Thailand’s weak economy to bring more rate cuts

Today’s Q4 GDP data show that, due to widespread floods, Thailand’s economy suffered a bigger quarterly contraction in late-2011 than it did in either the 2008-09 global crisis or the Asian Financial Crisis of the late-1990s. Domestic demand should recover in coming quarters, but we think overall growth will be sluggish and that inflation will ease. The upshot is that we expect Thailand’s repo rate to be lowered again this year and have pencilled in a 25bp cut in Q2.

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