BANGKOK (Reuters) -Thailand’s economy is in a state of recession owing to a high level of household debt, a deputy finance minister said on Monday, raising pressure on the central bank to cut interest rates.
Deputy Finance Minister Julapun Amornvivat also said the government was committed to delivering on its signature 500 billion baht ($14 billion) handout plan of transferring 10,000 baht ($281) each to 50 million Thais, and hoped a delay in its rollout would not be long.
He said the country’s policy interest rate, which is at a decade-high of 2.50%, should be cut at the central bank’s next policy review on Feb. 7 to help lower high borrowing costs.
“The rate should be lowered as high rates now are people’s burden. People can’t survive,” he told reporters.
Prime Minister Srettha Thavisin has also urged the central bank to cut the key rate to help Southeast Asia’s second-largest economy he says is in crisis.
Bank of Thailand Governor Sethaput Suthiwartnarueput, who has come under fire from the premier for not cutting rates despite negative inflation, told Reuters last week growth had been slower than expected but the economy was not in crisis.
Sethaput said the current policy rate was “broadly neutral”.
The central bank left its policy rate unchanged at 2.50% at its last rate meeting in November, having raised it by 200 basis points since August 2022 to curb inflation.
The government last week slashed its 2024 growth projections for Southeast Asia’s second-largest economy to 2.8% from an earlier forecast of 3.2% on weaker exports and lower foreign tourist numbers.
It also lowered the 2023 growth estimate to 1.8% from 2.7%, below 2022’s 2.6% growth. Official 2023 gross domestic product (GDP) is due to be released by the planning agency on Feb. 19.
“If you ask, now it’s at the dangerous level. It’s a kind of economic recession,” Julapun said, adding the situation was driven by the high debt burden of households and the private sector.
“It’s difficult to drive the economy forward. That’s why we’ve seen economic growth that has always been sluggish.”
Julapun also said Thailand is planning to issue bonds overseas in the next one or two years in dollar, yuan and yen to create benchmarks for businesses to raise funds.
He said there would be a sale of government savings bonds worth about 100 billion baht ($2.8 billion) in the 2024 fiscal year, with the first batch of 40 billion baht in March.($1 = 35.5800 baht)
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