BANGKOK – Bank of Thailand (BOT) Governor Prasarn Trairatvorakul has reported that Thailand could grow by 4.5 percent in the first half of 2015, the central bank governor said Thursday, though he acknowledged the economy likely will only slowly recover this year after a bad 2014.
Bank of Thailand (BOT) Governor Prasarn Trairatvorakul told a news conference said that as exports won’t improve much, “government spending, especially on investment, is the hope for driving growth”.
Prasarn said “the economy this year is likely to recover slowly”.
With solid spending, annual economic growth could be 4.5 percent in the first half and 3.4 percent in the second half, he said.
To economists, growth of 4.5 percent in January-June wouldn’t indicate a solid recovery, as the first half of 2014 was disastrous. Initially, the government said the economy shrank 0.1 percent, which it later revised to zero growth.
Thailand will report full-year 2014 growth, which the BOT forecasts at 0.8 percent, on Feb. 16.
Southeast Asia’s second-largest economy is still struggling to regain traction nearly nine months after the army took power in May in a bid to end political tension and spur recovery.
For now, the central bank maintains its economic growth forecast of 4.0 percent for this year while the International Monetary Fund sees 3.5 percent.
Governor Prasarn Trairatvorakul, who has repeatedly say the current policy rate of 2 percent supports the economy, reiterated that it will be adjusted if need be.
“Do we have room for easier monetary policy? The answer is yes if economic activity is not going as expected,” he said.
Some analysts expect the first cut in a year at a policy meeting on March 11, due to falling consumer prices and sluggish economic growth.
The BOT said on Tuesday it had no plans to adjust monetary policy despite the first annual decline in consumer prices in more than five years in January.
JPMorgan economist Benjamin Shatil said he expected one 25 basis point cut from the BOT this year, although he thought that might have little impact.
“With a global wave of easing, in a relative sense and in terms of competitiveness it makes sense for Thailand to ease,” Shatil said.
Although the coup restored some confidence, efforts to get the economy growing have been stymied and consumer confidence slipped in January, putting pressure on the junta to speed up infrastructure projects to rev up growth.