Central bank retains economic growth estimate unchanged

BANGKOK, Jan 23 (TNA) – Bank of Thailand (BoT) Assistant Governor Paiboon Kittisrikangwan on Friday announced that the central bank will maintain its economic growth estimate for this year at 3.3-5.3 per cent against a contraction of 2.7 per cent in 2009.

He said that Thailand’s gross domestic product (GDP) grew 4 per cent in the fourth quarter of last year and tended to expand further upon global economic recovery, improved private consumption and investment and increased exports.

Thailand’s economic recovery looks sustainable, he said, given the higher consumer confidence and business confidence indexes.

The BoT projected GDP in 2011 will expand 2.8-4.8 per cent, boosted by the expected increase in the private consumption and investment, and higher exports and imports.

However, the Thai economy would continue to experience four risk factors including the slower than expected global economic growth, a continued slowdown in fiscal driving force, the concerns and impacts from the investment project suspension in the Map Ta Phut Industrial Estate, and persistent political conflicts.

Mr Paiboon said the inflation rate would remain low because the government decided to extend measures to relieve living costs to the first quarter of this year.

It is expected the general inflation rate would stay at 3-5 per cent and the core inflation rate at 1.3-2.3 per cent.

Monetary policy implementation will return to normal this year if the private sector conducts business steadily and the economy continues expanding.

Still, higher oil and commodity prices must be monitored as it could fuel rising inflation. He said the BoT will consider again whether it is appropriate to raise the policy interest rate in the third and fourth quarters.

“The interest rate adopted by the bank to boost the economic recovery is considered especially low. If the economy recovers steadily, the interest rate must return to normal because the bank must retain economic stability in the long run,” said Mr Paiboon.

Regarding the stronger baht, he allowed the central bank is unable to peg the currency because it had adopted the managed float regime, but if the baht fluctuated too heavily, the bank would attempt to supervise to prevent it from affecting the economic recovery. (TNA)