“Financial experts are expressing concern about the current situation," said Deputy Prime Minister Phumtham Wechayachai. — Reuters
BANGKOK: Inflation slowed in January for the fourth consecutive month, dipping into negative territory of 1.11%, says Deputy Prime Minister and Minister of Commerce Phumtham Wechayachai, noting that this is considerably lower than the same period last year and the lowest in 35 months.
The current situation indicates that Thailand is still facing a crisis, particularly in terms of financial instability, which is a cause for concern.
A financial crisis can have severe repercussions on the economy, as evidenced by the impact of the Tom Yum Kung crisis in 1997, the consequences of which were felt across the entire economic system.
“Financial experts are expressing concern about the current situation, and everyone is discussing this issue. The crucial point at the moment is the observation of signs of default on stock loans occurring continuously.
“It has been suggested that if another financial crisis, similar to the Tom Yum Kung period occurs, it could lead to severe damage to the country.
“We are therefore calling on everyone who opposes any government actions to consider this aspect seriously, “ he said.
Phumtham emphasised that economists have warned that if nothing is done at this moment, there is a possibility of facing a crisis similar to that of 1997.
Both sides should revisit the data to verify its accuracy, he added. If the threat is real, proactive measures must be taken.
If objections have been raised and a crisis unfolds as predicted, it is important for everyone to share responsibility for the consequences.
Kasikorn Research Centre ( KResearch), however, appears less pessimistic, indicating that the negative inflation rate in January is a result of government measures to reduce energy expenses, coupled with continuous reductions in the prices of fresh-food products.
However, the Thai economy is not yet considered to be in a deflationary situation, as not all items in the inflation basket have experienced price reductions. In January, out of 430 items, 265 items maintained or increased their price, KResearch pointed out.
While the basic inflation rate in January 2024 stands at 0.52% year-on-year, which is exceptionally low, it reflects the limited upward pressure on prices due to restrained demand.
However, it is not considered a cause for significant concern, as Thailand’s general inflation rate before the Covid-19 crisis was around 0.5% on average.
According to KResearch, the general inflation rate in Thailand is expected to remain negative in the first quarter of 2024 due to ongoing measures to reduce the cost of living related to energy.
However, from the second quarter onwards, there is an anticipation that general inflation will turn positive.
This is attributed to the government’s tendency to reduce energy price subsidies gradually.
Furthermore, Thailand’s inflation is expected to slightly increase due to tensions in the South China Sea, which have led to higher shipping costs.
KResearch predicts that the average general inflation rate in Thailand for this year will be around 0.8%, which is lower than the Bank of Thailand’s inflation target range of 1% to 3%.
As a result, there is a possibility that the Bank of Thailand may consider adjusting its policy interest rates in the latter half of the year. — The Nation/ANN
