Signs of a slowing economy in terms of exports, domestic spending and relatively low inflation reflect the vulnerabilities of the Thai economy, while the impact from the lackluster exports has begun seeping into the real economic sector. Although the government recently introduced a series of economic stimulus measures, they could only cushion the impact and merely prevent the economy from sliding down further. Looking ahead, risk factors to the economy persist, including the US trade war with China, and inconclusive Brexit negotiations, despite the recently-emerged positive signs associated with these issues. KResearch views that Thailand's Monetary Policy Committee (MPC) is likely to cut the policy rate by 0.25 percentage points from 1.50 to 1.25 percent during their meeting on November, 6.
Looking ahead, the Thai monetary policy in 2020 will be conditional upon the development of risks related to the ongoing trade war and Thailand's economic performance. The global economy continues to face risks. In spite of positive signs from the US trade war with China and the Brexit talks, they are unlikely to significantly change the outlook for the global economy. Meanwhile, the Thai economy continues to brace for continuing risks due to the stronger Thai Baht and spillover impact from the poor export performance to domestic employment and household purchasing power. The MPC is likely to closely monitor these issues. KResearch views that the MPC still has some space to maneuver to implement additional monetary policy measures if necessary, even if the policy rate hits bottom.