Bank of Thailand to X-ray private consumption, investment

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BANGKOK, May 21 – Thailand’s central bank will thoroughly examine the country’s private consumption index (PCI) and private investment to find the reasons behind the disappointing growth rate of the gross domestic product (GDP) at only 5.3 per cent in contrast to an earlier forecast at 7.1 per cent, the bank chief said today.

Bank of Thailand (BoT) governor Prasarn Trairatvorakul said a GDP growth at 5.3 per cent in Q1, as announced by the National Economic and Social Development Board (NESDB), could jeopardise the annual GDP growth target of 5 per cent.

The BoT projected domestic consumption to expand 5.8 per cent but the NESDB reported it as only 4.2 per cent.

The NESDB’s figure on the growth of domestic demand was 3.9 per cent but the BoT’s forecast was 6.1 per cent.

The BoT estimated private investment to rise by 7.3 per cent but the growth percentage, as given by the NESDB, was only 3.1.

Mr Prasarn said he has requested an analysis of relevant factors for a clearer understanding of the economic trend and results of the study will be submitted to the Monetary Policy Committee (MPC) to back up its deliberations on the policy interest rate in its May 29 meeting.

The MPC is ready to relax the monetary policy if there are signals of a domestic consumption slowdown and the negative impact on the country’s economic growth, he said.

Regarding the Q1 growth at 5.3 per cent, the BoT governor said special attention should be given to domestic consumption, not imports and exports.

However, the BoT analysis will not be based on only one quarter, he pointed out, saying that the private consumption slowdown was in contrast to the low unemployment rate and higher household debt.

The increase of minimum wage to Bt300 should spur consumption while commercial banks’ lending has increased by 13 per cent.

Mr Prasarn said the foreign capital inflows will continue to impact the exchange rate but the BoT will try its best to minimise the volatility as requested by exporters.

The BoT has prepared measures to rein in the baht but some measures will need the Finance Ministry’s cooperation, he said.