Wednesday March 29 2017
Thailand Holds Key Rate Steady At 1.5%
Bnak of Thailand | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Thailand unanimously left its benchmark interest rate unchanged at 1.5 percent at its March 2017 meeting, as widely expected. Policymakers said growth outlook improved mainly due to a recovery in exports while inflation is expected to gradually rise. However, the economy still faces external risks. The central bank also revised its 2017 GDP growth forecasts to 3.4 percent from 3.2 percent. Inflation is expected to be slightly lower at 1.2 percent from 1.5 percent in the December projections. In 2018, GDP growth is seen at 3.6 percent and inflation at 1.9 percent.

Statement by the Bank of Thailand:

In deliberating their policy decision, the Committee assessed that Thailand’s growth outlook improved and that the economy would expand at a faster pace than the previous assessment. Meanwhile, headline inflation was expected to gradually rise. Nonetheless, the Thai economy still faced many risks, particularly on the external front. Hence, the Committee decided to keep the policy rate on hold at this meeting in order to maintain accommodative financial conditions which would facilitate the continuation of economic growth. 

The overall growth outlook improved on the back of a clearer recovery in merchandise exports. Meanwhile, tourism continued to recover, and public expenditure remained an important growth driver. Private consumption and investment, however, continued to recover at a gradual pace. Additionally, the improved growth outlook was still subject to risks that warranted close monitoring. These included the outturns of the US economic and foreign trade policies, financial stability concerns in China, political developments in Europe, and problems faced by the European banking sector.

Headline inflation was expected to gradually rise, although demand-pull inflationary pressures remained low. Meanwhile, the public’s medium-term inflation expectations remained close to the target. Nevertheless, headline inflation might fluctuate in the nearterm due to base effects, and would face increased downside risks from developments in global oil prices. Core inflation slowed down recently, in part due to the increase in excise tax last year, but was expected to gradually increase.

Overall financial conditions remained accommodative and conducive to economic growth with ample liquidity in the financial system and low real interest rates. However, the baht appreciated somewhat against major trading partners’ currencies over the recent period which might not be as beneficial to the economy as it could. Under the Committee’s view, exchange rates might experience higher volatility in the period ahead due to uncertainties on the external front.

The Committee viewed that financial stability remained sound with sufficient cushion against economic and financial volatilities on both domestic and external fronts. However, there remained pockets of risks that warranted close monitoring such as the deterioration in loan quality of some business sectors, and the search-for-yield behavior in the prolonged low interest rate environment which might lead to the underpricing of risks. 

Looking ahead, the Thai economic recovery continued to gain traction but considerable uncertainties remained, particularly those pertaining to the global economic recovery and to the economic and monetary policy directions of major advanced economies. Meanwhile, demand-pull inflationary pressures remained low. Thus, the Committee viewed that monetary policy should remain accommodative, and would stand ready to utilize an appropriate mix of available policy tools in order to ensure that monetary conditions are conducive to the continuation of economic growth, while ensuring financial stability.




Monday February 20 2017
Thailand Economy Grows 0.4% QoQ In Q4, Below Forecast
NESDB l Rida Husna | rida@tradingeconomics.com

The Thailand economy grew by 0.4 percent in the fourth quarter 2016, the same pace as a downwardly revised figure in the previous three months but below market estimates of a 0.6 percent growth. The GDP growth rate remained at its weakest level since the March quarter 2014, mainly driven by a slowdown in exports while private consumption, government spending and investment rebounded.

In the December quarter, private consumption expanded 0.4 percent, rebounding from a 0.1 percent decline in the third quarter. Government spending also rose 10.2 percent, following a 5.8 percent contraction in the preceding quarter. Gross fixed capital formation went up 6.8 percent, after registering a 2.9 percent decline in the previous quarter. Exports of goods and services rose 0.1 percent, compared to a 0.4 percent rise in the previous three months. Imports of goods and services also increased by 3.6 percent, following a 1.2 percent rise  in the prior quarter.

On the production side, manufacturing grew by 5.9 percent (from 0.4 percent in Q3), followed by financial intermediation (2.6 percent from 0.8 percent); wholesale and retail trade, repair of motor rose (2.4 percent from 1.1 percent) and agriculture (1.4 percent from -1.8 percent).

