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Thai economic outlook highly uncertain, risks tilted to downside - central bank


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Thai economic outlook highly uncertain, risks tilted to downside - central bank

By Satawasin Staporncharnchai

 

2020-10-14T025737Z_1_LYNXMPEG9D056_RTROPTP_4_THAILAND-ECONOMY-TOURISM.JPG

FILE PHOTO: A passenger carries his bags at the Suvarnabhumi Airport as the government extended a ban on incoming passenger flights until the end of April, following the coronavirus disease (COVID-19) outbreak, in Bangkok, Thailand April 16, 2020. REUTERS/Soe Zeya Tun/File Photo

 

BANGKOK (Reuters) - Thailand's economic outlook remains highly uncertain with risks tilted to the downside and the central bank stands ready to use necessary tools to support an economy hammered by the coronavirus pandemic, central bank officials said on Wednesday.

 

Southeast Asia's second-largest economy contracted the most in 22 years in the second quarter, with tourism hit hard.

 

An economic recovery will take at least two years to return to pre-pandemic levels and will be "uneven", the Bank of Thailand (BOT) said in a statement at an analysts' meeting.

 

"We have to wait until the second half of 2022 to see economic activity back to pre-COVID levels, but there are still many downside risks," senior director Don Nakornthab said, adding reopening to foreign tourists would be key.

 

The BOT expects 6.7 million foreign tourists this year and 9 million in 2021. Last year's 39.8 million visitors accounted for 11.4% of GDP.

 

Thailand's plans to receive visitors again have been delayed.

 

The BOT expects the economy to contract by a record 7.8% this year before growing 3.6% next year.

 

The central bank reiterated a need to preserve limited policy room for the most effective time and said is ready to use appropriate policy tools as necessary.

 

The policy rate is at a record low of 0.50% after three cuts this year. Most analysts see no further easing this year.

 

More targeted fiscal measures will be needed to support the recovery, Deputy Governor Mathee Supapongse said, adding that BOT will soon announce measures on soft loans and expiring debt.

 

The BOT will also ease rules on foreign currency deposits (FCDs) early next year and for Thais to directly invest overseas to balance fund flows.

 

"Timing will be quick... but it will not be done at once. The first phase should be for FCDs with fewer conditions," Mathee said.

 

Separately, Finance minister Arkhom Termpittayapaisith told reporters the fiscal position remained strong and the government needed to urgently increase spending.

 

(Reporting by Satawasin Staporncharnchai; Writing by Orathai Sriring; Editing by Ed Davies)

 

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-- © Copyright Reuters 2020-10-14
 
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17 hours ago, webfact said:

The BOT expects 6.7 million foreign tourists this year and 9 million in 2021. Last year's 39.8 million visitors accounted for 11.4% of GDP.

6.7 million from where? And since tourism only 11%, any particular reason why so many unemployed and first on agenda seems to be to bring the tourists back? 

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13 minutes ago, NorthernRyland said:

6.7 million foreign tourists this year with the borders closed? Maybe if they opened the borders tomorrow and offered free visas to China but no way that's going to happen.

I wouldn't offer anything free to China as they put us in the state we are in now. But I do agree with opening the borders and letting tourist in from low risk countries. Thailand relies to much on tourism. Tourism is the last thing on peoples minds right now, it's a shame the government can't see this!

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17 hours ago, Flying Saucage said:

I don't see any uncertainty. Thailand is facing an economic disaster, thanks to the selfish policies of the powers that be. What's uncertain about this???

Nothing uncertain. The drop when going over a cliff is always sudden no matter how much one is in denial when approaching it.

????????????

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The high baht has been an obstacle to tourism for years. The problem will be how many potential future tourists will have jobs once this pandemic is over? Most of the worlds economy’s will have been severely damaged.

 

If any hope remains in picking up potential tourism post Covid then the baht will need to be devalued and the current administration needs to stop making them jump through hoops to spend their money here.

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