Thailand’s new government has reignited discussions regarding the central bank’s borrowing costs, as Prime Minister Paetongtarn Shinawatra’s commerce chief urges policymakers to take action to stimulate the nation’s economy, the second-largest in Southeast Asia.
Commerce Minister Pichai Naripthaphan expressed his concerns during a briefing on Monday, stating, “The central bank’s approach may be outdated and too slow. Our economic growth is stagnating, and the Bank of Thailand (BoT) should assist in promoting growth.” Mr. Pichai served as a key advisor to Ms. Paetongtarn’s predecessor, Srettha Thavisin.
He emphasized that the Bank of Thailand should address the rising strength of the baht, which is impacting exporters negatively, and also increase liquidity within financial markets. The Thai baht has appreciated more than 10% this quarter, making it the strongest currency in Southeast Asia.
This call for a rate cut marks the first from Ms. Paetongtarn’s cabinet, indicating that the new administration intends to maintain pressure on monetary authorities to reduce borrowing costs, which are currently at their highest level since 2013. Mr. Pichai had previously supported Mr. Srettha’s ongoing push for lower rates, an initiative that central bankers, led by BoT Governor Sethaput Suthiwartnarueput, had opposed.
Mr. Pichai plans to arrange a meeting with Mr. Sethaput to discuss the matters he raised.
Additionally, he pointed out that the Thai currency’s strength poses risks to exporters, particularly those with thin profit margins.
The Commerce Ministry is also set to:
- Assist Thai companies aiming to expand internationally
- Seek free trade agreements to enhance trade and investment opportunities
- Implement measures to protect local manufacturers from cheap imports, particularly from China
“We must exert ourselves amid the global economic slowdown,” stated Mr. Pichai. “Reviving the Thai economy is essential.”
