Thai CB says economy slowed in Dec

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BANGKOK- Thailand’s economy slowed in December last year on a monthly basis from weaker exports and manufacturing, the central bank said on Friday.

Thailand’s economic growth has lagged regional peers since the pandemic, hobbled by high household debt and borrowing costs as well as contracting manufacturing.

The central bank said private consumption rose 0.3 percent in December from November, and private investment rose 0.2 percent on the month.

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Exports rose 8.4 percent in December from a year earlier, while foreign tourist numbers increased 0.1 percent from November, the Bank of Thailand said.

The current account surplus rose to $2.9 billion in December from a surplus of $2 billion in November.

“Thai economy continued to expand from the previous quarter,” the central bank said and that growth was driven by improving activities in the service sector, higher tourism revenue, as well as a good expansion in government investment.

Thailand’s economic growth may falter at under 2.9 percent this year after a weaker-than-expected fourth quarter despite a government cash handout, Governor Sethaput Suthiwartnarueput told Reuters on Thursday in his first remarks this year.

Sethaput said growth could be close to 2.7 percent in 2024, with the final quarter pace seen in the 3 percent plus range, less than earlier forecast, due mainly to softer-than-expected consumption.

Industry ministry data earlier on Friday showed manufacturing output dropped by a bigger-than-expected 2.1 percent in December from a year earlier due to a slump in the automotive industry and weak consumption.

Thailand’s car production fell 17.37 percent in December from a year earlier, down for the 17th successive month due to lower domestic sales and exports, according to the Federation of Thai Industries.

Thailand’s government is set to roll out the third phase of its “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. — Reuters

The BOT’s monetary policy stance remains broadly neutral and it expects inflation to rise to 1.1 percent this year, within the target band of 1 percent to 3 percent, Sethaput said. — Reuters

However, the central bank remains concerned about baht volatility, though it has no currency levels in mind, he added.

“We feel…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, we’re prepared to change.”

Last month, the central bank left its main interest rate  at 2.25 percent after a surprise cut in October. It will next review policy on Feb. 26.

Sethaput said the current inflation target band has served well, even though the government wants prices to rise to the 2 percent midpoint.

“Trying to focus too much on a specific numerical target, I would argue, has adverse unintended consequences,” he said.

The central bank wants to have the overall inflation regime anchored at a low level, even if it’s not 2 percent, Sethaput said.

There are no signs of deflation in Thailand, he added, despite prices growing just 0.4 percent last year.

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Sethaput said the buffer provided by Thailand’s high international reserves, of around $237 billion as of mid-January, had been a source of “strength and stability” at a time of high uncertainty.

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