BANGKOK, 26 March 2012 – The Federations of Thai Industries (FTI) has speculated that the product and service costs will rise by 8-10% in the third quarter this year as a result of the government’s money injection into the country’s financial system and the 300-baht minimum wage policy.
FTI Vice Chairman Tanit Sorat has revealed that the Thai economy is presently unstable as the government is injecting more money into the system and raising the minimum wage while trying to keep the product prices down in order to increase domestic spending. Moreover, the government at the moment has allowed the energy price to increase, which will result in higher production costs and affect entrepreneurs.
Mr Tanit also said that the third quarter of this year will see a rise of 8-10% in consumer product prices.
He agreed with Finance Minister Kittiratt Na Ranong’s proposal to proceed with a weak-baht policy for 1-2 months, but suggested that the government not declare it to avoid foreign speculators. He likes the idea because it will help the export sector recover, which will result in more hiring.
On the other hand, the Vice Chairman said that the weak-baht policy will weaken the value of the Thai currency itself, forcing Thailand to pay more for energy import in terms of baht, which will eventually add to the production costs.