Thailand: Growth outlook below potential, but no crisis yet: BOT governor

  • Thailand’s economic growth forecast of 2.8% for in 2019 is below potential and monetary policy will be reviewed if conditions worsen, the central bank governor said on 30 Sep 19.
  • While the Bank of Thailand downgraded the 2019 growth outlook in the week ending 29 Sep 19 from 3.3%, the economy is “not in a crisis yet,” BOT governor Veerathai Santiprabhob told reporters.
  • In 2018’s growth was 4.1%. “If economic conditions differ from our forecasts, we are ready to review monetary policy and to use tools,” he said.
  • In the week ending 29 Sep 19, the BOT’s monetary policy committee (MPC) left the benchmark policy rate unchanged at 1.50%, after Aug 19’s surprise cut, the first easing since 2015. The MPC will next review monetary policy on 6 Nov 19. Some analysts expect a further rate cut by the year-end.
  • Mr Veerathai said Aug 19’s rate reduction was pre-emptive, taking into account slowing economic growth and the outlook downgrade. South-east Asia’s second-largest economy grew just 2.3% in 2Q19, the weakest annual pace in nearly five years, as exports slumped.
  • The central bank is worried about the strength of the baht, driven by the country’s hefty current account surplus and higher foreign direct investment, Mr Veerathai said. In Jan 19-Jul 19, Thailand recorded a current account surplus of nearly USD20bn, he added.
  • However, the BOT has found very little speculation in the baht following the bank’s measures against it, Mr Veerathai said, adding stock and bond portfolios currently showed net outflows.

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