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Economy / Thai economy
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2009-02-25 05:48:51-05
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Thai central bank cuts key rate to 1.5 % to help economy hit by global crisis
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Thai attempt to kick start export dependent economy in recession
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Thailand's central bank slashed its benchmark lending rate for the third time in as many months Wednesday, attempting to kick start an export-dependent economy headed for its first recession in 10 years. The rate was lowered by half a percentage point to 1.5%, the Bank of Thailand said in a statement. The rate is now at its lowest level since early 2005. Assistant Governor Duangmanee Vongpradhip said the global financial crisis has caused a marked slowdown in world growth and there remains "high uncertainty" about the economic outlook. Government measures to stimulate Thailand's economy will take some time to take effect, she said. Last month, the bank cut the rate by 0.75 percentage point after a 1 percentage point cut in December. The rate decision came just two days after the government's National Economic & Social Development Board (NESDB) warned that Southeast Asia's second-largest economy will decrease as much as 1% in 2009 because of decreasing exports and weak domestic demand. It previously forecast growth of as much as 4% for this year. Thailand's economy shrank 4.3 percent from a year earlier in the 4Q, its first contraction in nearly a decade, as the global slowdown repressed exports and political unrest hit tourism. Thailand's economy grew 2.6% in 2008. The last time Thailand's economy shrank was in the first quarter of 1999. Thailand, like its export-dependent neighbors, has been hurt by the slump in global demand. Exports posted their steepest fall in 12 years in January as demand for the Thailand's cars, pick-up trucks , hard drives and electrical goods evaporated. Exports account for 65% of the country's GDP. Tourism, which makes up about 6% of the economy, was hard hit by anti-government protesters shutting down Bangkok's two main airports for a week just as the high season began late last year. Earlier this month, Thailand's Parliament approved a 116.7 billion-baht (USD3.3 billion) package which will take effect next month to stimulate domestic demand and create jobs.
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