Pattaya Daily News

30 October 2007 :: 12:10:37 pm 22944

Rising Oil Prices Will Slow Economy, Fuel Inflation: Economist

BANGKOK, Oct 30 – Rising oil prices could slow Thailand‘s economic expansion and fuel inflationary pressures, according to a leading Thai economist.
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Ekniti Nitithanprapas, assistant secretary-general of Thammasat University’s Economics Association, said the surging fuel prices would cause both the global and Thai economies to slow down.

He indicated that an oil price rise of US$1 per barrel would reduce Thailand’s economic growth rate by 0.2 per cent and increase the country’s inflation rate by 0.3 per cent.

A crude price in Dubai next year would rise to $80 per barrel from the current $65 per barrel, he predicted.

Dr. Ekniti believes the government should not attempt to maintain local oil prices unchanged, but rather should allow prices to move in accordance with market mechanisms.

He also sees the United States Federal Reserve as cutting key interest rates by 0.25-0.50 per cent in a meeting to be held later this year to ease the impacts of the sub-prime lending woes in the US.

However, the Thai economist saw no need for the Bank of Thailand Monetary Policy Committee to follow the Fed’s move because it had to give importance to overall the country’s overall economic conditions, inflation rates, and the balance of the baht.

“We estimate the Thai economy will grow 3.8-4.3 per cent this year. But the growth estimate might be revised, depending on fuel prices and global economic conditions,” he said.

Reporter : PDN staff   Category : Business News

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