Bangkok--3 Oct--Standard Chartered Bank In 2009, Standard Chartered Bank views that Thailand is likely to face a double whammy of both internal and external challenges. Following the global financial crisis, we are seeing more evidence of growth deceleration across Asia. Economic growth weakness in the West is likely to spread to Emerging Asia as global trade to slow further. In this environment, the downside risk to growth should be taken seriously given the fact that Thailand has been increasingly dependent on export sector as its sole engine of growth in recent years. We foresee that the global financial turmoil could negatively impact Thailand’s exports and tourism sectors, and resulting in a deterioration in the current account balance. Thailand’s export markets are quite well diversified. US, Europe, and Japan account for only about 1/3 of Thailand’s total exports. However, when combined with other key markets in the region, including ASEAN, China, and Hong Kong, they account more than 2/3 of Thailand’s total exports. Hence, a synchronised slowdown of the global economy will have a significant impact on Thailand. Alongside, the global financial crisis will add more downside risk to Thailand’s tourism income, which is already hit hard by the recent political disorder. On the local front, domestic demand will continued to be burdened by the political situation. In light of persisting political instability, local confidence, both for investors and consumers, will continue to remain weak. Meanwhile, the progress of the actual investment of mega-projects may be delayed due to political uncertainty. After all factors taken into account, we now expect Thai GDP growth to slowdown from the estimate of 4.7% in 2008 to 3.9% in 2009. In line with this, we believe that Thailand’s inflation will ease off significantly from an average of 6.4% in 2008 to 2.5% in 2009. Easing inflation pressures should allow the central bank to consider cutting policy rate to cushion the economic slowdown. The first rate cut is likely to come in Q2-09 with two 25bps cuts, followed by one 25bps cut in Q3-09, leading policy rate to 3.0%. But if economic conditions worsen, then we could see rate cuts happen sooner. As for the THB outlook, we believe that the prospect of weaker current account with ongoing portfolio outflows will weigh on THB, expected to weaken to 35.50 by end-2008, and 36 by mid-2009. Note to Editors: Standard Chartered — leading the way in Asia, Africa and the Middle East Standard Chartered PLC, listed on both the London Stock Exchange and the Hong Kong Stock Exchange, ranks among the top 25 companies in the FTSE-100 by market capitalisation. The London-headquartered Group has operated for over 150 years in some of the world’s most dynamic markets, leading the way in Asia, Africa and the Middle East. Its income and the number of employees have more than doubled over the last five years primarily as a result of organic growth and supplemented by acquisitions.Standard Chartered aspires to be the best international bank in its markets through leading by example to be the right partner for its stakeholders. The Group now employs 73,000 people, representing 115 nationalities, in more than 1,700 branches and outlets located in over 70 countries. The Bank derives more than 90 per cent of its operating income and profits from Asia, Africa and the Middle East, with balanced income derived from both Wholesale and Consumer Banking.The Group is committed to building a sustainable business over the long term and is trusted worldwide for upholding high standards of corporate governance, social responsibility, environmental protection and employee diversity. For more information, please visit: www.standardchartered.com Standard Chartered Bank (Thai) PLC Standard Chartered Bank (Thai) offers innovative products and services - Consumer Banking provides credit cards, personal loans, deposit taking, wealth management, mortgage, SME Banking to individuals and small to medium sized enterprises; Wholesale Banking provides corporate and institutional clients with services in trade finance, cash management, lending, securities services, foreign exchange, debt capital markets and corporate finance. For more information please visit: www.standardchartered.com Standard Chartered Bank (Thai) www.standardchartered.co.th For further information please contact Standard Chartered Bank (Thai) Corporate Affairs, Thailand: Supattra Wetchasart tel: 02 724 8022 [email protected] Saowarop Panyacheewin tel: 02 724 8025 [email protected]