Thai C.Bank Raises GDP Growth Forecasts, Holds Key Rate Steady

Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand in this April 26, 2016 file photo. (Reuters Photo/Jorge Silva)

By : Orathai Sriring and Kitiphong Thaichareon | on 7:00 AM December 21, 2017
Category : International, SE Asia

Bangkok. Thailand's central bank, saying economic recovery has gained "further traction", raised its forecasts for growth this year and next on Wednesday (20/12) 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 percent, where it has been since April 2015.

Southeast 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 global economic 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 percent from the 3.8 percent seen three months ago. The BOT made an identical revision for 2018, lifting its projection to 3.9 percent.

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 percent 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 percent in 2016.

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

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

Despite the baht rising nearly 10 percent against the US dollar 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 inflation forecast to 0.7 percent from 0.6 percent but trimmed its 2018 estimate to 1.1 percent from 1.2 percent.

The central bank expects inflation to be in its 1-4 percent target band in 2018's second quarter.


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