Prakash Sakpal, economist at ING, believes that the Bank of Thailand is likely to cut rates at its policy meeting tomorrow with weak data driving another downgrade of ING’s GDP growth forecast for the year to 2.5% from 2.8%, marking its third downgrade this year.
Key Quotes
“In an extended negative streak for the fourth month, manufacturing production contracted by 4.4% year-on-year in August. The fall was steeper than the consensus median of -3.3% and it followed a 3.2% fall in July. “
“The July-August average manufacturing growth of -3.8% is a further deterioration from the -2.5% average for the second quarter.”
“We now see GDP growth in the current quarter little changed from its second-quarter pace and revise our growth forecast accordingly to 2.3% from 3.0%. We also cut our full-year 2019 growth forecast further to 2.5% from 2.8%, the third downgrade this year.”
“Once again, we are bucking the consensus with our view of a 25 basis point rate cut to 1.25% at this meeting.”
“If they don’t move tomorrow, we don’t think we will have to wait for too long for the next cut. If nothing else, such a move is warranted from the strength of the THB, which is up 6.78% this year (starting date 31 Dec 2018), beating even the JPY (only +1.87% in comparison).”
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