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Bank of Thailand expects 2020 GDP to contract 8.1%

Thailand’s central bank’s monetary policy committee (MPC) voted unanimously to leave the one-day repurchase rate untouched at 0.5%.

Olivier Languepin

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The Bank of Thailand (BOT) has left the key policy rate unchanged during the Monetary Policy Meeting (MPC) today (June 24).

The central bank’s monetary policy committee (MPC) voted unanimously to leave the one-day repurchase rate untouched at 0.5%.

The MPC has cut key policy rates three times this year, from 1.25 per cent to 0.5 per cent, though most analysts expected the central bank to maintain its key policy rate. 

2020 GDP outlook downgraded to a 8.1% contraction

The BoT sharply downgraded its forecast of Thailand’s full-year economic outlook to a 8.1% contraction, instead of 5.3% previously forecasted.

The central bank, however, raised its forecast for Thai economic growth next year to 5% from the 3% predicted in March.

The Committee viewed that targeted and timely fiscal measures along with accommodative monetary policy, credit measures, as well as the speed-up of debt restructuring would remain vital to support employment and businesses and facilitate the economic recovery.

The annual average of headline inflation would be more negative in 2020 than the previous assessment. Energy prices collapsed following declining demand due to the dampened global economic activities. Core inflation would remain subdued at a low level.

Increased risks of deteriorating debt service capability

The financial institution system remained sound, according to the MPC assesment, while Commercial banks had robust capital fund and loan loss provision levels.

Nevertheless, there remained a need in the period ahead to cope with the highly uncertain COVID-19 situation and the increased risks from deteriorating debt service capability of businesses and households.

Source : Bank of Thailand

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