Bangkok: Thailand’s central bank has left key rates unchanged and has lowered its forecast for economic growth this year and next. Because Thailand is working on the largest wave of Covid cases to date.
As all 25 economists expected in a Bloomberg poll, the Bank of Thailand held a record low of 0.5% in nine consecutive unanimous decisions yesterday.
Bank of Thailand’s deputy governor Titanun Malikamas said at a briefing in Bangkok that the country’s vaccination campaign was key to economic recovery.
The labor market recovery is slower than before, and the markets are more fragile than they are today, so they can be more W-shaped than smooth returns.
The bank’s interest rate committee is “ready to use the limited policy leeway at the most effective time,” said Titanun.
“Restructuring credit and debt is more about helping businesses and households than cutting interest rates.”
The central bank has adjusted its forecast for gross domestic product (GDP) growth in 2021 from 3% to 1.8% due to the sharp decline in tourism during the pandemic.
The government plans to take the calculated risks to stimulate the economy and fully reopen the Thai border to foreign visitors in October.
After the decision, the market remained largely unchanged, with the baht losing 0.4% against the dollar that day while the benchmark stock index rose 0.3%.
Prime Minister Prayuth Chan-Ocha moved this week to allow more social activity in the capital, despite Covid-related deaths hitting records yesterday.
On June 21, about 11% of the population had at least the first vaccination.
The urgency of reopening Thailand stems from its reliance on tourism, which contributed to about a fifth of economic production prior to the pandemic.
The cabinet completed the “sandpit” in Phuket on Tuesday. This allows vaccinated visitors to travel to popular tourist islands from July 1st without quarantine.
The central bank’s downgrade of GDP follows similar steps taken by the Treasury Department and key economic planning agencies in the country.
On June 1, the government approved new stimulus measures worth THB 140 billion ($ 4.4 billion or RM 18.33 billion), including cash distributions and expense programs.
That month, Congress approved a $ 16 billion (RM 67 billion) loan plan to meet funding needs.
The central bank had previously announced a limited debt moratorium through the end of the year to help small businesses suffering from the outbreak.
A decision will be made this year whether the lenders ‘compulsory contributions to the financial institutions’ aid funds will be increased.
Gareth Leather, Senior Asian Economist at Capital Economics Limited, said in a poll after the decision: “The poor economic outlook means monetary policy will have to remain loose for a long time to come. I will do that. “
“Our forecast is that the key rate will not change until the end of 2022.”
Another important point from yesterday’s briefing is that the central bank has lowered its GDP forecast for 2022 from 4.7% in March to 3.9%.
The tourist arrival forecast, which has already been reduced several times this year, has been reduced again from 3 million to 700,000. – Bloomberg
Thailand’s central bank holds interest rates and lowers GDP prospects for tourism
Source link Thailand’s central bank holds interest rates and lowers GDP prospects for tourism