Thailand’s central bank left its policy rates unchanged, to stay still at the lowest level on Wednesday, but lowered growth forecasts for the year amid the stronger currency and increased external risks.
The Bank of Thailand (BoT) unanimously voted to keep the one-day repurchase rate at 1.25 percent, a level last seen during the global financial crisis.
Meanwhile, economic growth for the year is projected at 2.5 percent, lower than the 2.8 percent previously forecasted in September. Last year, the actual gross domestic product (GDP) was recorded at 4.1 percent.
For 2020, the BoT said it is now expecting a lower growth of 2.8 percent as against the 3.3 percent previously projected.
The lower forecasts took into account the heightened global risks, which include the ongoing trade spat between the United States and China.
“The Thai economy would expand below its potential and below the previous forecast, mainly as merchandise exports had contracted more than the previous assessment and were projected to recover more slowly than expected,” the central bank said in a statement.
Exports—a key driver of economic growth—are now expected to dwindle to 3.3 percent as against an only 1-percent decline in 2018.
For 2020, exports are seen to grow marginally by 0.5 percent, as compared with the 1.7 percent forecasted previously.
The BoT also expects headline inflation to settle at 0.7 percent this year versus 0.8 percent and at 0.8 next year as against its earlier projection of 1 percent.
The BoT also expressed concern over the strength of the baht, Asia’s best-performing currency this year, which has risen by around 7.6 percent versus the greenback, putting further pressure on already weak exports.
In November, the BoT’s Monetary Policy Committee voted 5-2 to cut key rates by a 25 basis point, the second reduction since a cut of the same amount in August.
Thailand’s economy expanded less than expected in the third quarter of the year due to weaker exports.
The government of Thailand has launched this year a 316-billion-baht stimulus plan alongside other measures additional steps to help bolster the economy.
PHOTO COURTESY: BANK OF THAILAND