By Orathai Sriring, Thanadech Staporncharnchai and Devjyot Ghoshal
BANGKOK (Reuters) – Thailand’s economic growth may falter at under 2.9% this year on the back of a weaker-than-expected fourth quarter where consumption cratered despite a government cash handout aimed up firing up sluggish growth, the central bank chief said on Thursday.
The Bank of Thailand previously anticipated that the economy could expand by 2.9% this year, lower than finance ministry projection of 3% growth.
“I have to say that there is some downside risk to that figure,” governor Sethaput Suthiwartnarueput told Reuters in an interview.
He said the economy may have expanded close to 2.7% in 2024, with the final-quarter pace weaker than forecast, at north of 3%.
“The impact of the handouts and the stimulus was less than we had expected,” he said. “The handouts that went out sometimes were used to pay down debt and whatnot, so you didn’t see that translation into consumption.”
Sethaput’s remarks were his first this year on the economic growth outlook and the effectiveness of the government’s vaunted $14 billion handout policy.
Thailand’s government is set to roll out the third phase of its signature “digital wallet” programme in April, aiming to spur “very high” growth in the first quarter. The scheme, the ruling party’s core election campaign policy, was launched last September after repeated delays.
The BOT’s monetary policy stance remains broadly neutral and inflation will rise to cross to hit 1.1% this year, remaining in the target band of 1% to 3%, but the central bank remains concerned about the volatility of the baht, Sethaput said.
“We feel that at present, when you take it all together, the current policy rate is appropriate for striking the right balance for those things,” he said.
“That said, if things change, right, we’re prepared to change.”
Last month, the central bank left its key interest rate unchanged at 2.25% after a surprise rate cut in October. It will next review policy on Feb. 26.
TRUMP UNCERTAINTY, CRYPTO
The return of U.S. President Donald Trump for a second term had injected more uncertainty but it was still too early to say what impact it would have on Thailand, the governor said.
“It’s highly uncertain, and it’s very, very early days,” said Sethaput, who is set to finish a five-year term in September.
Southeast Asia’s second-largest economy is seeking to benefit from a reworking of supply chains triggered by tariffs threatened by the new U.S. administration.
Sethaput also underlined the central bank’s hesitation on cryptocurrency, even as the Thai government makes a push to use it as an alternative payment system, with a proposal for a sandbox on the tourist island of Phuket.
Cryptocurrencies lack a stable value, their underlying technologies are not very scalable and can lead to a fragmented payment system, he said, pointing out that Thailand’s existing Promptpay digital payment platform was working well.
“I understand, again, where the impetus is coming from. Even in the U.S. we see, you know, a push for this,” he said.
“The benefits of the use case have to be very, very clear because they are downside risk to moving to that.”
(Writing by Devjyot Ghoshal; Editing by Martin Petty)
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