Bank of Thailand raises GDP growth forecasts, holds key rate steady

Bank of Thailand’s Monetary Policy Committee unanimously voted to keep the one-day repurchase rate at 1.50 per cent, where it has been since April 2015. — Reuters picBank of Thailand’s Monetary Policy Committee unanimously voted to keep the one-day repurchase rate at 1.50 per cent, where it has been since April 2015. — Reuters picBANGKOK, Dec 20 — Thailand’s , saying economic recovery has gained “further traction”, raised its forecasts for growth this year and next today while leaving its benchmark interest rate unchanged.

As expected by all 14 economists in a Reuters poll, the Bank of Thailand’s (BOT) Monetary Policy Committee unanimously voted to keep the one-day repurchase rate at 1.50 per cent, where it has been since April 2015.

South-east Asia’s second-largest economy will have higher growth than previously seen on “continued improvements in exports and tourism that were driven by a stronger recovery”, it said.

Charnon Boonnuch, an economist at Tisco Securities, predicted the policy rate would remain unchanged in 2018, as the recovery was still driven mainly by external factors.



“Domestic demand continues to improve but at a slow pace… a stronger baht will limit the chances of a premature rate hike,” he said.

ANZ said it sees “no need for the BOT to adjust its monetary policy in either direction” and the rate could remain 1.50 through 2018.

The central bank upgraded its 2017 economic growth forecast for the fourth time, taking it to 3.9 per cent from the 3.8 per cent seen three months ago. The BOT made an identical revision for 2018, lifting its projection to 3.9 per cent.

Next year’s growth could be higher than forecast if government investment projects are implemented as planned, assistant governor Jaturong Jantarangs told a briefing.

Growth driver

At the start of this year, the BOT expected 3.2 per cent growth for 2017. The forecast was steadily raised as that for exports — a key growth driver — has been hiked.

The Thai economy grew 3.2 per cent in 2016.

The central bank predicted 2017 exports would rise 9.3 per cent, from 8 per cent seen in September. In 2018, it forecast 4.0 per cent.



Exports rose just 0.5 per cent last year, after contracting the three prior years.

Despite the baht rising nearly 10 per cent against the this year, Thai exports have remained strong, boosted by improving global demand. The BOT said last week it had stepped in to slow the baht’s gains.

The policy committee said the baht’s moves relative to those of its main trade partners’ currencies were largely unchanged

The BOT raised its 2017 headline forecast to 0.7 per cent from 0.6 per cent but trimmed its 2018 estimate to 1.1 per cent from 1.2 per cent.

The central bank expects inflation to be in its 1-4 per cent target band in 2018’s second quarter. — Reuters

Source: The Malay Mail Online





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