The National Economic and Social Development Council (NESDC) has urged the Bank of Thailand to review its policy rate, cut the credit card interest rate, from 8% to 5%, and to narrow the spread between lending and deposit rates, to ease the financial burden on households and small and medium-sized enterprises (SMEs).

Of late, the central bank has been under pressure from the government and the private sector to cut its policy rate, currently maintained at 2.5% since last September.

NESDC Secretary-General Danucha Pichayanan said today that it is about time for the central bank to ease its fiscal policy, as there are signs of increasing repayment defaults,which can eventually turn into non-performing loans (NPLs).

According to the NESDC report for the fourth quarter of 2023, Thailand’s economy registered 1.7% growth and 1.9%for the whole year. The delay in the disbursement of the 2024 budget has led to a drop in public sector investment for 2024 by 20.1%.

Although the global economy is showing signs of recovery, Danucha said that production in Thailand’s industrial sector continues to contract, while utilization of production capacity remains low and tourists are spending less, averaging about 36,000 baht per head, significantly affecting economic recovery.

The NESDC has forecast a 2.2%-3.2% growth for this year, due to anticipated export growth and increased investment and consumption, without taking into account the effects of the“digital wallet” scheme, which is yet to materialise.

Danucha said that it is too soon to conclude that the Thai economy is approaching a critical level, but there are several risk factors being monitored, such as household debt, economic fluctuations and the climate situation.

He also urged the government to keep a close watch on the dumping of cheap goods onto the Thai market and tax evasion, citing the unusual situation of domestic consumption increasing while production has decreased.