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Thailand: Omicron uncertainties could trim H1 growth
The economy could see lower growth in the first half than a baseline scenario due mainly to uncertainties caused by the Omicron variant of Covid, according to the Bank of Thailand.
Thailand is expected to be able to control the Omicron outbreak within the first quarter, which means the pandemic’s main impact would be felt in the early period of the year, said the central bank’s statement at an analyst meeting yesterday.
The central bank earlier predicted the economy would expand 3.4% this year, down from its previous forecast of 3.9%, and by 4.7% in 2023. The projected growth would be driven by domestic spending, a gradual improvement in foreign tourist figures as well as a recovery in various sectors in line with economic activities.
It also expected foreign tourist figures at 5.6 million in 2022, lower than its previous projection of 6 million, due to the outbreak which would affect international travel sentiment in early 2022.
The number of foreign tourist arrivals is expected to surge to 20 million next year.
Sakkapop Panyanukul, a senior director for economic and policy department at the central bank, said at the analyst meeting that headline inflation is trended to rise on a temporary basis in the first half before declining in the second half.
The central bank earlier predicted that headline inflation was expected to remain within the target, with headline inflation projected at 1.2%, 1.7%, and 1.4% in 2021, 2022, and 2023, respectively.
Inflation would increase temporarily due to supply-side factors, particularly energy prices as well as global production and freight constraints, which were expected to subside in the second half of 2022.
The central bank’s Monetary Policy Committee last month kept the benchmark interest rate at a record low of 0.50% to support economic recovery.
The meeting last December resolved that the committee will only meet six times a year, down from eight times previously, given that the macroeconomic data does not change much in a brief period. Moreover, more frequent meetings could impact the financial market’s anticipation of financial policies.
Source: https://www.bangkokpost.com/business/2245291/omicron-uncertainties-could-trim-h1-growth