Thailand's economy would continue to recover in 2022, but a rebound would remain fragile and uneven, as an Omicron outbreak puts less pressure on activity than earlier COVID-19 waves, according to minutes of the Bank of Thailand's (BoT) last policy meeting.
While upside inflationary risks had increased and headline inflation could exceed the upper side of the target range of 3% in early 2022, the risks of persistent increases in inflation remained low, the minutes published on Wednesday said.
On Feb 9, the BoT's monetary policy committee unanimously voted to leave the benchmark interest rate at a record low for a 14th straight meeting, maintaining support for a fragile economy.
"The Thai economy would continue to recover, but the recovery would remain uneven across sectors and would take time to return to the pre-pandemic levels," the minutes said.
The central ban forecast Southeast Asia's second-largest economy would expand 3.4% this year, after 1.6% growth in 2021, which was among the slowest growth rates in the region. It will next review monetary policy and economic forecasts on March 30.
Most economists see no policy change through 2022. According to the minutes, the central bank would continue to put emphasis on the economic recovery and that government measures and policy coordination would be critical.
The baht remained volatile and financial market could see more volatility ahead due to factors including faster-than-expected rate hikes by many central banks, the minutes said.
"Monetary policy divergence could lead to volatilities in exchange rates and capital flows. However, the impact on Thailand’s financial markets was judged to be manageable due to strength on the external stability front," the minutes said.