BOT chief says delay in govt formation will not affect Thailand's growth
The central bank governor on Wednesday played down the impact on Thailand’s economy from the delay in the formation of the next government, maintaining the bank’s projection of 3-4% growth this year.
Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput said the economic situation of Thailand had not changed much and the country would still enjoy growth of 3-4%.
He said the election of the next prime minister would not have much of an effect on the country’s overall economic outlook.
The Move Forward Party, the single largest party in Parliament after the May 14 election, has not been able to form a coalition government mainly because of the lengthy legal process set by the 2017 charter seen as favouring the 2016 coup masterminds. Last Thursday, Move Forward leader Pita Limjaroenrat failed to win the PM vote because most senators, appointed by the coup architects, refused to vote for him.
Sethaphut said the economic forecast of the BOT had already taken into account a political scenario of a delay in the formation of the next government.
The delay is expected to delay the fiscal 2024 budget bill in time for the start of the fiscal year in October.
“We expect the enactment of the budget bill to be delayed, Sethaphut said.
But he said government agencies could still draw their fixed expenditure for the fourth quarter of this year and the first quarter of next year without having to wait for the budget bill’s enactment.
“Only the investment budget would be missing, but not in a high proportion. This year would not be affected but next year could be,” Sethaphut added.
He said the BOT expected the growth would continue during the second half of this year.
“It is expected that the second half would see 4.2% growth, compared to 2.9% in the first half,” the central bank governor said.
Sethaphut said the growth in the second half would be mainly driven by consumption, which would expand because of the tourism sector’s recovery. The governor said it was expected that about 29 million foreign tourists would visit Thailand this year.
The BOT governor said the high 90% ratio of household debt to GDP would remain a rick factor for the Thai economy.
The governor added that the BOT expected no growth in exports because of the slowdown in the global economy, especially China.
Setthaphut said the inflation rate during the past two months was lower than projected but the low rate was seen as a short-term situation due to lower prices of foods and energy.
He said inflation could still rise because of recovery in tourism and service sectors and increases in manufacturing output.
Since there is still a risk of inflation rising, the central bank would not yet adopt normal-situation fiscal measures and would continue its fiscal policies for financial stability, Setthaphut added.
He said the next government should focus on creating economic stability rather than stimulus measures, which are now not necessary.
