New Energy Minister Pirapan Salirathavibhaga speaks about sourcing oil supplies as the government seeks to carve a new energy policy and quickly reduce electricity costs to help manufacturing competitiveness.
The newly installed Thai cabinet will meet in special session on Wednesday to discuss the government’s forthcoming policy statement in parliament due on September 11th. Economic data released on Tuesday showed a slight lift in inflation with the country’s current account running a deficit for July with falling exports and imports pointing to a growing crisis within the manufacturing sector. A key focus of the new government will be to curb electricity and energy prices.
Thailand recorded a current account deficit of $444.94 million in July this year.
This was driven by a continued fall in the country’s exports which fell 6.2% in the same month.
The country’s fall in exports was the 10th consecutive month of contraction, which raises concerns for it’s manufacturing base, which accounts for 60% of Thailand’s economy.
During July, imports also contracted even more severely by 11.1%. This was the fifth month in a row that Thailand’s imports declined. It represented the most severe contraction in seven months.
Prime Minister Srettha Thavisin is also Finance Minister as his government takes charge of a failing economic situation kept alive by foreign tourism
In addition to the disappointing news on economic output, the country’s remittances also fell from ฿23.21 billion in June to ฿20.495 billion in July.
All this spells bad news for the incoming government of Prime Minister Srettha Thavisin installed on Tuesday. Mr Srettha has also taken up the role of Finance Minister.
Economy tanks as demand for loans surges with an acute credit crisis and falling export output reducing growth
On Wednesday, he promised to make his mark and justify his appointment within three to six months.
The July data underscores that the country’s foreign tourism revival cannot plug the gap as the mainstay of the economy falters.
In recent weeks, the University of the Thai Chamber of Commerce revealed that business and consumer confidence have also begun to fall as the negative external situation feeds into domestic spending.
Bank of Thailand senior director insists economic recovery is still alive but admits there are growing risks of a downside, especially with exports
Commenting on the figures released last Thursday, the Bank of Thailand’s Sakkapop Panyanukul, Senior Director at the Central Bank, assured analysts that the country was still in growth mode. However, he indicated that the situation regarding Thailand’s export industry remains uncertain.
The senior bank official said that it would be monitoring the country’s relationship with its trading partners until the end of the year, but did not deny that there were still considerable downside risks.
The latest data from the economy puts paid to any prospect of a honeymoon period for the incoming government, especially as it originated from the second-placed party reneging on election promises to enter into a coalition with parties associated with the outgoing government, meaning it lacks popular support.
National opinion polls consistently show the public does not approve.
Inflation slightly elevated from August
Prime Minister Srettha Thavisin has been meeting representatives from all sectors of the economy and touring the provinces including a planned visit to the northeast of the country over the weekend.
It is reported that the first cabinet meeting to address the government’s policy statement will tackle a key commitment to cut energy costs with reports that new Energy Minister and Deputy Prime Minister Piripan Pirapan Salirathavibhaga will be advocating an energy policy based on oil and securing supplies of it as the most economical cost.
On Tuesday, the Ministry of Commerce reported data that showed a slight pickup in inflation for August with the Consumer Price Index (CPI) rising by 0.88% from 0.38% in July.
Cabinet to prioritise reducing electricity costs with a new energy plan to improve security and competitiveness based on secure access to oil supplies
The rise was due to higher energy costs with food prices remaining stable.
Officials noted however that the inflation rate was within the Bank of Thailand’s targeted range of 1% to 3%.
A key objective of the Pheu Thai Party in its economic policy platform launched before the election was to reduce electricity costs to households and industry as an overriding priority while providing stimulus injections to boost demand.
The new government, however, is meeting some resistance from the Bank of Thailand which is increasingly concerned about the country’s rising level of private sector debt and the need to preserve stability within the financial system.