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10636
Mon, 06/23/2008 - 20:49
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http://m.oananews.org//node/10636
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Economy likely to grow 4% if global oil prices continue to rise: TDRI
BANGKOK, June 23 (TNA) – The Thai economy is expected to grow around 4 per cent this year, not 6 per cent as targeted by the government, if global oil prices continue increasing, according to the Thailand Development Research Institute.
Somchai Chitsuchon, TDRI research director for the overall economy and income distribution, said should oil prices change and drop, the economy is likely to expand 5 per cent.
But what should be of concern now is accelerated inflation in the next three to four months due to a further increase in product and fuel prices.
He said the economy would not be affected if an inflation rate stayed at around 5 to 6 per cent.
Mr. Somchai warned the government not to accelerate economic growth nor inject money into the grass-roots level to overstimulate the public's purchasing power because it could fuel inflation.
Now, he said, inflation in the rural had areas increased to 13 per cent from 7.4 per cent four months ago.
Should the government attempt to boost consumer purchasing power too greatly, inflation in the areas might surge to 20 per cent.
He said the government's efforts to inject money to help ease living costs of poor people are considered good policy, but the money must be distributed in a form of coupons, not cash, to the real poor.
Otherwise, it would fuel the current inflation trend.
"The government should not build a demand pool nor inject money to boost consumer purchasing power too much because it may push up the country's inflation rate to stay close to 25 per cent, the rate Vietnam is now experiencing.
"Now, the actual interest rate is in a negative territory. Should
inflation go up considerably, labourers may need to seek a further
increase in wages. Likewise with producers, who want to raise product
prices. If the costs of everything are high, the economy will further slow down," said Mr. Somchai.
The TDRI executive said he agreed with a possible policy interest rate hike by the Bank of Thailand, but warned the adjustment must be made gradually to prevent repercussions in the overall economy.
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Somchai Chitsuchon, TDRI research director for the overall economy and income distribution, said should oil prices change and drop, the economy is likely to expand 5 per cent.
But what should be of concern now is accelerated inflation in the next three to four months due to a further increase in product and fuel prices.
He said the economy would not be affected if an inflation rate stayed at around 5 to 6 per cent.
Mr. Somchai warned the government not to accelerate economic growth nor inject money into the grass-roots level to overstimulate the public's purchasing power because it could fuel inflation.
Now, he said, inflation in the rural had areas increased to 13 per cent from 7.4 per cent four months ago.
Should the government attempt to boost consumer purchasing power too greatly, inflation in the areas might surge to 20 per cent.
He said the government's efforts to inject money to help ease living costs of poor people are considered good policy, but the money must be distributed in a form of coupons, not cash, to the real poor.
Otherwise, it would fuel the current inflation trend.
"The government should not build a demand pool nor inject money to boost consumer purchasing power too much because it may push up the country's inflation rate to stay close to 25 per cent, the rate Vietnam is now experiencing.
"Now, the actual interest rate is in a negative territory. Should
inflation go up considerably, labourers may need to seek a further
increase in wages. Likewise with producers, who want to raise product
prices. If the costs of everything are high, the economy will further slow down," said Mr. Somchai.
The TDRI executive said he agreed with a possible policy interest rate hike by the Bank of Thailand, but warned the adjustment must be made gradually to prevent repercussions in the overall economy.
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