Thailand’s central bank decided to again revise downward its economic growth projection for 2015 as a result of weaker-than-expected export performance and private spending.
Key developments factored into the MPC’s forecast revision include
(1) slower-than-expected global economic recovery due mainly to further weakness in China’s and other Asian economies’ growth,
(2) continuing economic support from government investment spending and additional stimulus measures,
(3) the impact of the mid-year drought on the overall economy, and
(4) more-than-expected decline of global oil prices.
In light of the aforementioned economic assessment, the MPC lowered the growth projection for both 2015 (2.7% down from 3%) and 2016 (3.7% down from 4.1%), and appraised the risks around the central projection to skew to the downside. The downside risks include
(1) a sharper slowdown in the Chinese and Asian economies,
(2) a greater-than-expected decline in the number of tourists in the aftermath of the bombings in Bangkok, and
(3) lower-than expected crowding-in effects of public investment amid weak private sector confidence.
The upside risks could stem from accelerated disbursements of public investment expenditure and more effective implementation of government stimulus packages, as well as a greater-than-expected growth of the tourism sector in 2016.
On August 5 and September 16, 2015, the MPC voted unanimously to maintain the policy rate at 1.50 percent per annum with the assessment that the recent conduct of monetary policy has further relaxed domestic monetary conditions conducive to economic recovery, reflecting in the decline in business sector’s funding cost in the money markets and recent developments in the exchange rate.