The MPC voted unanimously to maintain the policy rate at 0.5% on November 10th assessing that the economy had bottomed out in the third quarter of 2021 and entered the recovery phase following the relaxation of containment measures and the reopening of the country.
The Thai economy in the third quarter of 2021 was severely affected by the COVID-19 outbreak and strict containment measures. After seasonal adjustment, private consumption indicators declined from the previous quarter due to weak household purchasing power, despite supports from the government measures.
The Thai economy would expand at a pace close to the previous projection for 2021 and 2022 on the back of domestic spending that gradually recovered following the relaxation of containment measures, partially offsetting the adverse impact of higher global energy prices.
Economic growth set for 0.7% in 2021
Currently the BoT maintains the existing forecast for economic growth at 0.7% in 2021 followed by and uptick of 3.9% next year.
Meanwhile, downside risks to the economic projection decreased on account of the accelerated vaccination progress.
However, the slow recovery of income and purchasing power would lead to subdued demand-side inflationary pressures. Meanwhile, medium-term inflation expectations remained anchored within the target.
The Commerce Ministry recently reported that headline inflation rose by 2.38% year-on-year in October from a 1.68% increase in September, driven by soaring prices of gasoline and some raw food, especially fresh vegetables, which were affected by floods in several areas.
The fragile economic recovery outlook would still be…
