BANGKOK (Reuters) – Thailand cannot contemplate any interest hikes until its economy is fully recovered, and fiscal and monetary policy will continue to support businesses and an economic recovery, the finance minister said on Wednesday.
The government is aiming for 4% economic growth this year while trying to develop new growth engines such as startups and digital technologies, Finance minister Arkhom Termpittayapaisith told a business seminar.
Southeast Asia’s second-largest economy grew 1.6% last year, among the slowest rates in the region, recovering from a 6.2% contraction in 2020.
During coronavirus outbreaks, fiscal policy will play a major role and monetary policy should be accommodative to allow the government to spend more, he said.
“The question is in 2022, if the Fed (U.S. Federal Reserve) raises interest, rates shall we follow? We have to be confident that our economy is fully recovered,” he said.
Fiscal and monetary policy will facilitate the business sector to grow and get through a COVID-19 crisis, Arkhom said.
The central bank has left its key interest rate <THCBIR=ECI> at a record low of 0.50% since May 2020, maintaining support for a still fragile and uneven economic recovery.
Deputy Prime Minister Supattanapong Punmeechaow told the seminar economic growth of 3-4% this year can be achieved, helped by increased investment and a reopening to foreign tourists.
The government will ensure energy prices are not too high to help maintain the country’s competitiveness, he added.
(Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; Editing by Ed Davies)
