Officials agree on stimulus measures

The country's economic growth slowed to 5.7 per cent in the second quarter of this year, down from 6 per cent in the first quarter, said the ministry's spokesman Somchai Sujjapongse.

As a result, top officials of the BOT, the Securities and Exchange Commission (SEC), the National Economic and Social Development Board (NESDB) and the Budget Bureau agreed that the government needed to take more action to lift growth in the remaining months of this year.

For the second half of this year, the growth projection is 5 to 5.5 per cent.

According to Somchai, monetary policy could be eased if oil prices do not rise further and economic growth becomes weak.

Both Finance Minister Surapong Suebwonglee and BOT Governor Tarisa Watanagase were present at the meeting, also attended by the chiefs of the SEC, the NESDB and the Budget Bureau.

Earlier, the Finance Ministry was unhappy about the BOT's tight monetary policy under which the key interest rate was raised by 25 basis points last month amid rising inflation. According to Somchai, yesterday's meeting of top officials agreed that there should be increased flexibility in the inflation-targeting policy.

At present, the BOT's inflation target is no more than 3 per cent, but inflation peaked at 9.2 per cent in July.

However, the weakening of oil prices in the world market will lead to less inflationary pressure so monetary policy might be less tight in the second half of this year.

In terms of fiscal policy, the meeting also agreed that the government would have to introduce more tax and other fiscal measures to stimulate private consumption and investment to sustain economic growth later this year.

At present, the economy is relying on the export sector as the only engine of growth, while consumption and investment remain weak due to a lack of confidence.