Economic
Research
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30
March 2017
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Thailand
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Economic Update
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Bank of Thailand’s (BOT) monetary policy committee
(MPC) unanimously voted to keep its benchmark lending rate (1-day bilateral
repurchase rate) unchanged at 1.5%, after observing that the economic outlook
improved on the back of a clearer recovery in merchandise exports, and
returning tourists.
However, the MPC noted that the Thai economy still
faced a plethora of external risks, including risks from US economic and
foreign trade policies, financial stability concerns in China, political
developments in Europe, and problems faced by the European banking sector.
The MPC also highlighted the following key domestic
risks to economic growth:
i. Deterioration in loan quality in some business
sectors;
ii. Under-pricing of risks due to the search-for-yield
behaviour, following the prolonged low interest rate environment.
We maintain our forecast for Thailand’s GDP to grow
3.7% this year and with inflation expected to remain positive but manageable, we do not expect BOT to alter its key policy rate
at its next meeting on 24 May and throughout the year.
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Thursday, March 30, 2017
BOT Hikes GDP Forecast, Keeps Interest Rate At 1.5%
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