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Thai economy to continue recovery but risks increase: Central bank minutes

Thai economy to continue recovery but risks increase: Central bank minutes

FILE PHOTO: The headquarters of the Bank of Thailand are pictured near the Chao Phraya river in central Bangkok, Thailand, February 29, 2016. REUTERS/Athit Perawongmetha

BANGKOK: Thailand's economy will continue to recover, driven by improving local demand and foreign tourist numbers, while recent negative shocks have had a limited impact on the recovery, according to minutes of the central bank's last policy meeting.

Downside risks to short-term growth increased, however, as there could be prolonged shortages of some raw materials while households and businesses could be affected by higher costs, the minutes released on Tuesday (Apr 12) said.

On Mar 30, the Bank of Thailand's monetary policy committee unanimously voted to leave the benchmark interest rate at a record low of 0.50 per cent, where it has been since May 2020, maintaining support for growth.

Its next policy review is in June, and most economists expect no policy change through this year.

The BOT forecasts economic growth of 3.2 per cent this year and 4.4 per cent next year, with foreign tourists at 5.6 million and 19 million, respectively.

It predicted inflation at 4.9 per cent this year, exceeding its target range of 1-3 per cent, before slowing to 1.7 per cent next year.

Medium-term inflation expectations remained within the target range while inflation pass-through to wage was assessed to be limited due to a fragile recovery in the labour market and an uneven recovery across industries, the minutes said.

"Employment remained lower than the pre-pandemic level and might recover more slowly than in past crises," they said.

While the committee continued to focus on growth, it should reassess the balance of risks in the period ahead "when the robust economic recovery resumed and the associated risks subsided", the minutes said.

On future policy tightening, Governor Sethaput Suthiwartnarueput told Reuters on Monday the BOT would watch for signs of "deviation from the expected recovery" such as second-round effects on prices and unanchored inflation expectations.

Source: Reuters/gs

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