Bank of Thailand slashes growth outlook

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ThailandThe Bank of Thailand said risks to financial stability, including high levels of household debt, have reduced the scope for further monetary easing, even as it cut its growth forecast for the second time in 2013, Bloomberg reported.

The central bank pared its estimate for gross domestic product growth this year to 3.7 per cent, compared with a July projection of 4 per cent, and said exports may expand 1 percent, down from an earlier forecast of 4 per cent.

Thailand kept its benchmark interest rate unchanged for a third meeting on October 16, and “there is no need to ease monetary policy further because there are still risks to financial stability,” Assistant Governor Paiboon Kittisrikangwan said.

A slowdown in private consumption and exports, and delays in government spending on infrastructure will remain a drag in the second half, Paiboon said. The economy is expected to stabilize, and may recover by early next year, he said.

The plan to keep borrowing costs on hold clashes with the view of Finance Minister Kittiratt Na-Ranong, who earlier this month said the benchmark interest rate is “too high.” The economy unexpectedly contracted 0.3 per cent in the three months through June from the previous quarter, when it shrank by 1.7 per cent, official data showed.

The central bank today said the current account is forecast to post a deficit of $6.8 billion this year, compared with a $1.7 billion surplus predicted earlier.

Thai exports slumped 7.1 per cent in September, according to a separate report today from the commerce ministry. That compared with the median estimate in a Bloomberg survey for a 0.5 per cent gain.

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The Bank of Thailand said risks to financial stability, including high levels of household debt, have reduced the scope for further monetary easing, even as it cut its growth forecast for the second time in 2013, Bloomberg reported.

Reading Time: 1 minute

ThailandThe Bank of Thailand said risks to financial stability, including high levels of household debt, have reduced the scope for further monetary easing, even as it cut its growth forecast for the second time in 2013, Bloomberg reported.

The central bank pared its estimate for gross domestic product growth this year to 3.7 per cent, compared with a July projection of 4 per cent, and said exports may expand 1 percent, down from an earlier forecast of 4 per cent.

Thailand kept its benchmark interest rate unchanged for a third meeting on October 16, and “there is no need to ease monetary policy further because there are still risks to financial stability,” Assistant Governor Paiboon Kittisrikangwan said.

A slowdown in private consumption and exports, and delays in government spending on infrastructure will remain a drag in the second half, Paiboon said. The economy is expected to stabilize, and may recover by early next year, he said.

The plan to keep borrowing costs on hold clashes with the view of Finance Minister Kittiratt Na-Ranong, who earlier this month said the benchmark interest rate is “too high.” The economy unexpectedly contracted 0.3 per cent in the three months through June from the previous quarter, when it shrank by 1.7 per cent, official data showed.

The central bank today said the current account is forecast to post a deficit of $6.8 billion this year, compared with a $1.7 billion surplus predicted earlier.

Thai exports slumped 7.1 per cent in September, according to a separate report today from the commerce ministry. That compared with the median estimate in a Bloomberg survey for a 0.5 per cent gain.

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