Illustrative image (Photo: Internet) Bangkok (VNA) – The Bank of Thailand (BOT) has reduced its economic outlook to a contraction of 8.1 percent this year, deeper than the 1997 financial crisis, but kept the policy rate on hold at 0.5 percent, according to local media.
The latest economic forecast for 2020 is worse than the record contraction of 7.6 percent for the 1997 crisis, said Don Nakornthab, senior director for the economic and policy department, adding that a double-digit contraction is expected in the second quarter.
The central bank's Monetary Policy Committee (MPC) on June 24 voted to leave the benchmark rate unchanged, the Bangkok Post reported.
However, the central bank raised its forecast for 2021 economic growth to 5 percent from 3 percent projected three months ago.
MPC secretary Titanun Mallikamas said the deeper contraction is mainly the result of weaker external demand, especially tourism and exports. The BoT worsened the export contraction outlook to 10.3 percent from 8.8 percent previously forecast, while lowering foreign tourist arrival numbers from 15 million to 8 million this year.
"Under the central bank's scenario, we expect the Thai economy hit bottom in the second quarter. But the 8.1% contraction projection for the full year does not take into account a second-wave outbreak," the quoted Titanun as saying.
He said the MPC believes economic activities will gradually recover in the second half this year in countries that can effectively contain the outbreak, including Thailand. The contraction rate is expected to narrow in the third and fourth quarters.
The economy needs additional supply-side policies to support the changing economic structure and patterns of business operations consistent with the post-COVID-19 environment, said Titanun.
Households need help with their financial burden to overcome the crisis, he said, while the labour structure needs improvement to support an economic recovery after the pandemic.
The central bank also lowered its forecast for headline inflation to -1.7 percent in 2020 from -1 percent predicted in March, but expects a return to positive 0.9 percent next year./.
The latest economic forecast for 2020 is worse than the record contraction of 7.6 percent for the 1997 crisis, said Don Nakornthab, senior director for the economic and policy department, adding that a double-digit contraction is expected in the second quarter.
The central bank's Monetary Policy Committee (MPC) on June 24 voted to leave the benchmark rate unchanged, the Bangkok Post reported.
However, the central bank raised its forecast for 2021 economic growth to 5 percent from 3 percent projected three months ago.
MPC secretary Titanun Mallikamas said the deeper contraction is mainly the result of weaker external demand, especially tourism and exports. The BoT worsened the export contraction outlook to 10.3 percent from 8.8 percent previously forecast, while lowering foreign tourist arrival numbers from 15 million to 8 million this year.
"Under the central bank's scenario, we expect the Thai economy hit bottom in the second quarter. But the 8.1% contraction projection for the full year does not take into account a second-wave outbreak," the quoted Titanun as saying.
He said the MPC believes economic activities will gradually recover in the second half this year in countries that can effectively contain the outbreak, including Thailand. The contraction rate is expected to narrow in the third and fourth quarters.
The economy needs additional supply-side policies to support the changing economic structure and patterns of business operations consistent with the post-COVID-19 environment, said Titanun.
Households need help with their financial burden to overcome the crisis, he said, while the labour structure needs improvement to support an economic recovery after the pandemic.
The central bank also lowered its forecast for headline inflation to -1.7 percent in 2020 from -1 percent predicted in March, but expects a return to positive 0.9 percent next year./.
VNA
