Economists have maintained Thailand's 2025 GDP growth forecast following the Bank of Thailand's recent interest rate cut, saying more reductions are likely during the year to lift a stagnant economy amid a challenging global outlook.
Economists at BofA Securities, led by Pipat Luengnaruemitchai, said the Monetary Policy Committee's (MPC) rate cut came earlier than the market anticipated, indicating the central bank was more concerned about the country's growth outlook.
"The MPC did not mention a 'neutral stance', unlike the last rate cut in October 2024, which implies the possibility of further cuts in our view," BofA said in a research note.
The committee said Thai growth is likely to be weaker than previous assessments and is subject to heightened risks from US trade policy.
The main weakness is in the manufacturing sector, especially automotive, petrochemicals and construction materials, which face both structural problems and rising competition, noted the MPC.
BofA maintained its forecast of three cuts this year, meaning two more in 2025.
"The Bank of Thailand did not describe this cut as a recalibration to a neutral level. This opens up the path for further easing in the future," said the securities firm.
"We reiterate our forecast of three cuts in 2025, with expected cuts in the second and third quarters."
BMI, a research house under the UK-based Fitch Solutions Group, kept its forecast of 3% Thai growth this year, but noted that geopolitical uncertainties present a downside risk to its forecast.
"Thailand runs a large trade surplus with the US, ranking just outside the top 10, leaving the country susceptible to [US President Donald] Trump's reciprocal tariff threats," BMI said.
"If Washington follows through on its plans, this could pile pressure on Thailand's already lacklustre external demand."
With growth falling short of the central bank's estimates, and at risk of slowing even further, BMI believes the likelihood of an imminent 0.25% rate cut significantly increased.
"We forecast the central bank to reduce its policy rate by an additional 50 basis points [bps] by the end of 2025, which will not only support investment activity, but also provide some relief to household incomes over the coming quarters," said the research house.
Kuala Lumpur-based Maybank acknowledged the chance of further cuts this year if spillovers from Trump's tariffs intensify.
"Given growing domestic demand, we expect the regulator to keep the policy rate on hold for the rest of 2025, and ease once by 25bps in 2026," Maybank said in a research note.
"But we don't rule out another 25bps cut to 1.75% this year if the adverse effects from Trump's potential tariffs become acute. These could stem from direct US tariffs targeting Thailand, or rising US duties on China that could redirect its surplus goods to other markets."
