Thailand’s economic growth slows even as it beats estimate
THAILAND’S economic growth slowed in the first quarter, heaping further pressure on the central bank to answer the government’s call for lower borrowing costs to aid recovery.
Gross domestic product in the three months to March rose 1.5 per cent from a year earlier, the National Economic and Social Development Council said on Monday (May 20).
That compares with the 0.8 per cent median estimate in a Bloomberg survey and a 1.7 per cent pace reported earlier for the fourth quarter.
The economy expanded 1.1 per cent quarter on quarter, compared with a median estimate for 0.6 per cent growth. GDP contracted 0.6 per cent in the October to December period, based on earlier report.
The economic performance, though above estimate, will likely support the case for an interest-rate cut when the Bank of Thailand (BOT) holds its next meeting in June.
It comes as tensions between the government and the central bank appear to have cooled after Finance Minister Pichai Chunhavajira last week said they would leave the monetary decision-making to the BOT, explaining that access to lending and liquidity were more important than the level of borrowing costs.
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The central bank’s policy rate has stood at a decade-high 2.5 per cent since September even as consumer prices slipped into negative territory in the fourth quarter of 2023 and GDP growth stuttered.
Headline inflation finally quickened in April, showing the first gain in the past seven months.
The BOT said last month that holding the rate steady had given it “policy optionality” to deal with currency volatility, geopolitical risks and uncertainty around the US Federal Reserve’s pivot to easing.
South-east Asia’s second-largest economy is expected to pick up pace in the second half, supported by public spending after the much-delayed passing of the national budget.
The government is targeting to roll out the US$14 billion cash handout later this year to boost consumption. Critics have warned this could fan inflation and set back fiscal consolidation. BLOOMBERG
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