Cheap oil may add nearly 1% to GDP: minister

Duangkamol Jiambutr, spokeswoman for the ministry, said the significantly lower oil prices would benefit the Thai economy as a whole, cutting the costs of manufacturing, agriculture, exports and logistics.
The ministry’s study also projected that the average global oil price would be about US$65 per barrel this year. The price dropped by about 60 per cent between June and last month to less than $50 per barrel.
GDP could be fattened by 0.96 per cent, inflation could be lower than the previously forecast of 1.8-2.5 per cent, and export growth could expand by a 1 percentage point.
Logistics businesses will also benefit. Fuel accounts for 40-50 per cent of the cost of road transport, 30-40 per cent for air freight, and 20-25 for maritime transport.
Agricultural products that will benefit from lower fuel costs include sugar cane, rice, tapioca, oil palm and rubber. Fuel accounts for about 8-10 per cent of the total cost of production of those crops.
The industrial sector will benefit less from lower oil prices, as it relies mainly on electricity and natural gas. The steel industry is likely to benefit the most, as petroleum-based fuel accounts for 1.5-2 per cent of its total production costs.
However, the study also found that lower oil prices would affect Thai export competency to oil-exporting countries including Russia and those in the Middle East, and some countries in Africa. Export products that would be affected in those markets are vehicles and auto parts and jewellery and ornaments.