Thailand export growth remains sluggish, domestic demand subdued

The Thailand economy is fighting its way out of poor growth and crippling economic structure. Barring fiscal spending and support from the tourism industry, there remains absolutely nothing that can provide a silver lining to the Thai economy.

While the Bank of Thailand (BOT) has already lowered its 2016 GDP growth forecast to 3.1% from 3.5% previously, further lowering cannot be completely ruled out. In addition, private investment remained subdued despite the BOT adopting an accommodative policy stance. Private investment growth has averaged -1.5% in the past three years.

While the Central Bank is unlikely to act in the wake of a weak baht, it is most likely to step up efforts to favour export competitiveness; much remains to be seen in today’s policy statement. However, the pressure on the BoT seems to have decreased to ease its monetary policy. Meanwhile, the current 1.5- pct policy rate is already near its all-time low.