Year-on-year, the country's GDP expanded expanded 3.0 percent from a year earlier in the December quarter of 2016, compared to a 3.2 percent growth in the third quarter and in line with market expectations. It was the slowest expansion since the December quarter 2015.




Monday February 20 2017
Thailand GDP Growth Slowest In A Year In Q4
NESDB | Rida Husna | rida@tradingeconomics.com

Thailand’s GDP expanded 3.0 percent from a year earlier in the December quarter of 2016, compared to a 3.2 percent growth in the third quarter and in line with market expectations. It was the slowest expansion since the fourth quarter 2015, as a rebound in government spending and a faster rise in investment were unable to offset a slowdown in private consumption and exports.

In the three months to December, private consumption grew by 2.5 percent, compared to a 3.0 percent increase in the preceding quarter. The slowdown was mainly attributed to lower growth of spending on non-durable goods and a fall in spending on durable goods while spending on semidurable goods and net services expenditure increased.

Government spending rose 1.5 percent, rebounding from a 5.2 percent fall in the previous quarter, contributed by a 2.8 percent rise in social transfers in kind in form of goods and services, a 0.1 percent increase in compensation of employees, a 2.3 percent rise in purchases of goods and services and 0.8 percent growth in consumption of fixed capital. 

Gross fixed capital formation advanced by 1.8 percent, faster than a 1.0 percent growth in the September quarter. Public investment rose 8.6 percent (from 5.8 percent in the previous three months, as a result of a 6.8 percent expansion of government and a 12.3 percent rise in state enterprise investment). Private investment declined by 0.4 percent (from -0.8 percent drop, due to a 0.4 percent fall in private machine investment and a 0.5 percent decline in private construction investment).

Exports of goods and services grew by 1.1 percent, slowing from a 1.4 percent increase in the third quarter. Imports of goods and services rose 3.4 percent (from -1.1 percent in Q3).

On the production side, the non-agricultural sector expanded by 3.1 percent, slowing slightly from a 3.2 percent increase in the September quarter. Agriculture sector also grew by 3.2 percent, following a 0.9 percent rise in the previous quarter, contributed mainly by crops production, particularly, major rice, oil palm, and vegetable. Growth in non-agriculture sector eased for: hotels and restaurants (4.8 percent from 13.5 percent, due to lower number of foreign tourist); transport, storage and communication (5.1 percent from 6.5 percent) and electricity, gas and water supply (1.8 percent from 4.9 percent). Meanwhile, growth was faster for: manufacturing (2.1 percent from 1.6 percent), construction (6.1 percent from 5.2 percent); wholesale and retail trade; repair of motor (5.6 percent from 5.2 percent), financial intermediation (6.7 percent from 5.8 percent); real estate services (1.8 percent from 1.1 percent); public administration and defence (0.4 percent from -1.8 percent), health and social work (4.1 percent from 0.9 percent) and other community, social and personal service (6.7 percent from 11.4 percent). In contrast, a decline was seen for: mining and quarrying (-5.6 percent from -0.9 percent), education (-0.6 percent from -2.4 percent) and private households with employed persons (-2.4 percent from 1.6 percent). 

Considering full 2016, the economy advanced 3.2 percent, faster than an upwardly revised 2.9 percent growth in 2015, with exports growing for the first time in four years.

For 2017, the Thailand's economic planning agency (NESDB) expected Southeast Asia's second-biggest economy to grow between 3.0 to 4.0 percent, the same range as it forecast previously. Exports in the year are projected to rise 2.9 percent, compared to a 2.4 percent increase in an earlier projection. 

On a quarter-over-quarter seasonally adjusted basis, the economy grew by 0.4 percent in the fourth quarter 2016, the same pace as a downwardly revised figure in the previous three months and missing estimates of a 0.6 percent growth. The GDP remained  the weakest since the second quarter of 2015.




