PM’s adviser fears for economy as Thailand slips into deflation

Pichai Naripthaphan, deputy chairman of Pheu Thai Party’s strategies and politics committee and adviser to PM Srettha Thavisin, said the negative inflation rate in October was a bad sign that warranted the delivery of an economic stimulus package.

October saw inflation at minus 0.31%, the first negative rate in 25 months.

Pichai noted that inflation had been very low for five consecutive months before plunging into negative territory last month. Inflation was low in May at 0.53%, followed by 0.23% in June, 0.35% in July, 0.88% in August and 0.30% in September.

Pichai said Thai inflation rates were low despite high oil prices.

He predicted that inflation in November and December would remain negative at about minus 0.35% and minus 0.42% respectively.

The negative Thai inflation comes despite high inflation rates elsewhere, including 4.3% in Europe and 3.7% in the US.

Pichai said negative inflation was a sign that Thai consumers had low purchasing power, signalling the danger of deflation and a shrinking economy.

He cited China as an example, saying it recorded inflation of minus 0.2% in October because Chinese people had low purchasing power due to the debt crisis in the property sector. This had also reduced the number of Chinese tourists visiting Thailand and cut Thai exports to China, he said.

Current inflation figures indicated that Thailand’s economic growth this year would fall below 2% from the initial projection of 3.5%, he added.

The global economic slowdown and ongoing wars in Europe and the Middle East would aggravate Thailand’s economic situation.

“So, I would like all sides to brainstorm ideas on how to stimulate the economy before the situation gets too serious,” Pichai said.

Pheu Thai’s plan to stimulate the economy by borrowing 500 billion baht to hand out 10,000-baht payments to some 50 million people has come under strong criticism from all sides. Pichai stopped short of mentioning the digital wallet handout scheme.