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