Thailand: Growth outlook revised lower – UOB

Economist at UOB Group Barnabas Gan assessed the outlook on Thailand’s economic growth for the current year.

Key Quotes

“Thailand’s economy expanded 1.6% y/y in 4Q19, marking its slowest growth pace since 3Q14. On a quarter-on-quarter seasonally adjusted basis, the economy expanded merely 0.2% in 4Q19. Accounting for the latest growth print, Thailand clocked 2.4% growth for the whole of 2019.”

“We are downgrading our full-year growth further to 2.0% for 2020, accounting for the negative impact from the COVID-19 outbreak. This is down from our previous estimate of 2.8% which we highlighted was still subjected to downside risks of between 0.5% and 1.0% depending on the severity of the COVID-19 outbreak.”

“With the Bank of Thailand cutting its benchmark rate by 25bps to an unprecedented low of 1.0% in its February 2020 MPC meeting, we think that policy space is limited at this juncture. We also view that Thailand’s elevated household debt levels and inflation pressures could be exacerbated if rates are cut further in 2020. As such, we do not expect the Bank of Thailand to reduce rates further in 2020. Instead, we expect economic stimulus to come from fiscal space (ie budget disbursements, relaxed rules to facilitate capital outflows etc) to mitigate the impact arising from the COVID-19 outbreak.”