The MPC may raise the policy rate two more times to 2% within this year.
This is an forecast from SCB EIC that the MPC is expected to continue to raise interest rates at the March and May 2023 meetings by 0.25% each time and will reach 2% throughout this year.
Thai economy grows 3.4%
SCB EIC expects the Thai economy to expand 3.4% this year, driven mainly by tourism and private consumption. China’s opening up faster than expected may cause more Chinese tourists to Thailand This has a positive effect on the tourism sector and related services. causing consumption to expand continuously
The export is not bright
Exports tend to be dull. This can be observed from the contraction in the value of Thai exports in the last quarter of 2022 following the global economic slowdown. Exports this year may face pressure from new import tariffs from key trading partners such as Europe and India. There will be some effect from this year. Therefore, Thai exports are expected to grow as low as 1.2% in 2023.
Headline inflation tends to slow down.
Inflation has gradually declined from 6.1% in 2022 to 3.2% at the end of 2023, but is still higher than the target range of 1-3% due to high domestic energy and food prices.
The baht tends to continue to appreciate.
Since the beginning of 2023, the baht has appreciated rapidly, leading other countries in the region. The depreciation of the US dollar and the prospects for the recovery of the Thai economy benefited from the opening up of China. The baht has appreciated 5.6% since the beginning of the year and is likely to continue this year. The first half of the year is in the range of 32.5-33.5 baht per US dollar and is expected to appreciate in the second half to 31.5-32.5 baht per US dollar.
Source – SCB EIC
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