Affected by soaring global energy prices, Thailand's Ministry of Finance has lowered this year's economic growth forecast from the previously expected 2.0% to 1.6%.
Winee, Director of the Fiscal Policy Office at the Ministry of Finance, pointed out at a press conference on the 28th that the hostilities in the Middle East have directly pushed up Thailand's energy import costs. The authorities have significantly raised this year's average crude oil price estimate from $57.5 (RM227.12) per barrel to $91 (RM359.44) per barrel. Since Thailand relies heavily on imported energy, rising oil prices directly weaken households' real purchasing power and put pressure on domestic demand.
Export growth and government spending are key buffers. Thailand's goods exports are expected to grow by 6.2% this year, much higher than the 1.0% forecast in January.
Although the Gulf conflict has pushed up energy costs, Thailand currently does not face stagflation risks, as inflation remains within the target range and investment continues to increase. The Ministry of Finance forecasts an inflation rate of 3% for this year, higher than the previous prediction of 0.3%; the central bank's inflation target range is 1% to 3%.
Winee said that the growth forecast has taken government assistance measures into account, including a consumption subsidy program. The government also plans to issue debt not exceeding 500 billion baht (RM60.74 billion) before October this year to further support economic growth.
The Ministry of Finance forecasts that private investment will increase by 3.2% this year, government investment by 1.7%, and private consumption by 2.3%.
On Tuesday, Thailand's Cabinet approved 45 interdepartmental projects with a total value of more than 111 billion baht (RM13.484 billion), and also approved a series of measures aimed at reducing household electricity bills and promoting clean energy.