The Bank of Thailand (BoT) has increased its inflation forecast for this year to 4.9 percent from 1.7 percent in the same period last year due to increases in energy and food prices caused by the supply shock that is driven by the Russia-Ukraine war.
According to the bank, headline inflation is expected to be 4.9 percent in 2022, which is higher than the bank’s inflation target range of 1-3 percent.
According to Piti Disyatat, secretary of the central bank’s Monetary Policy Committee (MPC), the BoT expects headline inflation to reach 1.7 percent next year, up from 1.4 percent previously. The bank also reduced its GDP growth forecast for 2022 from 3.4 percent to 3.2 percent, and its 2023 forecast from 4.7 percent to 4.4 percent.
According to Piti, inflation will exceed 5% in the second and third quarters of this year, owing primarily to rising energy prices and the pass-through of food prices. He did note, however, that the figure is expected to fall and return to the target range in 2023, owing in part to the belief that the rise in energy prices will not be sustained.
The MPC stated that it will continue to monitor inflation dynamics to ensure that medium-term inflation expectations are consistent with the monetary policy target while projecting that Thailand’s GDP will grow by 3.2 percent this year and 4.4 percent in 2023, owing to improved domestic demand and tourism.
The MPC warned that downside risks to growth remain, including prolonged raw material shortages in certain industries and the impact of higher prices on household living costs and business production costs, particularly for vulnerable groups.
The BoT maintained its forecast for foreign arrivals this year at 5.6 million, with 400,000 Russian and Ukrainian visitors expected. (NNT)