Wednesday February 08 2017
Thailand Maintains Key Rate At 1.5% In February
Bank of Thailand l Rida Husna | rida@tradingeconomics.com

The Bank of Thailand unanimously kept its benchmark interest rate unchanged at 1.5 percent at its February meeting, as expected. While saying current policy stance is conducive to the domestic economy, policymakers viewed uncertainties remained, particularly those pertaining to monetary policy directions of major advanced economies.

Statement by the Bank of Thailand:

The Committee assessed that the Thai economy would recover at a faster pace compared with the previous assessment despite facing uncertainties especially on the external front. Inflation would continue to be on an upward trajectory. Meanwhile, overall financial conditions remained accommodative and conducive to the economic recovery although bond yields increased somewhat. Hence, the Committee decided to keep the policy rate on hold at this meeting.

The Thai economy was projected to expand at a faster pace on the back of a more broad-based recovery in merchandise exports and a faster-than-expected recovery in tourism. At the same time, public expenditure remained an important growth driver, while private consumption and private investment continued to recover at a gradual pace. Nevertheless, the improved growth outlook was still subject to various risk factors that warranted close monitoring going forward. These included the implications of the US economic and foreign trade policies, financial stability concerns in China, political developments in Europe, and problems faced by the European banking sector.

Headline inflation returned to the target band last December and continued trending upward. Core inflation steadied around the previous assessment which reflected low demand-pull inflationary pressure. Meanwhile, the public’s medium-term inflation expectations remained close to the target.

Overall financial conditions remained accommodative and conducive to the economic recovery with ample liquidity in the financial system and low real interest rates. Nevertheless, bond yields increased somewhat due to both domestic and external factors. With regard to the exchange rate movements over the recent period, uncertainties stemming from external developments led to some appreciation of the baht against major trading partners’ currencies, which might not be as beneficial to the ongoing economic recovery as it could under the Committee’s assessment.

The Committee viewed that financial stability remained sound with sufficient cushion against economic and financial volatilities on both domestic and external fronts. However, there remained pockets of risks that warranted close monitoring such as the deterioration in loan quality of some business sectors, defaults of unrated bonds issued by certain companies, and the search-for-yield behavior in the prolonged low interest rate environment which might lead to the underpricing of risks.

Under the Committee’s assessment, the Thai economy started to gain more traction, but uncertainties remained at large, particularly those pertaining to the fragile global economic recovery and to the economic and monetary policy directions of major advanced economies. Meanwhile, demand-pull inflationary pressure remained low. Thus, the Committee viewed that monetary policy should remain accommodative, and would stand ready to utilize an appropriate mix of available policy tools in order to ensure that monetary conditions are conducive to the economic recovery, while ensuring financial stability.




Wednesday December 21 2016
Thailand Holds Key Interest Rate Steady at 1.5%
Bank of Thailand l Rida Husna | rida@tradingeconomics.com

The Bank of Thailand unanimously kept its benchmark interest rate unchanged at 1.5 percent on December 21st, as expected. While highlighting downside risks to the economy increased, policymakers projected headline inflation to rise gradually and return to the target band within the first quarter of 2017.

Statement by the Bank of Thailand:

The Committee assessed that the Thai economy would continue to expand at a pace close to the previous assessment, but downside risks increased. Inflation was still expected to slowly rise. Meanwhile, monetary conditions remained accommodative and conducive to the economic recovery. Hence, the Committee decided to keep the policy rate on hold at this meeting.

The Thai economy was projected to expand at a pace close to the previous assessment. Tourism was affected more than expected by recent measures to curb illegitimate tour operators, and private investment remained low. Nevertheless, such negative impact on growth was offset by improvements seen in exports of goods due to recent consolidation of production location of certain products to Thailand. Moreover, private consumption improved on the back of farm income and the government’s short-term stimulus measures. Meanwhile, public expenditure remained an important growth driver for the economy. Looking ahead, the Committee viewed that the Thai economy remained on a recovery path with the overall growth momentum largely unchanged from the previous meeting. However, risks to growth tilted further to the downside due to Thailand’s trading partners which might record weaker-than-expected growth, uncertainties in the direction of the US trade policies that would have significant implications for confidence and international trade, and the number of Chinese tourists that could turn out lower than projected. Meanwhile, uncertainties pertaining to political developments in Europe as well as concerns over the European and Chinese financial sectors continued to warrant close monitoring.

