Thai GDP growth seen much lower than forecast this year - central bank minutes

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Thai GDP growth seen much lower than forecast this year - central bank minutes

By Orathai Sriring

 

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva/File Photo

 

BANGKOK (Reuters) - Thailand's economy will grow at a much slower pace than previously forecast this year and much further below its potential, the central bank said in minutes of a meeting earlier this month when it cut interest rates to a record low.

 

Risks are increasing due to the coronavirus outbreak, delayed government spending, and an intensifying drought, according to the minutes of its Feb. 5 meeting, which were released on Wednesday.

 

At the meeting, the monetary policy committee (MPC) unanimously voted to cut the policy rate <THCBIR=ECI> by 25 basis points to 1.00%, the third reduction in six months.

 

"The committee viewed that a more accommodative monetary policy stance would alleviate the negative impacts," the minutes said.

The MPC "would stand ready to use policy tools as appropriate," the minutes said.

 

Thailand is the second most vulnerable economy to the virus outbreak after Hong Kong, with its strong reliance on China trade and Chinese tourists, analysts at Nomura say, adding they expect the MPC to cut rates again in the second quarter.

 

In December, the Bank of Thailand (BOT) predicted growth of 2.8% for this year, but it recently said it might be less than 2%.

 

It will next review monetary policy and provide updated economic projections on March 25.

 

BOT Governor Veerathai Santiprabhob previously said there was still policy room to help growth if necessary.

 

On Wednesday, Veerathai said it was too early to say whether the newly reduced policy rate was low enough for current conditions.

 

"That's because of the situation's dynamics, which need monitoring and assessing," he told reporters. "Importantly, all sides will have to help."

 

Thailand's trade-reliant economy grew just 2.4% last year, the weakest pace in five years, hurt by contracting exports amid global trade tensions, and sluggish investment.

 

Headline inflation in 2020 and 2021 was projected to be lower than the 1%-3% target range, the minutes said.

 

The committee remained concerned that the baht's value <THB=TH> might not be consistent with economic fundamentals and would likely remain volatile despite its recent depreciation compared with trading partner currencies, they said.

 

The MPC said there was a need to closely monitor exchange rates and the effectiveness of the relaxation of rules to spur capital outflows.

 

The committee encouraged the BOT to consider implementing additional measures to stimulate investment and imports to reduce large current account surplus.

 

For the full minutes, click on https://www.bot.or.th/English/MonetaryPolicy/MonetPolicyComittee/ReportMPC/Minutes/MPC_Minutes_12020_7pmifrqb.pdf

 

(Reporting by Orathai Sriring; Editing by Kim Coghill)

 

-- © Copyright Reuters 2020-02-19

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[Mavideol]

whatever they have been doing it's not working, economy doesn't appear to be improving at all, they shouldn't expect any growth at all

[Jimbo2014]

Honestly.  This happens every year since as long as I can remember.  We start January with wildly optimistic projections.  Then each month we gradually downgrade.  Unfortunately this year the starting point was quite low for a country of Thailands GDP per capita.  I wouldnt be surprised to see it sink to negatives by end year with the pollution, corona virus and high baht tripple apocalypse.

[mickey rat]

1 hour ago, Jimbo2014 said:

by end year with the pollution, corona virus and high baht tripple apocalypse

The horrendous air pollution during peak tourist season and the way they handled the wu virus serves to highlight the total and complete incompetence of these nincompoops. 

[observer90210]

Worse figures are to be expected with the lack of tourists due to mainly the over strong Thai Bhat, the CoronaVirus, the flagrant immigration hassles...and all the rest unfortunately....pity !