Thai growth prospects good despite planning agency downgrade – finance minister

By Kitiphong Thaichareon

BANGKOK (Reuters) – Thailand’s finance minister said on Tuesday that this year’s economic outlook is still good despite the state planning agency downgrading its growth forecast, adding he also hopes for a central bank interest rate to support the recovery.

A weak baht is good for exports, although it makes imports more expensive, Finance Minister Arkhom Termpittayapaisith told reporters. The currency was last seen at its weakest level against the dollar in almost five years.

Earlier on Tuesday, the planning agency cut its 2022 growth forecast to 2.5%-3.5% from 3.5%-4.5% and raised its inflation estimate on higher prices and slower global growth fueled by Russia’s invasion of Ukraine was caused.

Arkhon said the revised outlook “is still viewed as a good sign that the economy is still recovering.”

Monetary policy should remain supportive of Southeast Asia’s second-largest economy as outflows have been modest following the US Federal Reserve’s tightening, he said.

“I still want to see a rate that’s positive for economic recovery, although we also have to weigh outflows, which haven’t been much yet,” Arkhom said.

The Bank of Thailand (BOT) has kept interest rates unchanged at a record low of 0.50% since May 2020. She will next review her policy on June 8th.

With inflation already breaching the upper end of the 1% to 3% BOT target range, some economists are forecasting a rate hike later this year rather than next.

To mitigate the impact of high fuel prices, the government on Tuesday agreed to cut the excise tax on diesel by 5 baht ($0.1447) per liter for two months, resulting in a lost revenue of about 20 billion baht ($578.7 million). USD) led. .

But the tax cut would not affect the country’s overall financial position because of improved tax collection, Arkhom said.

“After that, we need to see global oil prices again to see if additional action is needed,” he said.

($1 = 34.5600 baht)

(Reporting by Kitiphong Thaichareon; Writing by Orathai Sriring; Editing by Martin Petty and Kanupriya Kapoor)

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