Headline inflation was projected to gradually rise and return to the target band within the first quarter of 2017, although the timing would depend largely on future development in oil and fresh food prices. Core inflation remained stable at low levels around the previous assessment. Meanwhile, the public’s medium-term inflation expectations remained close to the target.

Overall monetary conditions remained accommodative and conducive to the economic recovery with ample liquidity in the financial system and low real interest rates. Long-term bond yields increased but remained close to last year’s averages. Over the recent period, the baht depreciated against the US dollar, though to a lesser extent compared with overall trading partner currencies which might not be as beneficial to the ongoing economic recovery as it could. In addition, financial stability remained sound and able to provide cushion against economic and financial volatilities on both domestic and external fronts. However, there remained pockets of risks that warranted close monitoring such as the deterioration in loan quality of some business sectors and the search-for-yield behavior in the prolonged low interest rate environment. 

The Committee assessed that the Thai economy would still be facing greater uncertainties going forward, particularly the fragile global economic recovery and uncertainties in the economic and monetary policy directions of major advanced economies that might induce greater capital flow and exchange rate volatility. The Committee viewed that monetary policy should remain accommodative, and stands ready to utilize an appropriate mix of available policy tools in order to ensure that monetary conditions are conducive to the economic recovery, while ensuring financial stability.


Monday November 21 2016
Thailand Economy Expands 0.6% QoQ in Q3
Chusnul | chusnul@tradingeconomics.com

The Thai economy grew by 0.6 percent quarter-on-quarter in the three months to September of 2016, compared to a downwardly revised 0.7 percent expansion in the previous three months. The figure came in below expectations of a 0.7 percent expansion to hit the weakest growth rate since the June quarter of 2015. Private consumption slowed and exports rebounded while government spending contracted.

In the September quarter, private investment expanded 0.4 percent, accelerating from a 1.9 percent growth in the June quarter. In contrast, government spending shrank 5.3 percent, following a 4.4 percent contraction in the preceding quarter. Gross fixed capital formation decreased by 2.9  percent, after registering a 3.7 percent decline in the previous quarter. Exports of goods and services rose 1.2 percent, compared to a 2.1 percent contraction in the previous three months. In contrast, imports of goods and services went donw by 0.2 percent, following a 1.3 percent rise  in the preceding quarter.

On the production side, wholesale and retail trade, repair of motor rose (+1.3 percent from +1.1 percent) and financial intermediation (+0.6 percent from +1.62 percent). In contrast, agriculture fell (-0.1 percent from -1.0 percent), manufacturing (-0.1 percent from +1.2 percent), 

Year-on-year, the country's GDP expanded 3.2 percent from a year earlier in the September quarter of 2016, compared to a 3.5 percent expansion in the second quarter and market expectations of a 3.4 percent growth.


Monday November 21 2016
Thailand GDP Growth Below Estimates in Q3
NESDB l Rida Husna | rida@tradingeconomics.com

Thailand’s gross domestic product expanded 3.2 percent from a year earlier in the third quarter of 2016, compared to a 3.5 percent expansion in the previous period and market expectations of a 3.4 percent growth. Private consumption, investment and exports were the main drivers of growth while government spending declined sharply.

In the three months to September, private consumption grew by 3.5 percent, compared to a 3.8 percent increase in the preceding quarter. While expenditure on durable and non-durable goods, particularly for vehicles and furniture purchased by households eased, spending on semi-durable goods declined. 

Gross fixed capital formation advanced by 1.4 percent (from +3.2 percent in the June quarter). Public investment rose 6.3 percent (from +11.9 percent).

Exports grew by 3.4 percent, following a 2 percent increase in the June quarter. Imports fell 1.3 percent (from -1.6 percent).

In contrast, government spending shrank 5.8 percent (from +1.5 percent).

