Thailand's economic upswing still in good shape

Thailand data published late last week and earlier today show that activity continues to expand at a brisk pace while inflation remains low. The GDP expansion should stay on track in 2011 and the focus will shift toward containing inflation and back to Thai politics. A repeat of the unrest seen recently is possible but unlikely, and we forecast that the Bank of Thailand (BoT) policy rate will rise significantly over the next 12 months. Capital inflows will be managed through a combination of more intervention, regulatory controls, and further exchange rate appreciation.