The Bank of Thailand (BoT) believes the Omicron coronavirus variant has affected the economy to a lesser degree than predicted, despite dampening the country's economic activities during January.
Omicron affected economic activity during January after the country's economic activity had improved in December last year as well as the entire fourth quarter of 2021.
The central bank will still monitor both Omicron's impact and the possibility of other Covid-19 variants emerging.
The BoT has also been monitoring headline inflation that has decelerated as energy prices decreased, while core inflation was stable from the previous month.
The central bank will update its assessment at the BoT's Monetary Policy Committee (MPC) meeting next week, said senior director Chayawadee Chai-Anant.
In addition, the BoT announced a better economic situation in the fourth quarter of 2021, recovering from the previous quarter after the country's reopening on Nov 1 last year, especially an improvement in private consumption.
After seasonal adjustment, private consumption indicators in the fourth quarter of 2021 increased 8.2%, compared with 3.2% contraction in the previous quarter.
Private consumption rose 2.3% in December last year, on a year-on-year basis, from 1.4% in November the year before.
The rise was due to the improvement of the Covid-19 situation and the relaxation of containment measures, which bolstered overall economic activities, consumer confidence and household income, Ms Chayawadee said.
Private investment indicators, after seasonal adjustment, in the fourth quarter of 2021 increased to 1.5% from a contraction of 2.1% in the previous quarter.
In December private investment improved to 1.7% from 0.9% the previous month.
The improvement stemmed from investment in machinery and equipment, and in construction, in line with the recovery of demand and business sentiment.
For the fourth quarter of 2021, the manufacturing production index (MPI) increased significantly to 8.2% from a contraction of 6% the previous quarter.
In December last year, MPI also rose to 2.6% from 1.2% in the previous month.
Ms Chayawadee said the value of merchandise exports, after seasonal adjustment, increased to 5.6% in the fourth quarter of 2021 from a contraction of 1.8% in the previous quarter.
Meanwhile, exports showed growth of 5.2% in December last year from 3% the previous month.
Merchandise exports rose as demand from trading partners recovered.
In addition, the number of foreign tourist arrivals, after seasonal adjustment, accelerated after the reopening.
In December 2021, tourist arrivals were 230,497, surging from 91,255 in November, particularly tourists from Europe.
Nevertheless, figures remained low as international travel restrictions in many countries remained in place.
Ms Chayawadee said the BoT would also monitor foreign tourist numbers again after the government announced backing Test and Go measures from today.