On the production side, the non-agricultural sector expanded by 3.2 percent, slowing from a 3.8 percent increase in the June quarter, Agriculture sector also grew  by 0.9 percent, following a 1.2 percent fall in the previous quarter. Growth in non-agriculture sector was seen for: mining and quarrying (+2.9 percent from +1.5 percent in the previous quarter); manufacturing (+0.9 percent from +2.1 percent); electricity, gas and water supply (+6.1 percent from +7.2 percent), construction (+5.0 percent from +7.8 percent); wholesale and retail trade; repair of motor (+5.5 percent from +5.5 percent); hotels and restaurants (+15.9 percent from +12.7 percent);  transport, storage and communication (+6.4 percent from +4.4 percent), financial intermediation (+4.4 percent from +4.6 percent); real estate services (+1.8 percent from +2.8 percent);  health and social work (+1.9 percent from +5.2 percent), other community, social and personal service (+10.3 percent from +10.5 percent) and private households with employed persons (+2.4 percent from +1.4 percent). In contrast, a decline was seen for: public administration and defence (-3.4 percent from +0.1 percent), education (-2.4 percent from -1.6 percent). 

For 2016, the Thailand's economic planning agency (NESDB) projected the economy to advance 3.2 percent, compared to a previous forecast range of 3.0 to 3.5 percent. Exports in the year are expected to be flat, following earlier projections of a 1.9 percent drop.

On a quarter-over-quarter seasonally adjusted basis, the GDP grew by 0.6 percent, compared to a downwardly revised 0.7 percent expansion in the previous three months. It was the weakest growth since the June quarter 2015 and slightly below market consensus of a 0.7 percent expansion.

For 2017, GDP is projected to expand between 3.0 to 4.0 percent while exports rose 2.4 percent.

In 2015, the economy grew by 2.8 percent.


Wednesday November 09 2016
Thailand Holds Key Rate Steady at 1.5%
Bank of Thailand l Rida Husna | rida@tradingeconomics.com

The Bank of Thailand left unanimously its benchmark interest rate unchanged at 1.5 percent on November 9th, as widely expected. Policymakers said the economy remained on a recovery path with uncertainties stemming from political developments in the US and Europe. At the same time, concerns over the European and Chinese financial sectors continued to warrant close monitoring.

Statement by the Bank of Thailand: 

The Committee assessed that the Thai economy continued to expand at a pace close to the previous assessment despite greater downside risks on both domestic and external fronts. Inflation was expected to increase but might return to the target later than expected due to supply-side factors. Meanwhile, monetary conditions remained accommodative and conducive to the economic recovery. Hence, the Committee decided to keep the policy rate unchanged at this meeting.

The Thai economy was projected to recover at a pace close to the previous assessment. Exports of industrial goods expanded more than expected, while private investment remained low despite some improvements seen in certain export-oriented manufacturing sectors. At the same time, tourism was expected to slow down as a result of the government’s measures to curb zero-dollar tours. Private consumption continued to expand although some activities might slow down temporarily. Public expenditure continued to be an important growth driver. Overall, under the Committee’s assessment, the Thai economy remained on a recovery path, but downside risks increased from the number of Chinese tourists that could turn out to be lower than the previous projection as well as uncertainties stemming from political developments in the US and Europe. Meanwhile, concerns over the European and Chinese financial sectors continued to warrant close monitoring.

Headline inflation in October softened slightly on account of fresh food prices, while core inflation remained stable around the previous assessment. The Committee expected that headline inflation would rise slowly and might return to the target later than previously projected, depending on fresh food prices as well as global oil price developments which remained largely uncertain. Nevertheless, headline inflation was still expected to gradually pick up, while the public’s medium-term inflation expectationsremained close to the inflation target.

Overall monetary conditions remained accommodative and conducive to the economic recovery as reflected in low real interest rates and government bond yields. Nonetheless, the baht appreciated against key trading partner currencies which might not be beneficial to the ongoing economic recovery. In addition, financial stability remained sound and able to provide cushion against potential shocks and volatilities in financial markets.
However, there remained pockets of risks that warranted close monitoring, such as the deterioration in loan quality of some business sectors and the search-for-yield behavior under the prolonged low interest rate environment.

The Committee saw the need to preserve policy space given that the Thai economy would still be facing greater uncertainties going forward, particularly the fragile global economic recovery and uncertainties in the monetary policy directions of major advanced economies that might induce greater capital flow and exchange rate volatility. 

