BangkokPost-Apr 20
Thailand’s economy is increasingly seen as fragile now that the Songkran holiday has come to an end, as price freezes on energy and other products are discontinued. Businesses have warned that they may need to raise prices to reflect higher costs, while household disposable income has remained flat or declined amid the impact of the Middle East war. The new government, including Finance Minister Ekniti Nitithanprapas, has said it will seek to prevent stagflation, while acknowledging potential risks. Mr. Ekniti said fiscal discipline will be upheld, though public debt may be allowed to exceed the 70% of GDP ceiling if necessary. Unnecessary spending will also be cut in the next fiscal year’s budget. During the policy debate earlier this month, opposition parties also questioned how proposed taxes would be implemented to ensure they are both adequate and well targeted in addressing possible stagflation in Thailand. Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce (UTCC), said there was no clear definition of the level of economic growth that can be considered stagflation. In theory, a growth rate of around 2% is seen as stagnation, while inflation above 5% is considered high. For Thailand, the Office of the National Economic and Social Development Council recently projected economic growth of between 0.2-1.4% this year, while UTCC forecasts growth of 0-1.5%, with a possibility of contraction if the conflict in the Middle East drags on. However, he believes inflation is unlikely to exceed 4.5% this year, as the government is expected to contain it by managing electricity costs and securing energy at reasonable prices for various sectors. Technically, stagflation could occur if inflation rises above the 3% target, while economic growth remains low at around 1% or less. In terms of severity, inflation is unlikely to surpass 5%. Read more at:
https://www.bangkokpost.com/business/general/3240108/spectre-of-stagflation-haunts-thailand.
