War, uncertainty add to concerns
Prime Minister Anutin Charnvirakul checks prices at a Bangkok hypermarket as rising fuel and raw material rates nudge up Thai inflation. (Photo: Chanat Katanyu)
Escalating inflation poses a significant risk to the Thai economy, especially if the US-Iran war drags on until the second half of the year, as domestic consumption remains fragile and small businesses in provincial markets face a liquidity crunch, say economists.Amonthep Chawla, executive vice-president and head of research at CIMB Thai Bank, said despite significant growth in the first quarter, the Thai economy remains at risk for the rest of the year as energy prices are high while overseas bond yields have risen.
"There are looming uncertainties about a Federal Reserve interest rate cut later this year, or rate hikes by other central banks as global inflation has been surging," said Mr Amonthep.
The Bank of Indonesia, for example, on Wednesday lifted its benchmark seven-day reverse repurchase rate by 50 basis points, the first increase in two years, to support the rupiah as it had fallen to record lows.
