Thailand is starting to enter a state of technical deflation. The University of the Thai Chamber of Commerce expects that the MPC will not cut interest rates in April.
The University of the Thai Chamber of Commerce recommends that the government expedite investment budget disbursement and push digital wallets to stimulate the economy. It is seen that Thailand's inflation is starting to enter a state of technical deflation. It is expected that the MPC this week still does not have enough reason to cut interest rates. It is estimated that the policy interest rate will be reduced in the second half of the year.
April 5 2567 Mr. Thanawat Phonwichai, Advisory ChairmanCenter for Economic and Business Forecasting and President of the University of the Thai Chamber of Commerce Evaluate that The Thai economy in the 1st quarter of 67 will see a picture of the tourism atmosphere starting to recover. positive exports and the prices of agricultural products are quite good Therefore, it is believed that the Thai economy this quarter will grow 1.5-2.0%, while the trend for 2Q67 is expected to grow 1.8-2.3%, shrinking from the previous expectation of 2.0-2.5%. Because there is a survey of opinions of the private sector. It was found that sales were still stagnant and depressed.
Therefore, recommend that the government expedite budget disbursement. Especially the investment budget This is because Thailand has not used its budget as usual since April. 66 to the present, which the normal investment budget will come into the economy approximately 30,000-40,000 million baht per month. Therefore, the Thai economy lacks driving force from the 1st quarter of 67 until this April. which is more than the budget can pass and be driven It takes at least 4 months to complete during this time. There will be approximately 1 billion baht missing from the economic system, which is the reason why the Thai economy is depressed. Therefore, if the government can speed up the disbursement of budget funds. and able to move money during June The Thai economy will gradually Recovered in the 3rd-4th quarter of 67.
“The government therefore must urgently accelerate investment in the 3rd-4th quarter of 67 because the attitude of the digital wallet project may occur in September. or the end of the 67 budget and will use the 68 budget as the basis, especially because the Cabinet (Cabinet) has a tendency to create a special budget deficit in a single year, a deficit of 860,000 million baht, an increase of approximately 150,000 million. baht from an expected deficit of over 700,000 million baht. Therefore, it is expected that the government will use digital money at the end of the 3rd quarter of 67 and the beginning of the 4th quarter of 67 in the amount of 500,000 million baht, which will stimulate the economy at the end of the year. It may make the economy more active. Add another 0.3-0.5% of GDP.” Mr. Thanawat said
It is also expected that the economy in the first half of 67 will grow approximately 1.8-2.0%. The need to stimulate the economy in the 3rd-4th quarter of 67 by implementing the digital wallet project. To add to the Thai economy to expand on average to about 3.0-3.5%, which will make the Thai economy grow close to 2.7% as the target that many parties want to see.
The Thai economy is in a state of decline. “Technical Deflation”
However, we must watch for signs of reducing the policy interest rate of the US Federal Reserve (Fed) because at present The market is worried that the Fed will not cut interest rates. Because signs of US inflation are gradually increasing from rising oil prices. Employment signals continue to improve. Unemployment rate decreased The market is therefore worried about whether the Fed will really cut interest rates in June or not. And is it true that there will be a total of 3 reductions this year? which will affect the direction of Thai interest rates and has an effect on the recovery of the world economy
Mr. Thanawat said that the important point now That is, Thailand's inflation has started to enter deflation, technically. This is a result of the energy prices that the government has taken care of, including diesel and electricity, while the prices of agricultural products such as meat and fruits and vegetables have also decreased. It shows that general inflation is negative. It is a technical deflation signal.
I believe that the MPC in April has not cut interest rates yet.
As for whether Thailand's interest rates will decrease or not? At the Monetary Policy Committee (MPC) meeting next week, Mr. Thanawat said that the MPC had held the view that if the issue of energy prices was eliminated, General inflation is still close to 1%, within the inflation target range of 1-3%, and the MPC has always had a guideline that Signs that the economy is about to recover from fiscal policy will have normal spending. and the economy will recover from last year. It is expected that this year's growth will be 2.7% from last year's 1.9%. Therefore, there is not enough reason to reduce interest rates.
At the same time, the baht was at 36.80 baht/dollar, still weak compared to the dollar. If interest rates are cut faster than the United States This may cause the baht to weaken past 37.00 baht/dollar. Because of the US interest rate difference and Thailand will be further apart.
Ready to see that if the MPC cuts interest rates in April which results in the baht being weak It will put pressure on oil funds to have more debt. There is pressure on energy prices. Especially the price of oil has increased. Moreover, if the baht depreciates very much It will also result in higher import costs.
It is expected that in the second half of the year we will begin to see the MPC reduce interest rates.
Mr. Thanawat believes that the MPC may start reducing interest rates after other countries have already reduced them, especially after the Fed's interest rate reduction. In order to adjust interest rates to be in line with the world interest rate situation. and adjusted to reflect inflation. after last The Ministry of Commerce predicts that inflation in 67 will be at 0-1%. It is seen that energy prices will increase. and inflation during the 2nd-3rd quarter of 67 will gradually increase.
“If the government gradually Gradually reduce energy price compensation It may cause inflation in the second half of the year. More consistent with the facts and may be lower than 1%, which may be reason enough to BoT cuts interest rates When world interest rates fall and Thai interest rates decreased accordingly. Because many parties are starting to talk about measures to stimulate the economy. Both the West, the United States, Europe and China may therefore see Thai interest. It started to decrease in the second half of the year.” Mr. Thanawat said
Advise the government to push fiscal measures “Digital Wallet” stimulates the economy.
However, another important point to note is underlying inflation. Which is an indicator of the real purchasing power of people in the country. Most recently, core inflation in the 1st quarter of 67 averaged at 0.44%, which the BoT had previously set an initial inflation target for core inflation at 0.5-3.0%. Therefore, the latest core inflation continuously lower than 0.5% Therefore, it may be a point for the MPC to decide to reduce interest rates for this reason. from a decrease in real purchasing power or the economy continues to weaken until March
“Atmosphere to stimulate the economy Therefore, it is necessary that the government sector may have to use fiscal measures. To stimulate more quickly Because of the digital wallet policy It is the main policy of the government that is expected to use 500,000 million baht at the end of the 3rd quarter of 67.”
“At the same time, it is expected that the BoT There is still a unclear picture of interest rate cuts. There is no need to reduce interest rates yet. Because Thai interest rates are still the lowest in ASEAN, fiscal policy is still necessary. Because tourism and exports are still unable to revive the economy in the 2nd-3rd quarter of 67, fiscal policy must be used. Because the monetary policy is not yet clear whether it will be reduced in April. Or June or not?”
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