Annual Information Service
Thailand Country Risk Report Q2 2020
|Published by||Fitch Solutions, Inc.||Product code||203091|
|Published||annual subscription||Content info||65 Pages|
|Thailand Country Risk Report Q2 2020|
|Published: annual subscription||Content info: 65 Pages||
We at Fitch Solutions believe Thailand's economy in 2020 will continue to face the similar headwinds it has met during 2019, curbing the potential for a strong
rebound in activity. External challenges are set to persist, widening net exports' drag on headline growth, and we expect a further moderation of household
demand, given high indebtedness and weaker job growth prospects. As such, growth will be highly dependent on the effect of fiscal and monetary stimulus, with
risks of delays to the former and insufficient impact from the latter. We now forecast growth in 2020 to rebound to 3.0%, from a forecast 2.8% in 2019, having
previously expected a stronger pick-up in growth at 3.5%.
We believe the Bank of Thailand (BoT) will take a cautious approach to further monetary easing over the coming quarters. We have maintained our forecast for
the key policy rate to be kept on hold at 1.25% through 2020 but note risks of further easing are higher given the impact of the novel coronavirus (2019-nCoV)
outbreak on the country's tourism sector. The key reason for the BoT's cautious approach are policy constraints we do not foresee abating in the coming quarters;
namely high household indebtedness, slowing economic growth, Thai baht strength and ongoing trade negotiations with the US.
Thailand's fiscal packages will target boosting domestic consumption, export-orientated sectors and investment as well as encouraging foreign direct investment
over the coming quarters. The fiscal packages will not pose a threat to Thailand's fiscal position, which remains well managed under the Fiscal Responsibility Act.
However, we note the boost to the economy may be less than intended given weak domestic confidence and longer-term structural issues. Moreover, delays
to the passing of the 2020 budget could mean fiscal policy fails to act as a buffer through Q120.