Thailand’s economy to contract sharply in ’09-IMF

Thailand’s economy will contract sharply this year, largely because of the global recession, and low inflation gives it room for further interest rate cuts, the International Monetary Fund said on Monday.

In a statement summarizing its 2009 consultation with Thailand, the IMF said the Bank of Thailand had “reacted appropriately” by cutting interest rates by 225 basis points since last December, but said there was scope for more.

“Supportive fiscal and monetary policy will be needed to limit the contraction in consumption and investment,” the IMF said. “Assuming that there are no major shortfalls in policy implementation, and that political stability is maintained, the fall in GDP growth could be contained to a range of between -2 and -4 percent.”