SCB EIC forecasts that BoT will keep the policy rate unchanged at 2.5% throughout the upcoming year

The Monetary Policy Committee (MPC) has unanimously decided to maintain the policy rate at 2.50 percent, stating that he Thai economy is showing signs of recovery, despite a slowdown in merchandise exports and related production.

It is expected that growth will be more balanced in 2024 and 2025, supported by domestic demand, the tourism sector, and a recovery in merchandise exports. Inflation is also projected to increase next year in line with the economic recovery and El Niño-related supply pressures.

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The MPC forecasts a growth rate of 2.4 and 3.2 percent in 2023 and 2024, respectively. The government’s digital wallet scheme is projected to contribute to a growth rate of 3.8 percent in 2024. The overall trajectory of the economy is one of continued recovery, marked by robust expansion in private consumption and improvements in employment and labor income. However, structural impediments could limit the positive effects of global demand recovery on Thai exports.

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The MPC also projects headline inflation of 1.3 and 2.0 percent in 2023 and 2024, respectively. This projection accounts for the digital wallet scheme, which is expected to contribute to a 2.2 percent inflation rate in 2024. The committee is monitoring risks from higher food prices due to El Niño and a potential increase in global energy prices arising from the Middle East conflicts. The MPC is also keeping an eye on the financial system’s overall resilience and the slight tightening of overall financial conditions. It is important to continue monitoring credit quality for some small and medium-sized enterprises and households with impaired debt serviceability.