Thai Economic Recovery in Line With Expectations: Sethaput

If you take a look at Q1 number, just this morning, better than expected, coming in at 2.7% beating estimates. If you take a look at the outlook for the economy, are you more encouraged or more discouraged? The recovery has pretty much been in line with what we expected. For the first quarter, we had a 2.6 number, so this came in ballpark close to that. We expect the recovery is intact and to continue buoyed largely by the recovery and domestic consumption, which has been strong all throughout, and especially for us, very importantly for us, tourism. So we're sticking with our 3.

6% headline figure for GDP for this year, and expect that that number should, the outturn should be close to that number. Would there be a risk to that outlook, given that the economy is very tight to China? It's seen an even recovery. The tourism sector that you're looking out for may not be as high as anticipated. Yeah, China is very, very important to us. It counts for about a third of our tourist or normal periods, and if you include Hong Kong, about 15% of exports. So what happens to China is absolutely critical. And part of that outlook that I mentioned, that intact recovery is contingent upon a good recovery in China.

And to be fair, one thing that we've seen is that the recovery in China hasn't translated as much into exports from us as much as we would typically see as what we would like. But I think, again, if we look forward, the recovery in tourism, certainly that's pretty intact. We've seen the Chinese tourists come back. We have a 28 million estimate for the number of tourists coming this year, about 5.5% of that expected to come from China. That story is pretty intact. But the one that there is a bit of a, still some uncertainty about is the outlook for our exports of China.

If you look, for example, our exports overall, pre-COVID, to today, it's overall, it's picked up by about 17% in aggregate. But to China, it's lagged. It's gone up by about only 8%. So we'd like to see a bigger pickup from China. Do you think the economy needs fiscal stimulus at this point in time? I don't think it's the first thing that the economy needs at this point. If we look again, I think the economy is recovering quite well. Domestic consumption has been growing at quite a solid clip, 4%, plus percent easily.

And again, the recovery in tourism is likely to contribute to that because tourism is such an important driver of employment and incomes in Thailand. So I think that whole consumption, domestic demand story is very intact. And therefore the need for stimulus type measures is less now. I think in Thailand, as with a lot of countries, we're coming out of the COVID and subsequent crises. During that period, we saw a lot of policymakers, both in the monetary and the fiscal side, put in large degrees of stimulus, monetary policy has been extremely accommodated, fiscal policy has been very, very highly stimulative. So I think now, overall in terms of overall picture, it's a period of normalization. It's a time for consolidation, more fiscal consolidation rather than stimulus in terms of the overall macro picture.

We're on the culls of a new government in Thailand. If you take a look at the campaign promises, all the political parties promise to spend. In fact, some estimates suggest $92 billion in access of that. I'm just wondering what that might mean for a country that's still reeling with high inflation. Yes, inflation is east from a 14-year high, but it's still high. Yeah. Yeah.

First off, I think the most important impact in terms of the fiscal is to make sure that the fiscal picture, the overall fiscal picture in terms of fiscal stability, that's sound. I mean, I think right now there's, again, all around the world premium on that. And we've seen instances where the market is ready to punish bad policies or policy they're announcing. It's not clear how you're going to fund them, doesn't translate, result in good outcomes. So that's, I think, first and foremost, the thing that needs to be addressed in the fiscal front to make sure that there's a solid fiscal picture. But in terms of the fiscal impact on inflation, again, a lot of that will depend upon the nature of the spending that occurs. In the past, we've seen a lot of spending occur in the form of subsidies for energy and whatnot.

That, in terms of the inflation impact, is a bit different from the usual kind of pump priming type expenditures. So a lot of that impact that you're talking about in terms of the fiscal spending depends upon what kinds of spending will occur. But again, I think in terms of the overall picture, I would argue, again, that the focus should be more on trying to gradually consolidate the fiscal picture, trying to maintain the fiscal stability, because the economy overall, in terms of recovery, is progressing. When it comes to monetary policy, the Fed is data dependent. Are you data dependent? I think every central bank is data dependent. But I like to phrase it that we like to think our sources be outlook dependent, meaning that data comes out with a lag, and policy impacts occur with a lag. So if you're looking just at data and the data outturns, it's like that old line about driving and by looking at the rear view mirror.

So we look at the data, obviously, but data insofar as it informs how the outlook is evolving. So for us, again, if you look at the inflation numbers, what that means in our context is, yes, we've seen inflation come down. Inflation was high, went up to about 8%, close to 8% last September. It's tracked down. It's come back within our 3%, 1 to 3% headline inflation target range. This outturn is ballpark about 2.7%, over the past two outturns.

But it's important not to be sanguine because if we look ahead, even though inflation is likely to be low for a while, there are risks of upside inflation pressure coming from, again, the pickup in tourism that we expect to see, coming from, again, possible spending by the new government, coming from possible promises made regarding the minimum wage.

Bank of Thailand, Fiscal Policy, Haslinda Amin, Monetary Policy, Suthiwartnarueput Sethaput, Thailand, Thailand Economy, Thailand GDP, Thailand Government