BANGKOK :Thailand’s economy was seen growing slightly more than 2.5 per cent this year, less than earlier expected, minutes of the Bank of Thailand’s February 26 monetary policy meeting showed on Wednesday, with its economic recovery becoming more uneven.
At the meeting, the BOT’s monetary policy committee voted 6-1 to cut the one-day repurchase rate by 25 basis points to 2.00 per cent. One member voted to maintain the rate.
The surprise quarter-point rate cut followed a hold in December and a similar reduction in October.
The bank saw economic growth at 2.9 per cent in December.
The committee said growth could be lower than previously anticipated, with higher risks going forward, according to the minutes, and that the majority of members considered lowering rates to ease credit conditions and with 2.00 per cent providing sufficient policy space.
Thailand’s household debt stood at 16.34 trillion baht ($486 billion) at the end of September 2024, or equivalent to 89.0 per cent of gross domestic product, among the highest levels in Asia.
The government sees household debt as significant constraint on consumption and growth.
“Economic recovery became more uneven across sectors,” the central bank minutes said, with tourism and exports expanding. “Conversely, manufacturing sectors facing structural challenges, especially the automotive-related and real estate industries, showed further deterioration.”
The committee agreed that the slowdown in the Thai economy was “driven by structural factors, which required supply-side restructuring policies.”
The committee member who voted to maintain rates saw that monetary policy had “limited effectiveness in addressing structural issues in the current economic context” and was primarily a tool to manage demand.
Thailand’s key interest rate of 2.0 per cent was considered robust for the current circumstances and the central bank did not intend to move rates frequently, central bank chief Sethaput Suthiwartnarueput said last week.
The central bank has said the bar would be high for a further cut as the level is consistent with the current economic outlook.
Thailand’s government has a growth target of 3 per cent this year and hopes to surpass that through stimulus measures worth $4.4 billion and other steps to boost economic activity.
Southeast Asia’s second-largest economy grew 2.5 per cent last year, lagging its peers.
The central bank’s next rate review is on April 30.
($1 = 33.6300 baht)
