Central bank lowers GDP projection as pandemic drags on

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The Bank of Thailand on Wednesday lowered the country’s economic growth projection for 2021 to 1.8 per cent, down from 3 per cent predicted in March, but kept the policy rate unchanged.

The Monetary Policy Committee at the central bank reduced its estimate of gross domestic product (GDP) growth in response to a downturn in international tourists and lower domestic demand impacted by the third wave of Covid-19 pandemic.

Projected tourist arrivals for this year plunged to only 700,000 from the 3 million expected earlier in March, despite the fact that Thailand is planning to open its border by October.

“Employment in the service sector and the self-employed is more vulnerable and may even recover more slowly,” said the committee assistant-governor Titanun Mallikamas.

The MPC also unanimously voted to maintain the benchmark policy rate at 0.5 per cent, given that the third wave of the Covid-19 epidemic has slowed the Thai economy to grow unevenly and less than expected, with a chance of a new wave of infections in the future.

“Assistance measures, especially loan rehabilitation and debt restructuring, must be accelerated as they will aid affected businesses and households more precisely than lowering the current low interest rate,” Titanun said.

However, the MPC upgraded its export growth forecast to an expansion of 17.1 per cent, up from 10 per cent previously, driven by global economic recovery.

The GDP projection for 2022 was also reduced, to 3.9 per cent from 4.7 per cent.

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