Thailand’s inflation in March continued to fall for three consecutive months, down 0.2 per cent from the same period last year, due mainly to declining oil prices. Core inflation, excluding volatile items like energy and food prices, was unchanged from February but rose 1.5 per cent year on year.

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Inflation in March down 0.2%

Demand from businesses have increased rapidly over the years in Thailand

Economists and analysts forecast gloomier times, predicting Thailand’s GDP to contract by 0-3 percent while the country descends into a deflationary spiral. Moody’s Economy.com says Thailand could be the Asian economy that suffers the most from the global financial crisis. Plus the specter of further political unrest remains on the horizon. However, there are some signs that Thailand can ride out the economic firestorm. Government debt-to-GDP remains below average regionally speaking, the financial sector learned from the 1997 meltdown and remains relatively well capitalized and liquid, and Board of Investment privileges are some of the best in Southeast Asia.
Imports from new ASEAN member countries also have lower import duties. As part of ASEAN Integration System of Preferences (AISP), tariffs of products such as vinegar, chili, certain vegetables, wood products, and electronic switchboards imported from Cambodia, Myanmar and Lao PDR are either reduced or abolished from September 2008.

Import tariffs on machinery are waived for regional operating headquarters. The Board of Investment cancels import tariffs on machinery used in conducting research and development activities by regional operating headquarters (ROHs). This is in addition to the existing privileges such as a permission to own land and remit foreign currency abroad as well as preferential corporate and income tax rates. Looking forward, related agencies such as the Revenue Department, the Bank of Thailand, and the Department of Business Development plan to streamline other rules and regulations that help to promote ROHs in Thailand.
In January 2009, the overall economy in Thailand continued to contract from the same period last year, with continual large contractions in manufacturing production and export. Private consumption and investment trended downward, in line with a considerable drop in import. Furthermore, major crops production and price continued to decelerate, resulting in a slowdown in farm income. Nevertheless, tourism sector observed a smaller contraction. External stability remained sound with high international reserves as well as trade and current account surpluses following a marked decrease in import. Regarding internal stability, January’s inflation in Thailand turned negative for the first time since October 1999. Even though the unemployment rate remained low, manufacturing employment continued to decline.

External stability in Thailand was upheld by high international reserves, while trade and current account were close to balance. Regarding internal stability, inflation rose from last year in line with higher oil prices, despite a downward trend during the second half of the year. Unemployment rate remained low in Thailand in 2008 but employment started to deteriorate in the forth quarter, particularly in the production sector affected by economic slowdown.

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