Thailand’s economy will grow despite a poor second quarter, according to the central bank.
Reuters: The Thai central bank said Tuesday that despite a weaker-than-anticipated second quarter, the economy is expected to improve as tourism picks up, the central bank said Tuesday, suggesting gradual policy tightening may continue.
The central bank was wrong about growth in the second quarter because private investment and inventories were lower than expected, but exports and tourism were higher than expected.
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“The image shows economic recovery,” he remarked.
The economy grew 2.5% year-over-year and 0.7% in April-June.
The Bank of Thailand (BOT) predicted 3.3% GDP growth this year and 6 million foreign tourists. It recently said growth could outperform its expectations as foreign tourist projections improved.
This year, the administration expects 9.5 million foreign tourists. Before the pandemic, Thailand had approximately 40 million visitors.
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Piti said that a global recession shouldn’t have too much of an effect on the Thai economy because tourism isn’t affected by the global economy.
He expects inflation to rise in August before decreasing gradually and remaining close to estimates.
The BOT predicts headline inflation of 6.2% this year and 2.5% next year, versus 1% to 3%.
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Inflation hit a 14-year high in July, 7.61%.
Last week, the BOT raised its key interest rate by 25 basis points to 0.75 percent in order to combat inflation and signal further gradual increases.
Piti stated that gradual policy tightening will allow for gradual rate transmission, which will benefit the economy while easing the burden on vulnerable individuals.
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