The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) met on Monday and laid out the worrisome economic situation facing Thailand this year.
It said the main risk was rapidly rising energy prices that were increasing costs for businesses and manufacturers. High prices are also eroding people’s purchasing power, it added.
The JSCCIB warned that the private sector is now bearing extremely high costs. As a result, it can now stimulate the economy on its own, meaning the government should intervene by spending to boost the cash flow in the economy, it added.
The committee also urged the government raise the median budget for government procurement projects to reflect the actual cost of operations.
Meanwhile, it wanted more government measures to aid the tourism sector, a main driver of Thai economic growth.
Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), said uncertainty over the Russia-Ukraine war had made inflation unpredictable.
He said Thai industries are expected to grow slowly, except for the food sector where global demand continues to rise regardless of product prices. Although the weak baht makes Thai exports more competitive, manufacturers must prepare for high inflation as well as the possibility of supply chain disruption, the FTI chief added after attending Monday’s JSCCIB meeting.
The JSCCIB views that the global economy is now prone to recession, particularly in the United States and Europe. Inflation is expected to reach a new high, affecting household purchasing power and the manufacturing sector's ability to manage costs.
Meanwhile, the slowdown of China’s economy because of its Zero-Covid policy would see the Thai export sector face more challenges in the second half of the year, it said.
Payong Srivanich, chairman of The Thai Banker's Association and JSCCIB chairman, said the committee decided to revise the growth forecast for Thailand this year from 2.5-4.0 per cent to 2.75-3.5 per cent due to the likely global economic slowdown and high inflation.
The JSCCIB also raised its export growth forecast from 3.0-5.0 per cent to 5.0-7.0 per cent, and its headline inflation forecast from 3.5-5.5 percent to 5.0-7.0 percent. The revision was in line with expected high commodity prices and the baht depreciating more than previously forecast.
Although the country's tourism industry would recover to more than 80% of pre-pandemic levels in the first half of the year, the Thai economy's recovery would be hampered by high inflation of 6-8 percent.
Also, high inflation would put additional pressure on the Bank of Thailand to raise interest rates, increasing the cost of finance for businesses and entrepreneurs.
Kriengkrai concluded that more joint investment and collaboration between the public and private sectors is required. All businesses are ready to assist the country's economy, but the government must also provide more practical solutions.
Published : Aug 16, 2022
Published : Aug 16, 2022
Published : July 04, 2022
By : Nongluck Ajanapanya