Bank of Thailand to hold rates this year, economists split on next cut - Reuters poll

AI Sentiment: Cautiously Bullish
Reason: The article presents a cautiously optimistic view on the Bank of Thailand's economic prospects, despite challenges like potential COVID-19 resurgence and high household debt. Economists expect Thailand's GDP to grow by 1.0% this year and 3.5% in 2023.

According to a recent poll conducted by Reuters, economists are divided on whether the Bank of Thailand will implement an interest rate cut next year. The majority of economists, however, agree that the bank will maintain its current rates throughout the remainder of this year.

The Bank of Thailand has held its benchmark rate at 0.50% since a quarter-point cut in May 2020. It was one of the first Southeast Asian central banks to shift to an accommodative stance in response to the impact of the COVID-19 pandemic on the economy.

According to 11 out of the 19 economists surveyed, the central bank is likely to keep rates steady for the rest of 2023. The remaining eight are split over the timing of the next rate cut, which they believe could occur either in the first or third quarter of next year.

Despite the split in opinion, economists generally agree that the central bank's decision will hinge on the country's economic recovery from the pandemic, which has been slower than expected due to the resurgence of the virus and the slow rollout of vaccines.

Thailand's economy, which is heavily reliant on tourism, has been hit hard by the pandemic with the sector's revenues plummeting 80% last year. However, the government has launched a phased reopening of the country to vaccinated foreign tourists without quarantine requirements, which is expected to provide a much-needed boost to the economy.

Nonetheless, economists warn of potential risks that could delay the economic recovery. These include the possibility of another wave of infections, slow vaccine rollout, and high household debt, which remains one of the highest in Asia.

Inflation, which soared to a more than 13-year high in October, was also a concern. However, the survey indicated that economists believe the spike is temporary and that inflation will slow down to the central bank's target range of 1-3% next year.

Despite these challenges, the economists surveyed expect Thailand's GDP to grow by 1.0% this year, improving to 3.5% in 2023. This is in line with the government's forecast of a 1.0-1.5% growth for this year and a 3.5-4.5% expansion next year.