Due to the coronavirus (COVID-19) outbreak, the Thai economy would contract significantly in 2020 and headline inflation would become negative, said the Bank of Thailand in a Press Release.

Nonetheless, the financial system was sound overall, with financial markets starting to function normally. Headline inflation is also forecast to contract in negative value with -1 per cent instead of 0.8% previous projections.

Policy rate at 0.75 percent

The Committee viewed that targeted measures designed to address liquidity needs would be of great importance. Most members thus voted to maintain the policy rate at this meeting. However, two members voted to cut the policy rate by 0.25 percentage point due to the significant economic contraction.

The Committee viewed that the Thai economy would markedly contract in 2020 as tourist figures and merchandise exports were severely affected by the COVID-19 outbreak, the slowdown of trading partner economies, and supply chain disruptions in many countries.

For 2021, Thailand’s central bank expects the economy to bounce back with growth of 3 per cent.