Government Discusses Measures To Handle Global Fuel Crisis

Finance Ministry’s permanent secretary Krisada Chinavicharana said the government would implement some measures to ease the global fuel crisis’s impact on Thai people’s finances.

Following a meeting with an ad hoc committee tasked with managing economic crises, Mr. Krisada said officials had discussed trouble management measures to deal with the fallout from the Russia-Ukraine war and other possible geopolitical conflicts.

The plan includes “quick win” measures with fertilizer management schemes and organic fertilizers promotion, credit guarantees for small and medium entrepreneurs, farmer database integration, and financial strategies to restructure the economy.

Meanwhile, authorities will take follow-up measures to deal with the growing energy crisis and rising commodity prices, Mr. Krisada stated. In addition, the government plans to introduce energy conservation measures to encourage public transport use and reduce travel costs through the rail system.

Mr. Krisada explained that officials considered measures to address high production costs and agricultural raw materials shortages. They also discussed moves to alleviate the financial crisis that affects homes and companies, solve the domestic economy’s structural problems, and enhance the country’s declining competitiveness.

Officials attending the meeting, chaired by Prime Minister Prayut Chan-o-cha, also forecast three possible global scenarios. In the first one, the war between Ukraine and Russia would drag on and Western sanctions against Moscow would intensify, generating counter-sanctions and giving time for global crude oil supply and demand to adjust accordingly.

If it happens, Western nations could reduce oil imports from Russia, reducing the risk if Moscow decides to export oil to other markets, preventing global supply from shrinking and increasing the chance that prices will fall further.

Under this scenario, Thailand’s economy should expand, the minister added, explaining that it was in line with the Office of the National Economics and Social Development Council’s prediction that GDP will grow 2.5-3.5% this year.

In the second scenario, the conflict intensifies and generates more sanctions, making global demand for crude oil and other important raw materials unable to keep pace. As a result, prices would rise this year, and the US Federal Reserve and other major economies raise interest rates to a higher rate before lowering them amid signs of recession in 2023.

In light of this, Thailand might see slower growth this year and the next while inflation would remain high before falling in 2024.

The worst-case scenario would see the West and a rival bloc led by Russia and China engage in more acute conflicts that alter economic growth depending on their actions and the opposing blocs’ reactions.

In this scenario, food, energy, and raw material prices would skyrocket, causing shortages and wreaking havoc on the national economy.