Thailand Economic Review

Thailand economic 1Q08 review and outlook for 2H08-Risein oil and commodity price major risks:

?Rising inflationary pressure. Headline inflation for 4M08

?MPC turning hawkish. UOB forecasting policy rate to increase 50 basis points in the 2H08.

?Decelerating GDP growth over the remaining quarters. UOB forecasting GDP growth of 4.7% for 2008. 1Q08 GDP was 6%.

?High oil price will put pressure on trade balance as Thailand imports of oil accounts for about 8-9% of GDP. Energy imports jumped 74% during the 4M08 period. Trade deficit during the 4 months of 2008 totaled US$2.98b versus trade surplus of US$12b in 2007 and current account surplus of US$14.9b.

averaged 5.3% vs. 2.2% in 2007. April inflation jumped 6.2% yoy. Food and beverage accounts for 36% of CPI and energy accounts for another 9%.

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