Boston, MA -- (ReleaseWire) -- 05/02/2014 -- Thailand's political stalemate has had a devastating impact on economic growth, and with no signs of a possible resolution in the near term, we expect economic activity to remain depressed in 2014. The risk of a sustained contraction in GFCF over the coming quarters presents the biggest threat to Thailand's economic outlook as confidence in political stability is shaken.
We believe that the Bank of Thailand (BoT) will keep its policy rate on hold at 2.25% throughout 2014. We caution that should Thailand's political situation deteriorate rapidly over the coming months, this could eventually force the BoT to ease monetary policy in a bid to support growth. However, for now, we believe that the risk of triggering major foreign capital outflows and the negative impact on the Thai baht will continue to weigh more heavily on the BoT's stance on monetary policy.
View Full Report Details and Table of Contents
We hold a relatively neutral view on the Thai baht over the coming months following the recent 14.0% peak-to-trough decline in the unit. On one hand, the political and economic situation in the country is baht negative, with no meaningful end in sight to the ongoing political impasse, and foreign and domestic investment likely to struggle in 2014. On the other hand, the technical picture of the baht is stabilising, while a shift in protests away from central Bangkok should provide some relief to the economy following months of partial shutdown. The currency's tight correlation with regional FX also suggests that the baht will follow regional trends.
We believe the latest move by the National Anti-Corruption Commission (NACC) to charge caretaker Prime Minister Yingluck Shinawatra for alleged negligence could potentially tip the balance in favour of the People's Democratic Reform Committee (PDRC) as the political stalemate in stretches into its fourth month. Should the NACC's charges fail to remove Yingluck and her caretaker government from power, however, we believe that the political stalemate could drag further into H214
Major Forecast Changes
We have downgraded our real GDP growth forecast for Thailand from 3.8% to 3.2% for 2014. With no signs of a possible resolution to the political impasse and violent protests,
About Fast Market Research
Fast Market Research is a leading distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff is always available to help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.
Browse all Country Reports research reports at Fast Market Research
You may also be interested in these related reports:
- Chile Business Forecast Report Q2 2014
- Brazil Business Forecast Report Q2 2014
- Trinidad & Tobago Business Forecast Report Q2 2014
- Hungary Business Forecast Report Q2 2014
- Croatia Business Forecast Report Q2 2014
- Russia Business Forecast Report Q2 2014
- Canada Business Forecast Report Q2 2014
- Albania Business Forecast Report Q2 2014
- Lithuania Business Forecast Report Q2 2014
- United States Business Forecast Report Q2 2014