Governor: Thai growth outlook below potential, but no crisis yet
BANGKOK: Thailand’s economic growth forecast of 2.8% for this year is below potential and monetary policy will be reviewed if conditions worsen, according to the central bank governor.
While the Bank of Thailand (BOT) downgraded the 2019 growth outlook last week from 3.3%, the economy is “not in a crisis yet,” BOT governor Veerathai Santiprabhob told reporters. Last year’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.
Last week, the Bot’s monetary policy committee (MPC) left the benchmark policy rate unchanged at 1.50%, after August’s surprise cut, the first easing since 2015. The MPC will next review monetary policy on Nov 6.
Some analysts expect a further rate cut by the year-end.
Veerathai said August’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 the second quarter, 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, Veerathai said.
In the first seven months of this year, Thailand recorded a current account surplus of nearly Us$20bil, due to slow investment, he added. However, the BOT has found very little speculation in the baht following the bank’s measures against it, Veerathai said, adding stock and bond portfolios currently showed net outflows.
The baht is Asia’s the best performing currency this year, up about 6.5% against the US dollar.