BoT chief dismisses worries on stagflation

Inflation has not been prolonged

- SOMRUEDI BANCHONGDUANG

With stagflation concerns mounting across many countries as the Iran war enters its third month, the Bank of Thailand governor insists Thailand is not at risk of entering a stagflationary period, citing the absence of persistently high inflation.

Central bank governor Vitai Ratanakorn said yesterday the Thai economy does not meet the conditions for stagflation and shows no signs of moving in that direction.

He said Thai inflation is unlikely to remain elevated for a prolonged period or reach levels that would structurally affect the economy.

Stagflation is characterised by a combination of weak economic growth and high inflation sustained over an extended period. Persistently high inflation has long-term adverse effects on an economy.

Stagflation typically has a direct impact on employment, said Mr Vitai, leading to declining job levels or rising unemployment. However, Thailand has not shown clear signs of labour market deterioration.