Bank Of Thailand Chief Prasarn Bullish About Growth

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EXCLUSIVE INTERVIEW

BOT chief Prasarn bullish about growth

The Nation

Thanong Khanthong talks to Prasarn Trairatvorakul, the governor of the Bank of Thailand, about the prospects for the Thai economy.

BANGKOK: -- The Thai economy has been hit hard by last year's floods. What is your assessment of the recovery process of the Thai economy this year?

From our monitoring of the figures between December and January, we are quite confident that the recovery from the floods is quite satisfactory, judging from other economic indicators, and the output gap that has been caused by the floods is now narrowing. We do expect that this output gap will close again sometime in the third quarter. The growth rate will be quite healthy. In fact, the Bank of Thailand's figures in January of a growth rate of 4.9 per cent for the whole year of 2012 is likely to be revised up by even up to one full percentage point.

But the government is giving out a 7-per-cent growth rate for 2012.

We might not be reaching that level, as the government expects, of 7 per cent. However, 6 per cent is likely to be a working figure. We are awaiting reconfirmation and at the end of next month we will probably be coming up with the revision.

On the monetary side, will there be any need for monetary easing to accommodate the economic growth?

I don't think that will be necessary. At this point, the present 3-per-cent rate is already quite accommodating. Bearing in mind that our headline inflation at the moment is around 3 per cent plus, the real rate is in fact in negative territory. So, 3 per cent, I think, is quite accommodating already.

You have mentioned earlier that were the oil price to rise to $140 per barrel, it would still be within the range of the central bank's management of inflation. Could you expand on this?

Our monetary policy now is anchored in inflation targeting, and each year we put out targets to the public; for example, in the previous year, we had this inflation target of 0.5 per cent to 3 per cent. Also, we were talking about the headline of 1.5 per cent to 4.5 per cent. Now, if we use these as references, based on our calculations, every 10-per-cent increase in the world's oil price will create some 0.3 to 0.4 increase in our consumer price index. From that calculation, under the stressed assumptions, the stressed scenario of $140 per barrel, both the headline and core are still within range of our targets for this year.

The government is about to pump massive liquidity into the system in order to help the economy recover from the floods. Are you concerned about the country's fiscal sustainability?

It is our duty to maintain the proper balance in the economy and the proper liquidity. The government certainly is now equipped with the fiscal space to restore confidence and to help support restoration, repairs and what is necessary. In practice, these things won't come in a day or a few days. It will go into procedures, planning projects, drawing, approval and so on. So we do hope that it will come gradually. Also in the longer term, it's our wish to see that

our stakeholders will take into account the sustainability of the fiscal position of the country.

-- The Nation 2012-03-26

[CalgaryII]

"The government certainly is now equipped with the fiscal space to restore confidence and to help support restoration, repairs and what is necessary. In practice, these things won't come in a day or a few days. It will go into procedures, planning projects, drawing, approval and so on"

A very positive position, both emerging from effective Flood management evolving back to normality going forward.

[WackySomchai]

"The government certainly is now equipped with the fiscal space to restore confidence and to help support restoration, repairs and what is necessary. In practice, these things won't come in a day or a few days. It will go into procedures, planning projects, drawing, approval and so on"

A very positive position, both emerging from effective Flood management evolving back to normality going forward.

More than 800 Thais killed = Effective flood management?

The troll is back in this forum ...

[how241]

With all the Post flood building and rebuilding, I'm sure will have good growth.

[Bagwan]

Do my eyes deceive me? Did he really use the word 'bullish' or was it BS? Same same most pho yai promouncements?

[IsaanUSA]

Do my eyes deceive me? Did he really use the word 'bullish' or was it BS? Same same most pho yai promouncements?

Yes, bullish. Why is that hard to understand? It's in the news about every week.