Thai central bank holds key rate as economy recovers from COVID-19 slump

[snoop1130]

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva/File Photo/File Photo

 

BANGKOK (Reuters) - Thailand's central bank left its key interest rate unchanged at a record low and maintained its 2021 economic growth forecast on Wednesday, saying a relaxation of pandemic curbs and a steady vaccine rollout will help the recovery.

 

Thailand's worst coronavirus outbreak led to restrictions in July and August, but the curbs have since been relaxed and the Southeast Asian country will soon reopen to more vaccinated visitors.

 

The Bank of Thailand (BOT) maintained its 2021 economic growth outlook at 0.7%, and said it expected 200,000 foreign tourists this year.

 

For 2022, it raised its growth outlook to 3.9% from 3.7% forecast in August, and predicted 6 million foreign visitors.

 

While uncertainties surrounding the economic outlook remained high, "progress on vaccination and earlier-than-expected relaxation of the containment measures would help support the economy in the period ahead," the BOT said in a statement after its policy meeting.

 

The BOT's monetary policy committee unanimously voted to hold the one-day repurchase rate at 0.50% for an 11th straight meeting after three reductions in 2020 to mitigate the impact of the COVID-19 pandemic.

 

Twenty of 23 economists in a Reuters poll had expected the BOT to stay on hold while the others predicted a quarter-point cut.

 

"We are taking out the rate cut we originally had pencilled in for this year. But the poor state of the economy means rate hikes are a long way off," Capital Economics said in a report.

 

The BOT said monetary policy will remain accommodative and that fiscal measures must be expedited to support the recovery.

 

"The committee viewed that financial measures would be more effective than a further reduction in the policy rate, which was already low," the BOT said.

 

The BOT recently said it backed the government's increased public debt ceiling for more fiscal flexibility to support Southeast Asia's second-largest economy.

 

The central bank said it would closely monitor the baht. The currency, emerging Asia's worst performer, has depreciated about 11% against the dollar so far this year.

 

-- © Copyright Reuters 2021-09-29

 

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(Additional reporting by Kitiphong Thaichareon; Editing by Jacqueline Wong)

[spidermike007]

The Bangkok Post had a good article today or yesterday, about how prolonged this economic recovery will be, predicting this will take many years. I agree. Tourism will not recover anytime soon, with these cowardly plans to allow vaccinated travelers to come, and continue to require a COE, and jump over alot of hoops? Absurd, at best.

 

Millions are currently out of work. Nobody wants to discuss an unemployment level of 40%. They keep talking about the economy growing by only 1%. How about real numbers? A real contraction of 14%, is more likely. I see closed stores everywhere. A friend of mine said if you ever want to measure the state of an economy, look at how many billboards are empty. I am seeing hundreds, everywhere I go. Many appear to have been devoid of expensive advertising for years, as they are crumbling, just like the nation is. 

[Eric Loh]

4 hours ago, spidermike007 said:

The Bangkok Post had a good article today or yesterday, about how prolonged this economic recovery will be, predicting this will take many years. I agree. Tourism will not recover anytime soon, with these cowardly plans to allow vaccinated travelers to come, and continue to require a COE, and jump over alot of hoops? Absurd, at best.

 

Millions are currently out of work. Nobody wants to discuss an unemployment level of 40%. They keep talking about the economy growing by only 1%. How about real numbers? A real contraction of 14%, is more likely. I see closed stores everywhere. A friend of mine said if you ever want to measure the state of an economy, look at how many billboards are empty. I am seeing hundreds, everywhere I go. Many appear to have been devoid of expensive advertising for years, as they are crumbling, just like the nation is. 

I totally agree with you with every thing you posted and that the recovery will be long and painful. However the economic meltdown is not as devastating as the 1997 Tom Yum Kung financial crisis and Thailand recovered and didn't crumbled.

 

In 1997, Thailand exhausted all the foreign reserves to defend the Baht. This time the foreign reserves are barely touched. The Baht dropped 56 B per USD in 1997 compare to current Baht which is holding up relatively well. SET is still trading well too which indicated confidence with investors. In 1997, foreign and domestic investors fled the market and SET lost 75% of its value. Thailand had to borrowed almost USD20 B from IMF with tough conditions and bank runs were comman. Debt to GDP rose to 167%. Still Thailand economy didn't crumbled and recovered after 4 years with Baht recovered to 29B and IMF loans fully paid. Guess it's down to a competent government which is missing in this government. I think we can concur with that. 

Edited September 30, 2021 by Eric Loh
wrong word