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Thai central bank will cut 2019 growth forecast again as risks rise - governor

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08/19/2019 | 06:30am EDT
Thailand's central bank is seen at the Bank of Thailand in Bangkok

BANGKOK (Reuters) - Thailand's central bank will lower its 2019 economic growth forecast of 3.3% as growth is slowing amid "escalating trade protectionism, which is likely far from over", the governor said on Monday.

Bank of Thailand Governor Veerathai Santiprabhob also told a seminar in Khon Kaen in the Thai northeast that strength in the baht, Asia's best performing currency this year, remains a concern.

The central bank will review its economic forecasts at the next monetary policy meeting, on Sept. 25.

In June, the BOT cut its forecasts for 2019 GDP growth and exports for the third time in six months, to 3.3% from 3.8%, with exports flat, rather than rising 3%.

In 2018, Southeast Asia's second-largest economy grew 4.1%, the best in six years but still less than regional peers.

Veerathai's comments came hours after the state planning agency reported 2.3% annual growth in the second quarter, the weakest in nearly five years.

While concerned about the baht's strength, the BOT has only acted on excessive moves in the currency, Veerathai said.

"We are not comfortable as the baht has strengthened against the currencies of trade partners and competitors," he said.

"The central bank will have to intervene when there are large foreign funds coming in. If we don't do it, the baht will appreciate too rapidly. To prevent that, we will intervene".

The baht <THB=TH> has strengthened 5.5% against the dollar this year, putting pressure on Thailand's trade-dependent economy.

The government planning a $10 billion stimulus package which Finance Minister Uttama Savanayana said should boost economic growth by 0.55 percentage points, lifting 2019's pace to at least 3%.

On Aug. 7, the BOT cut its policy rate for the first time since April 2015, by a quarter point to 1.50%, just 25 basis points above the record low. Most economists expect more easing this year.

However, Veerathai said Thailand's current policy rate is considered "very low" compared with those in neighbouring countries.

(Editing by Richard Borsuk)

By Orathai Sriring and Satawasin Staporncharnchai

Stocks mentioned in the article
ChangeLast1st jan.
EURO / THAI BAHT (EUR/THB) 0.26% 33.592 Delayed Quote.-8.66%
US DOLLAR / THAI BAHT (USD/THB) 0.19% 30.55 Delayed Quote.-5.40%
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