Thai economy may grow less than forecast after new outbreak, says Central Bank

* Current GDP growth forecast is 3.0% this year * Reiterates economy to shrink in Q1 y/y and q/q * Says monetary policy to remain accommodative

BANGKOK, April 13 (Reuters): Thailand's economy may expand less than forecast this year, a central bank official has announced, after a third wave of coronavirus infections and concerns about the presence of a highly contagious variant.

The tourism-reliant economy suffered the deepest slump in over two decades last year, down 6.1%, due to the impact of the pandemic, with the key tourism sector still struggling.

Uncertainties remain, with a risk that growth could be less than the Bank of Thailand's 3.0% forecast this year, senior director Chayawadee Chai-Anant told an analyst meeting.

"Although the economy will recover this year, there are still soft spots, particularly in the service sector," she said.

The current economic forecast, which was downgraded last month, has yet to include the impact of the new outbreak, she said.

"It is too early to say," she said.

However, in the worst case scenario, the economy might contract sharply like last year, if there were issues with variants and vaccines efficacy, Chayawadee said.

The outbreak may take more than two months to control in Bangkok, the health ministry said. It came ahead of next week's Thai holidays and as the country seeks to reopen to foreign tourists.

In the January-March period, Chayawadee said the economy might have contracted from the previous three months and the same period a year earlier, as a second coronavirus wave slowed activity.

Inflation should be close to the lower end of the 1-3% target range from the second quarter, Chayawadee said.

The central bank has left its key interest rate unchanged at 0.50% since mid-2020 after cuts to mitigate the impact of the first outbreak.

Together with fiscal measures, monetary policy would remain accommodative and the central bank was ready to use monetary tools to support the recovery, said senior director Sakkapop Panyanukul.

Despite recent weakness, the baht will likely be volatile and the central bank will ensure currency moves will not hinder the recovery, he said. - Reuters
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