BANGKOK (Reuters) – Thailand’s finance minister said on Tuesday this year’s economic outlook was still good despite the state planning agency’s downgrade of its growth forecast, adding he also hoped for a policy rate from the central bank that supports recovery.
A weak baht was good for exports though it made imports more costly, Finance Minister Arkhom Termpittayapaisith told reporters. The currency has recently been trading at its weakest level in almost five years against the dollar.
Earlier on Tuesday, the planning agency cut its 2022 growth outlook to 2.5%-3.5% from 3.5%-4.5% and raised its inflation estimate because of higher prices and slower global growth caused by Russia’s invasion of Ukraine.
Arkhon said the revised outlook “is still considered a good sign that the economy is still recovering”.
Monetary policy should continue to support Southeast Asia’s second-largest economy as fund outflows have been small following the U.S. Federal Reserve’s policy tightening, he said.
“I still want to see an interest rate that is positive for the economic recovery, though we also have to weigh fund outflows, which haven’t been much yet,” Arkhom said.
The Bank of Thailand (BOT) has left its key rate unchanged at a record low of 0.50% since May, 2020. It will next review its policy on June 8.
With inflation already breaching the top end of the BOT’s target range of 1%-3%, some economists predict a rate hike later this year, rather than next year.
In a bid to mitigate the impact of high fuel prices, the government agreed on Tuesday to cut the excise tax on diesel by 5 baht ($0.1447) per litre for two months, resulting in a revenue loss of about 20 billion baht ($578.7 million).
But the tax reduction would not affect the country’s overall fiscal position due to improved tax collection, Arkhom said.
“After that, we will have to see global oil prices again whether there is a need for additional measures,” he said.
($1 = 34.5600 baht)
(Reporting by Kitiphong Thaichareon; Writing by Orathai Sriring; Editing by Martin Petty and Kanupriya Kapoor)