Going forward, the Committee viewed that monetary policy should remain accommodative, and stands ready to utilize an appropriate mix of available policy tools in order to ensure that monetary conditions are conducive to the economic recovery, while ensuring financial stability.


Wednesday September 14 2016
Thailand Holds Rates Steady at 1.5%
Bank of Thailand l Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Thailand left its benchmark interest rate unchanged at 1.5 percent on September 14th, as widely expected, saying the economy is expected to recover at a gradual pace, while facing uncertainties on both domestic and external fronts. Thailand’s economy grew a higher-than-expected 3.5 percent in the second quarter of the year, but the country still faces a number of challenges including low private investment amid a drop in exports and manufacturing production.

Statement by the Bank of Thailand:

In deliberating their policy decision, the Committee assessed the economy to continue recovering at a gradual pace, while facing uncertainties on both domestic and external fronts. Inflation was expected to return to the target band within the latter half of the year. Meanwhile, monetary conditions remained accommodative and conducive to the economic recovery. Hence, the Committee judged that the policy rate should be kept on hold at this meeting.

The Thai economy recorded higher-than-expected growth in the second quarter on the back of a strong expansion in private consumption, partly as a result of temporary factors and government stimulus measures. Meanwhile, public expenditure and tourism continued to be the key growth drivers. Nonetheless, private investment remained low and mostly concentrated in some business sectors. Manufacturing production and merchandise exports contracted due to the slowdown in Asian economies and structural problems facing the Thai economy. In addition, there was a decline in the quality of loans extended to some business sectors. Looking ahead, the Committee projected that the Thai economy would continue to recover but face risks, particularly those stemming from the fragile global economic recovery and political developments abroad.

Headline inflation in August increased slightly on account of fresh food prices, while core inflation remained stable in line with the gradual recovery in demand. The Committee expected headline inflation to return to the target band within this year as previously assessed.

Overall monetary conditions remained accommodative as reflected in low real interest rates and government bond yields. Nonetheless, the baht appreciated against key trading partner currencies over some recent periods which might not be beneficial to the ongoing economic recovery. In addition, financial stability risks from the prolonged low interest rate environment, including search-for-yield behavior, continued to warrant close monitoring.

The Committee saw the need to preserve policy space given that the Thai economy would still be facing greater uncertainties going forward, particularly the fragile global economic recovery and uncertainties in the monetary policy directions of major advanced economies that might induce greater capital flow and exchange rate volatility.

Going forward, the Committee viewed that monetary policy should remain accommodative, and stands ready to utilize an appropriate mix of available policy tools in order to ensure that monetary conditions are conducive to the economic recovery, while ensuring financial stability.


Monday August 15 2016
Thailand Economy Expands 0.8% QoQ in Q2
NESDB l Rida Husna | rida@tradingeconomics.com

The Thai economy grew by 0.8 percent on a quarter-on-quarter seasonally adjusted basis in the second quarter of 2016, compared to an upwardly revised 1.0 percent growth in the previous quarter and above market consensus of a 0.5 percent expansion. A sharp increase in private consumption were unable to offset a decline in government spending, investment and exports.

In the June quarter, private investment expanded 1.9 percent, accelerating from a 0.9 percent growth in the March quarter. In contrast, government spending shrank 3.6 percent, following a 0.6 percent growth in the preceding quarter. Gross fixed capital formation decreased by 3.3  percent, after registering a 4.5 percent expansion in the previous quarter. Exports of goods and services fell 3.3 percent, compared to a 4.5 percent growth in the previous three months. In contrast, imports of goods and services went up by 0.8 percent, following a 2.8 percent decline in the preceding quarter.

On the production side, all sectors in the economy expanded: agriculture (+1.9 percent from -1.0 percent), manufacturing (+1.2 percent from -0.5 percent), wholesale and retail trade, repair of motor (+1.0 percent from +0.9 percent) and financial intermediation (+1.7 percent from -0.2 percent).

Year-on-year, the country's GDP expanded  3.5 percent from a year earlier, as compared to a 3.2 percent expansion in the previous quarter and beating market expectations of a 3.2 percent expansion. It iwas the strongest growth since the March quarter of 2013.