By Reuters and published by CNA
THE cabinet today (May 5) approved an emergency decree to borrow 400 billion baht ($12.2 billion) to alleviate cost of living pressures and support energy costs, Prime Minister Anutin Charnvirakul said.
– The borrowing is necessary because higher energy prices will impact everyone, Finance Minister Ekniti Nitithanprapas said.
– Half of the borrowing will be targeted towards vulnerable groups and the other half will be used to help the energy transition.
– “We have to help vulnerable groups,” he said, adding the government will try to reduce living costs and push for clean energy use.
– All of the borrowing will be sourced from within Thailand, he said, adding that the decree will be put to parliament next week.
Meanwhile, the central bank kept its key interest rate unchanged at a review last Wednesday (April 29), as expected, saying it needed to assess the impact of higher oil prices driven by war in the Middle East while also supporting an economy grappling with weak consumption and high household debt.
The Bank of Thailand’s monetary policy committee voted unanimously to maintain the one-day repurchase rate at 1.00 percent, the lowest level in more than three years. It had cut the rate at its February meeting.
“Thailand’s economic expansion is projected to moderate, as the war in the Middle East has a direct impact on growth by increasing business costs and eroding household purchasing power,” the central bank said in a statement after the meeting.
The BOT said it expected economic growth to reach 1.5 percent this year, down from a projection of 1.9 percent made in February, before recovering to 2.0 percent in 2027. Last year’s growth of 2.4 percent lagged regional peers.
All 28 economists in a Reuters poll expected the rate to be held steady at last week’s meeting. A strong majority, 24 of 28, expected the policy rate to remain on hold throughout 2026, while four tipped a 25 basis-point cut by year-end.
Inflation to ‘accelerate’ in 2026 but under control
The Bank of Thailand adjusted its headline inflation forecast for the year to an average of 2.9 percent, up from a projection of 0.3 percent made in December, driven by the surge in global energy prices.
“Inflation is set to accelerate through 2026, and is expected to moderate in 2027 as supply-side pressures subside,” the central bank statement said.
Headline inflation is expected to exceed the target range of 1 percent to 3 percent for four quarters starting from the current quarter, but its impact can be disregarded for the time being, Assistant Governor Don Nakornthab told a news briefing.
“At this stage, there is no need to worry about stagflation,” he added.
Monetary policy will depend on circumstances, and specifically on whether inflation risks or economic risks become more pronounced, Don said.
In a worst-case scenario, if the war drags on throughout 2026, economic growth would fall to below 1 percent, while inflation would rise beyond 5 percent, he added.
The central bank said it expected exports to rise by 8.1 percent this year, up sharply from a December projection of a 0.6 percent rise, following a strong first-quarter performance and supported by strong demand for tech products.
Last Tuesday, the finance ministry lowered its 2026 growth forecast to 1.6 percent from 2.0 percent, and forecast inflation would rise to 3.0 percent this year.
CAPTIONS:
Top – Prime Minister Anutin Charnvirakul talking to reporters recently. Photo – Amarin TV
Front Page – Prime Minister Anutin Charnvirakul delivers his government’s policy statement to the parliament on April 9, 2026. Photo – REUTERS/Athit Perawongmetha and published by CNA
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