (SME) segment. 
“We are keeping a close eye on the credit front,” he said.
Lowering the household debt-to-GDP ratio from above 90 per cent down to a preferred level of 80 per cent would take time, he said.