Bank of Thailand holds off further stimulus, lifts 2020 GDP forecast

BANGKOK: Thailand’s central bank left its key interest rate unchanged at a record low yesterday and upgraded its GDP outlook slightly as Southeast Asia’s second-largest economy showed some signs of recovery from the coronavirus jolt.

While the central bank said private consumption and investment were likely to improve, it expected a record contraction in gross domestic product this year and said the economy would take at least two years to return to pre-pandemic levels. Its key tourism industry continues to suffer from a ban on foreign tourists.

The Bank of Thailand’s (BOT) monetary policy committee voted unanimously to keep the one-day repurchase rate steady at an alltime low of 0.5% for a third straight meeting, as was widely expected.

While it raised its 2020 GDP forecast, it still expected the economy to shrink by a record 7.8% in 2020, versus a previous forecast for a 8.1% contraction.

It said it remained ready to use appropriate monetary policy tools if necessary and that fiscal policy should play a major role in reigniting the economy.

Thailand’s economy saw its worst contraction in over two decades in the second quarter, but data has improved recently as the tourism-reliant country removed most virus restrictions and introduced steps to revive domestic activity.

All 18 economists in a Reuters poll had expected the central bank to remain on hold after it already cut rates by 75 basis points so far this year.

In addition to three rate cuts, the BOT has provided soft loans and debt relief programmes to cushion the blow from the pandemic. The government meanwhile has planned a 1 trillion baht (RM136 billion) virus response package. – Reuters