The Bank of Thailand has deemed that Thailand’s economy is past its lowest point, and now expects a gradual recovery of economic activities due to the continued relaxation of Covid restriction measures and the reopening of the country to international tourists. Owing to these reasons, the central bank’s Monetary Policy Committee has resolved to maintain the policy interest rate at 0.5%.
Mr. Piti Disyatat, the BOT Assistant Governor for Monetary Policy Group, said the Monetary Policy Committee (MPC) resolved to maintain the policy interest rate at 0.5% per year, as it viewed that this rate appropriately supported the economic expansion. The MPC also reasoned that the Thai economy was already past its lowest point in Quarter 3, 2021, and was entering a recovery facilitated by the relaxation of Covid restriction measures, the opening of the country to international tourists, and the administering of COVID-19 vaccines to the population. Mr. Piti added that there was continuity in fiscal policy, which will promote a strong recovery of incomes.
According to the assistant governor, the Thai economy is expected to expand by 0.7% in 2021 and 3.9% in 2022. Exports are predicted to slow in line with the economic performance of trade partners, while the number of foreign tourists is expected to slowly recover. Headline inflation has a tendency to temporarily increase due to heightened energy prices but will remain within the BOT’s target. Mr. Piti added that increased volatility in the foreign exchange rate – caused by monetary policies in major economies and the uncertainties over Thailand’s economic recovery – meant that SMEs should be encouraged to take action to cover their foreign exchange risk. (NNT)
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