Thailand’s economy said slips into recession with Central Bank said cold towards rates reduction

Interest Rates

Interest Rates (Photo credit: 401(K) 2013)

After Thailand‘s Central Bank failed to spur economic activity with a reduction in rates as Thailand’s private bank refused to reduce rates in-line with the Central Bank, Thailand’s economy shrank unexpectedly in the second quarter, slipping into a mild recession. But many dispute the recession claim. The recession is blamed on weak exports and domestic demand, but worries over high household debt are likely to keep the central bank from cutting interest rates further. The 0.3 per cent contraction in South-east Asia’s second-largest economy adds to a series of disappointing data casting a shadow over one of the world’s fastest-growing regions. Still, economists said they expect the economy to regain momentum in the second half, reducing pressure on the Bank of Thailand (BOT) to reduce rates. Most expect the benchmark policy rate to remain unchanged for the rest of the year. The April-June contraction compares with a revised 1.7 per cent decline in economic output in January-March, the data showed yesterday.

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