Nation Thailand
Three economic storms squeeze Thai SMEs and consumers
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Thailand’s economy is facing three overlapping economic storms: an energy-price shock and current-account deficit, a system-wide rise in production costs, and weakening domestic purchasing power, Vice Minister for Finance Santitarn Sathirathai said.
Key facts
- Import values accelerated in the second quarter, contributing to a current-account deficit of THB575.4 billion
- The pressures come as economic growth loses momentum
- Consumer price inflation shifted from a 0.5% contraction in the first quarter to growth of 2.7% in the second, while the Producer Price Index rose by 8.3%.
- Private consumption growth fell from 3.3% in the first quarter to 1.9% in the second, while the Consumer Confidence Index declined to 50.3.
- The government plans to use a further THB200 billion from the second tranche of borrowing under the emergency decree for measures aimed at sustainably reducing electricity bills and living costs for households and businesses.
- Despite the slowdown in overall economic growth, private investment expanded by 13.4% in the second quarter, its strongest growth in more than 13 years.
Summary
The pressures come as economic growth loses momentum. The Office of the National Economic and Social Development Council (NESDC) reported that gross domestic product expanded by 1.9% year on year in the second quarter, slowing from 2.8% in the first.
Santitarn said the figures reflected the strain on an economy undergoing a period of transition, with households and businesses confronting higher costs while domestic demand weakened.