Thailand’s growth was slower than economists estimated in the first quarter as exports cooled, boosting the case for the central bank to cut interest rates.
Gross domestic product increased 5.3 percent in the three months through March from a year earlier, after expanding a revised 19.1 percent in the previous quarter, the National Economic and Social Development Board said in Bangkok today. The median of 13 estimates in a Bloomberg News survey was 6 percent.
Finance Minister Kittiratt Na-Ranong, who has led calls for lower rates, said May 10 the monetary authority must cut by more than a quarter of a percentage point or implement capital controls to slow inflows that last month drove the baht to a 16-year high. The Bank of Thailand reduced the benchmark in October and has held it since, citing risks to financial stability.
“There is room for the central bank to lower the rate, given the benign inflation and signs of cooling in the economy,” Benjarong Suwankiri, an economist at TMB Bank Pcl in Bangkok, said before the data release. First-quarter GDP growth coming in below estimates would “increase the possibility of them easing monetary policy at the meeting next week.”
The baht slipped 0.1 percent to 29.89 per dollar as of 9:32 a.m. in Bangkok. It has retreated almost 4 percent from a high of 28.56 against the dollar in April, the strongest level since 1997 and is still Asia’s best-performing currency this year, data compiled by Bloomberg show.
Policy makers around the world have moved to counter currency appreciation and stimulate growth, with central banks in Vietnam, India, South Korea, Australia and Europe cutting borrowing costs this month. The Thai central bank’s Monetary Policy Committee is scheduled to meet on May 29.
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