Thailand: Mounting Upside Growth and Inflation Risks Heighten Chances of Rate Tightening
18/02/2010
Confirming upside risk from three sets of upcoming data readings — A senior monetary official recently flagged the need to hike overnight policy rates as growth conditions normalize. Prior to Mar 10 (scheduled MPC policy rate meeting), we believe policymakers would focus on the upside risk likely flagged or extracted from three sets of economic readings: 1) 4Q09 GDP; 2) BoT’s economic indicators for Jan; and 3) CPI stats for Feb. Our forecasts of these three sets of data would hike the odds of an overnight rate adjustment of 25bp on Mar 10. We assume no political distractions before or after Feb 26
Excess of 4% growth in 4Q09 — On the back of BoT’s buoyant economic indicators in 4Q09, we reckon GDP growth during the quarter was 4.5%yoy for a seasonally adjusted QoQ of 2.1%.
Uptrend in 4Q09 would crossover into 2010 — For the January, we continue to anticipate oversized export and import growth with manufacturing likely to follow suit that matches the robust indicators last Dec. We expect most indicators to undergo seasonally adjusted intra-month correction in Jan following sizeable gains in Dec. We expect to draw out the following implications: 1) strengthening recovery led by export gains; 2) more upside from consumer demand; and 3) utilization rate at 70% or more for the 2nd month would signal normalizing manufacturing output. These comprise upside risk to growth that would support overnight policy rate hikes sooner than later.
Higher inflation trajectory — We estimate core inflation of 0.7%yoy in Feb after a 0.6%yoy increase in Jan. With non-core inflation of close to 15%yoy, overall headline inflation probably registered 4.3%yoy.
18/02/2010
Confirming upside risk from three sets of upcoming data readings — A senior monetary official recently flagged the need to hike overnight policy rates as growth conditions normalize. Prior to Mar 10 (scheduled MPC policy rate meeting), we believe policymakers would focus on the upside risk likely flagged or extracted from three sets of economic readings: 1) 4Q09 GDP; 2) BoT’s economic indicators for Jan; and 3) CPI stats for Feb. Our forecasts of these three sets of data would hike the odds of an overnight rate adjustment of 25bp on Mar 10. We assume no political distractions before or after Feb 26
Excess of 4% growth in 4Q09 — On the back of BoT’s buoyant economic indicators in 4Q09, we reckon GDP growth during the quarter was 4.5%yoy for a seasonally adjusted QoQ of 2.1%.
Uptrend in 4Q09 would crossover into 2010 — For the January, we continue to anticipate oversized export and import growth with manufacturing likely to follow suit that matches the robust indicators last Dec. We expect most indicators to undergo seasonally adjusted intra-month correction in Jan following sizeable gains in Dec. We expect to draw out the following implications: 1) strengthening recovery led by export gains; 2) more upside from consumer demand; and 3) utilization rate at 70% or more for the 2nd month would signal normalizing manufacturing output. These comprise upside risk to growth that would support overnight policy rate hikes sooner than later.
Higher inflation trajectory — We estimate core inflation of 0.7%yoy in Feb after a 0.6%yoy increase in Jan. With non-core inflation of close to 15%yoy, overall headline inflation probably registered 4.3%yoy.