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Thailand – Somkid: Oil prices won’t hurt GDP
Rising oil prices are unlikely to create a major headwind for the country’s ongoing economic growth, a sharp departure from the financial turbulence experienced after oil prices hit UScopy00 a barrel for the first time in 2008, says Deputy Prime Minister Somkid Jatusripitak.
Mr Somkid’s position, however, has sparked a wave of scepticism from the private sector and government agencies.
The National Economic and Social Development Board (NESDB), meanwhile, said higher oil prices present a challenge to the country’s economic growth.
The Commerce Minister will meet consumer product manufacturers tomorrow to discuss the impact of higher diesel and LPG prices, as well as explore measures to ease consumers’ plight.
Mr Somkid said higher oil prices are unlikely to obstruct the country’s ongoing economic growth, while insisting the government itself is looking for ways to ease the impact of the hike on low-income citizens.
“We’ve seen oil prices hit copy00 per barrel in the past, so there’s nothing to worry about,” he said Wednesday.
According to Mr Somkid, the wealth accrued from economic growth over the past few years will allow the government to introduce measures to reduce the impact of higher oil prices. The rich state Oil Fund has sufficient funds to subsidise diesel prices, he said. (Story continues below)
However, he said rising oil prices will also help prop up the prices of some items such as rubber and rubber products, and plastic and plastic pellets.
“The NESDB’s economic growth forecast for this year is based on the oil price averaging $60-70 per barrel, up from $55-60 per barrel earlier projected in February,” Mr Wichayayuth said.
Nonetheless, Commerce Minister Sontirat Sontijirawong said the ministry is scheduled to meet consumer product manufacturers tomorrow to discuss the impact of higher diesel and LPG prices and new measures will be launched to ease hardship.
At the meeting, the ministry also plans to ask the manufacturers to supply their products in the Thong Fah Pracha Rat low-priced shops.
“We have found that LPG prices that are 49 baht higher per 15-kilogramme gas cylinder to 395 baht affects prepared food prices by only 15-20 satang per dish,” Mr Sontirat said, adding that raw material costs such as pork and vegetable cooking oil have declined.
Mr Sontirat said diesel, which normally represents 30-40% of transport costs, will affect 0.0032-0.4853% of product prices. The hardest-hit product will be cement.
For the food and drink sector, the impact was also found to be marginal at 0.0178-0.2772%.
Moreover, Jirapon Hirunrat, vice-president of Bangkok Airways Plc, said fuel jet prices are projected to increase about 10% in the second quarter compared with the same period last year.
The hike in jet fuel prices has resulted in higher operating costs for all airlines. However, it’s hard to increase airfare at this time because of low demand.
“Airfare increases will rely on market situation and competition, but it seems very difficult now,” Mr Jirapon said.
Bangkok Airways continues to collect a fuel surcharge for international routes.
Source: https://www.bangkokpost.com/business/news/1471701/somkid-oil-prices-wont-hurt-gdp