* Says to preserve limited policy room for most effective time
* Sees record 2020 economic contraction, recovery slow and uneven
* To relax rules on fund outflows, foreign currency deposits
* Says to unveil soon plans on soft loans, expiring debt measures (Adds details, forex plans, finance minister’s comment)
BANGKOK, Oct 14 (Reuters) – Thailand’s economic outlook remains highly uncertain with risks tilted to the downside and the central bank stands ready to use necessary tools to support an economy hammered by the coronavirus pandemic, central bank officials said on Wednesday.
Southeast Asia’s second-largest economy contracted the most in 22 years in the second quarter, with tourism hit hard.
An economic recovery will take at least two years to return to pre-pandemic levels and will be “uneven”, the Bank of Thailand (BOT) said in a statement at an analysts’ meeting.
“We have to wait until the second half of 2022 to see economic activity back to pre-COVID levels, but there are still many downside risks,” senior director Don Nakornthab said, adding reopening to foreign tourists would be key.
The BOT expects 6.7 million foreign tourists this year and 9 million in 2021. Last year’s 39.8 million visitors accounted for 11.4% of GDP.
Thailand’s plans to receive visitors again have been delayed.
The BOT expects the economy to contract by a record 7.8% this year before growing 3.6% next year.
The central bank reiterated a need to preserve limited policy room for the most effective time and said is ready to use appropriate policy tools as necessary.
The policy rate is at a record low of 0.50% after three cuts this year. Most analysts see no further easing this year.
More targeted fiscal measures will be needed to support the recovery, Deputy Governor Mathee Supapongse said, adding that BOT will soon announce measures on soft loans and expiring debt.
The BOT will also ease rules on foreign currency deposits (FCDs) early next year and for Thais to directly invest overseas to balance fund flows.
“Timing will be quick… but it will not be done at once. The first phase should be for FCDs with fewer conditions,” Mathee said.
Separately, Finance minister Arkhom Termpittayapaisith told reporters the fiscal position remained strong and the government needed to urgently increase spending. (Reporting by Satawasin Staporncharnchai; Writing by Orathai Sriring; Editing by Ed Davies)