Governor of the Bank of Thailand Surveys Thai and World Economies

Foreign Correspondents Club of Thailand. Bangkok. November 3, 2011. The very articulate governor of Thailand’s central bank, Prasarn Trairatvorakul, surveyed both the world and Thai economies for the assembled foreign press at Bangkok’s FCCT this past Thursday evening. Quite naturally, the effects of the flood on the economy were uppermost in everyone’s minds. The central bank had already projected that this year’s growth in Thai GDP would be reduced by 1.5% due to the floods. But, Kh. Prasarn predicted recovery next year because of rising local demand and expenditures to rebuild, both governmental and private. Thailand is heavily dependent on exports, and while global demand is softening from the US and Europe, inter-Asian demand for Thai exports will increase. In all, Kh. Prasarn is moderately upbeat.

Inflation is a looming problem for the Thai economy, and the central bank’s key role in controlling inflation is continuously under discussion in the wider economy and business community. The bank has been raising interest rates to control inflation and there are calls for it to reduce the rate due to the economic dislocations from the floods. However, as of now, Kh. Prasarn views the policy rate as accommodative enough (meaning no immediate decreases), but with there being room to ease in the future (meaning rates will not go up and might come down).

Kh. Prasam answered questions for 90 minutes and provided lucid and forthright responses involving contentious issues. It was a pleasure to listen to him, and it sounds to me like Thailand has a solid and fearless economist in charge of its central bank, who is determined to do what is right for the economy, even if this means opposing or restraining policies of the Thaksin government.