Mixed Activity Data Since June BoT Meeting

The Bank of Thailand (BoT) announces its decision later today and is widely expected to leave rates at 2.5%, which it considers to be “neutral”. Earlier finance minister Pichai said that the economy is “near crisis”, in line with consistent government pressure on the central bank to ease rates. BoT believes that current policy is “appropriate” to return inflation to target and achieve its growth forecast. It also wants to reduce the elevated household debt ratio.

• Q2 GDP growth improved to 2.3% from 1.6% and if Q3/Q4 grow at the same quarterly pace as Q2 then BoT’s 2.4% 2024 growth forecast should be achieved.
• Monthly indicators since the last meeting in June have been mixed. Q2 consumption slowed to 4% y/y but it faced unfavourable base effects. The tourism recovery and consumer confidence suggest that it should remain solid going forward. Sentiment is off its February high but remains positive at 57.7 but the economic assessment has weakened considerably to 51.3. Tourist arrivals are off their recent high but in June rose 22.3% y/y.
• Business indicators tell different stories. The S&P Global manufacturing PMI improved to 52.8 in July, highest since June 2023 and above the ASEAN aggregate. However, July business sentiment fell to 46.9 from 48.7 and orders books to 45.7 from 50.0. Manufacturing production growth is off its lows but June still fell 1.7% y/y, while Q2 capex contracted 6.2% y/y.