MPC raises GDP growth view
Panel votes to keep policy rate steady
The Bank of Thailand’s Monetary Policy Committee (MPC) yesterday raised its 2017 economic growth forecast to 3.4% from 3.2% predicted three months ago because of a stronger export outlook, as it kept the policy rate unchanged at 1.5% as widely expected.
At the meeting, the MPC judged that Thailand’s growth outlook had improved and the economy would expand at a faster pace than previously assessed, said Jaturong Jantarangs, assistant governor of the monetary policy group and the MPC secretary.
“Yet the Thai economy still faces many risks, on the external front in particular, leading the MPC to keep the policy rate on hold this meeting,” he said.
The stronger growth forecast was attributed to more optimistic prospects for merchandise exports and continued growth of the tourism sector, Mr Jaturong said.
The central bank’s new forecast for 2017 is on a par with the Fiscal Policy Office’s estimate, while the National Economic and Social Development Board, the state planning unit, last month maintained its growth forecast in a range of 3-4%.
Bank of Thailand governor Veerathai Santiprabhob recently voiced confidence that the country would see a broaderbased economic recovery in 2017 because of improving exports — the traditional mainstay of the economy — and higher farm income.
Mr Jaturong said the central bank raised its forecast for export growth to 2.2% this year from zero predicted in December, with 2% growth seen for next year.
The bank forecasts Thai GDP growth of 3.6% in 2018.
Higher demand for electronic goods and a clearer global economic recovery contributed to the more positive export outlook, Mr Jaturong said.
Exports fell by 2.8% year-on-year in February to US$18.5 billion after rising 8.8% in January, the Commerce Ministry reported.
Mr Jaturong warned that the Thai economy faces more downside risks than earlier assessed, including a downturn of the US economy based on its trade policies, financial stability concerns in China, and political and banking developments in Europe.
“The baht also appreciated somewhat against major trading partners’ currencies over the recent period,” he said.
Recent Federal Reserve statements and uncertainty about US President Donald Trump’s ability to deliver on his campaign promises such as infrastructure investment and tax reform will cause greater fluctuation in exchange rates in the period ahead, Mr Jaturong said.
The MPC raised its forecast for tourist arrivals from 34.1 million to 34.5 million this year, with Chinese visitors contributing half of the increase.
“We lifted our forecast for private investment based on actual numbers in the fourth quarter last year and the better export outlook this year,” Mr Jaturong said.