Central bank trims growth projection, holds base rate

The Bank of Thailand cut Thailand’s economic growth projection to 3 per cent for 2021 from 3.2 per cent predicted in December, on grounds of the pace of vaccination and outlook for tourism, but kept the base rate unchanged, as expected.

“The committee unanimously voted to maintain the benchmark policy rate at 0.5 per cent,” said Titanun Mallikamas, secretary of the Bank’s Monetary Policy Committee (MPC). The nation’s economy needs support from the ongoing low rate to withstand uncertainties and uneven recovery in the future, he said.

Earlier 25 economists surveyed by Bloomberg had said they expected the MPC to maintain the policy rate at the current all-time low for a 7th consecutive meeting, after lowering it by a total of 75 basis points last year.

The committee revised down the 2021 gross domestic product forecast due to the risks from the effectiveness and distribution of Covid-19 vaccines, coupled with a cut in foreign arrivals, now projected by the MPC to reach just 3 million in 2021, down from its December forecast of 5.5 million.

In 2020, only 6.7 million foreign tourists entered Thailand, compared to the 39 million visitors in 2019. The sector accounts for around 10 per cent of GDP.

However, the MPC upgraded its export projection to an expansion of 10 per cent from the previous 5.7 per cent, while imports were predicted to grow 15.2 per cent, up from an earlier 7.7-per-cent projection. Looking ahead to 2022, they expect Thailand’s economy to grow 4.7 per cent.

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