BOT: Economic potential 2.7%, 1% interest rate stability concerns

Prachachat•Economy•18d ago

Reader Briefing

The Bank of Thailand (BOT) projects this year's economic potential at 2.7%, advocating for a 1% interest rate but warning about stability risks, while acknowledging temporary inflation spikes.

•The Bank of Thailand (BOT) has raised its GDP forecast for 2026 to 2.3%, but considers this lower than the economy's potential growth of 2.7%.
•BOT believes maintaining the policy interest rate at 1% is appropriate but cautions against keeping it low for too long due to stability concerns.
•Temporary inflation driven by energy prices and cost pass-through is expected, with a return to target levels predicted for the medium term.
•Economic growth in 2026 is expected to be driven by exports, investment, and government measures, with a slowdown anticipated in 2027.

Overview

•The Bank of Thailand (BOT) has adjusted the economic forecast for the year 2026 to 2.3% GDP growth.
•Don Nakornthab, Assistant Governor of the BOT, stated that the 2.3% growth figure is not ideal when compared to the economy's potential of 2.7%.
•The BOT identifies a "K-Shape" recovery, with concentration in the technology export sector not benefiting the majority, indicating hidden inequality.
•Don Nakornthab emphasized that the interest rate should not be lowered further from 1% and should not be maintained at this level for extended periods due to stability risks.
•The BOT is monitoring cooperation between the public and private sectors, particularly the Joint Public-Private Consultative Committee (JPC) which aims for economic growth exceeding 3%.
•Surach Thanboon, Senior Director of Monetary Policy at the BOT, noted that keeping the policy rate at a relaxed 1% supports economic recovery amidst temporary high inflation.
•Surach Thanboon anticipates general inflation to be temporarily high this year due to energy prices and cost pass-through, decreasing next year.
•The BOT is monitoring the Baht's stability, which has weakened in line with the US dollar, while regional currencies show volatility.
•The BOT views restructuring the economy as a key policy, with initiatives like Reinvent Thailand aimed at revitalizing the nation's economy.

Full article content is available on the original source.

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Source: Prachachat (Original)

Key Quotes

Don Nakornthab

"What I want to say is that the 2.3% figure is not a good number, even though it's better than previously estimated, it's still quite far from economic potential."

สิ่งที่อยากบอกคือตัวเลข 2.3% นี้ ไม่ใช่ตัวเลขที่ดี แม้จะดีกว่าที่ประมาณการในช่วงก่อนหน้า แต่เมื่อเทียบกับศักยภาพเศรษฐกิจยังห่างพอสมควร

Don Nakornthab

"The economic figure returning to normal levels according to potential, as Thailand should be, is a growth of 2.7%."

ตัวเลขเศรษฐกิจที่กลับเข้าสู่ระดับปกติตามศักยภาพอย่างที่ประเทศไทยควรจะเป็นคือโตได้ 2.7%

Don Nakornthab

"The interest rate at 1% should not decrease further and should not remain at this level for a long time, as it could lead to stability problems."

ดอกเบี้ยที่ 1% ไม่ควรลดลงกว่านี้ และไม่ควรต่ำระดับนี้เป็นเวลานาน เพราะอาจนำไปสู่ปัญหาเสถียรภาพได้

Surach Thanboon

"Sustainable economic problem-solving requires a combination of policies to implement accommodative monetary policy alongside targeted financial measures."

การแก้ปัญหาเศรษฐกิจอย่างยั่งยืนต้องผสมผสานนโยบายหลายด้าน เพื่อดำเนินนโยบายการเงินแบบผ่อนคลายควบคู่กับมาตรการทางการเงินเฉพาะจุด

Surach Thanboon

"General inflation will rise temporarily this year due to energy prices and cost pass-through, before adjusting down next year."

อัตราเงินเฟ้อทั่วไปจะสูงขึ้นชั่วคราวในปีนี้ตามราคาพลังงานและการส่งผ่านต้นทุน ก่อนจะปรับลดลงในปีหน้า

Key Entities

Organization

Bank of Thailand (BOT)(ธปท.)ℹ️

The central bank of Thailand, responsible for monetary policy and economic stability.

Joint Public-Private Consultative Committee (JPC)(กรอ.)

A committee comprising public and private sector representatives aiming to address economic issues and promote growth.

Person

Don Nakornthab(นายดอน นาครทรรพ)

Assistant Governor of the Bank of Thailand, Monetary Policy Group.

Surach Thanboon(นายสุรัช แทนบุญ)

Senior Director of Monetary Policy at the Bank of Thailand.

Pranee Suthasri(นางปราณี สุทธศรี)

Senior Director of Macroeconomic Policy at the Bank of Thailand.