Why Thailand will 'inevitably' suffer price pressures

Even after a record 18.9% growth.

According to DBS, despite pressure from the government, the central bank (BoT) is unlikely to lower the policy rate especially after record growth of 18.9% YoY in 4Q.

The impressive part actually lay with the sequential 3.6% QoQ (sa) acceleration driven by a continued pick up in consumption. Meanwhile, investment has also stayed
elevated.

As such, from a growth perspective, there is little need to further stimulate credit growth (which is already elevated) to bolster the economy.

Here's more from DBS:

BoT has lso sounded out several times about the rapid pace of consumer credit growth. Instead, inflation is likely to come up as a key concern.

In our view, the minimum wage hike in January and the increase in consumption will inevitably lead to price pressures down the line.

Export competitiveness is another issue brought up. To be sure, the THB has appreciated significantly against the greenback over the past few quarters, but other Asian currencies have embarked on similar paths.

When measured using the THB real effective exchange rate (REER), current levels are still slightly lower than the recent high posted in end-2010. In this sense, the THB is not unduly uncompetitive.