Thailand warns economy to contract in 2020, but holds fire on rates

[BANGKOK] Thailand's central bank sharply downgraded its economic outlook for 2020 on Wednesday but kept interest rates on hold, warning that the impact from the coronavirus pandemic will be "severe".

Thailand's central bank voted 4-2 to keep the one-day repurchase rate rate steady at 0.75 per cent after cutting it last week by 25 basis points to record lows.

But the Bank of Thailand slashed its 2020 gross domestic product (GDP) forecast to minus 5.3 per cent, which will be the first contraction since the global financial crisis in 2009.

South-east Asia's second-largest economy has cut rates four times since August as its tourism and manufacturing sectors struggle to overcome widespread disruptions to travel and factory supply chains.

In a Reuters poll, 10 economists had predicted a 25 bp cut on Wednesday while nine others forecast no policy change.

Tourism is a key growth driver for Thailand, which is considered one of the economies most vulnerable to the virus in South-east Asia due to its heavy reliance on Chinese tourists and China trade. Foreign tourist receipts accounted for 11 per cent of Thailand's GDP last year.

Thailand on Wednesday reported 107 new cases of virus infections, taking the total to 934. Four people have died. 

REUTERS