As per analysts, Thailand’s economic forecast has deteriorated following the devastating March 28 earthquake in Myanmar, heightening calls for another interest rate reduction next month to bolster the sluggish economy.
The 7.7-magnitude earthquake struck Myanmar on Friday, causing over 1,700 deaths and impacting neighboring Thailand, where it led to 18 fatalities in Bangkok. Additionally, a construction site in Bangkok saw more than 70 workers missing after a collapse. This event contributed to a steep drop of as much as 1.7% in Thailand’s main stock market, the SET Index, heavily affecting property and financial shares on Monday.
Such scenarios present further challenges for Southeast Asia’s second-largest economy, already grappling with U.S. President Donald Trump’s trade tensions, high household debt, dwindling Chinese tourist numbers, and a continuing decline in factory output due to weak auto sales.
Nattaporn Triratanasirikul from Kasikorn Research Center Co. noted the already bleak economic outlook has been exacerbated by the earthquake, increasing the likelihood of consecutive interest rate cuts in April, with a potential for further easing later in the year.
A report by Standard Chartered Plc indicated that given the “outlook-dependent” nature of the BOT’s monetary policy, the deteriorating situation may lead to an April rate cut. Moreover, Citi Research echoed this sentiment, suggesting that the central bank could also encourage banks and financial institutions to extend additional support to clients.
The BOT had previously lowered rates unexpectedly in February this year and October last year to support growth, but remains cautious about committing to a full-scale easing strategy.
Kasikorn Research projected an immediate economic repercussion of approximately 20 billion baht ($590 million) due to the earthquake, primarily resulting from a significant decline in month-end spending on food and services.
According to BOT Deputy Governor Roong Mallikamas, the central bank has directed financial institutions to offer special debt relief to those affected by the disaster, similar to previous measures during last year’s floods. The Monetary Policy Committee is scheduled to convene on April 30.
For tourism, the impact from the quake may be particularly felt by the sector despite an anticipated growth driven by Thailand’s prominence in the popular TV series, “The White Lotus.” The Thai Hotels Association has predicted a potential drop in international tourist arrivals by 10%-15% or more over the next two weeks.
Furthermore, the property market, particularly condominium sales, faces pressure as concerns over earthquakes deter potential buyers for high-rise buildings, hindering recovery efforts in a market already burdened with unsold properties.
