Posted on 21 Aug 2008
Economic outlook Pridiyathorn warns of more high inflation (Thailand)
Although Thailand
has not yet slipped into recession, former deputy prime minister and finance
minister MR Pridiyathorn Devakula yesterday warned of a secฌond round
of high inflation, due to the costpush effect of rising prices for conฌsumer
goods.
Speaking at the Commerce Ministry on the topic of "Thailand's
Economic Crisis: How to Handle It", Pridiyathorn said the economy should
no longer rely chiefly on exports, but also on domestic consumption.
He said the rising price for agricultural goods would be a
key economic driving force as it would increase domestic consumption.
"Exports account for 70 per cent of gross domestic product. We should
change our economic strucฌture to rely more on domestic conฌsumption,
as other trading countries are facing economic recessions," said
Pridiyathorn.
Among important trading partners confronting recession is
the United States with its
subprime mortgage problem, while the European Union's economy dropped almost 1
per cent in the second quarter and Japan's econฌomy
slumped by 2.5 per cent in the same period.
Exports are likely to show slower growth in the current
quarter, due to reduced economic growth in partner countries, he added.
Pridiyathorn pointed out that Thailand's inflation would still be
high and range between 7 and 9 per cent in the second half of the year, as a
result of rising prices for consumer goods and increased oil prices. He said
oil prices should not, however, increase as in the first half, and should range
between US$110 (Bt3,800) and $120 a barrel in the second six months.
He said the economy should still grow steadily in the next
few years thanks to the increasฌing prices of five major agricultural products:
sugar cane, tapioca, oil palm, rubber and rice. The farm sector's income
increased by 59 per cent in July comฌpared with the same period last year. The price
of sugar cane was up by 30 per cent, palm by 30 to 40 per cent, rubber by 60
per cent, tapioca by 70 to 80 per cent, and rice by more than 100 per cent in
the first half of the year.
"Every country will face a second round of high
inflation, including Thailand.
However, we are in a stronger position as rising agriculturฌal
product prices maintain economic growth because a major part of the population
has benefited from higher these prices," said Pridiyathorn.
