The Bank of Thailand’s Monetary Policy Committee assessed that the Thai economy in 2021 would be affected by the COVID-19 outbreak more than expected with significant downside risks. The Committee on 4 August 2021 voted 4 to 2 to maintain the policy rate at 0.50 percent, according to Mr. Titanun Mallikamas, Secretary of the Monetary Policy Committee.


It viewed that the most important issue for the Thai economy at present was to accelerate containment of the outbreak and distribution of vaccines to restore confidence and support the recovery in economic activities and income. Fiscal and financial measures must be expedited to assist affected groups in a more targeted and timely manner in line with the current situation.


The Thai economy was projected to expand by 0.7 and 3.7 percent in 2021 and 2022 respectively. This would be lower than the previous projection due to private consumption, which was greatly affected this year and foreign tourist figures which were expected to be significantly lower next year.


The labor market would be more fragile, particularly the services sector and the self-employed. However, the economy would be supported by higher public expenditure thanks to the Emergency Decree Authorizing the Ministry of Finance to Raise Additional Loans to Solve Economic and Social problems as Affected by the Coronavirus Disease Pandemic, B.E. 2564 (2021).


The support would also come from the improving merchandise exports, although parts of the manufacturing sector were affected by the outbreak in factories and temporary shortages in raw material. Headline inflation would be largely unchanged, while medium-term inflation expectations remained anchored within the target. Downside risks to the economic outlook remained significant from the possibility of the outbreak situation in Thailand and other countries becoming more severe.


Despite ample overall liquidity, the distribution of liquidity remained uneven due to increased credit risks, particularly among SMEs and households that were additionally impacted by the third wave of the COVID-19 outbreak. Nonetheless, the special loan facility for businesses helped enhance credit access for SMEs.


Source: The Government Public Relations Department