Thailand is expected to be able to weather the eurozone crisis thanks to the treasury's 500 billion baht reserves, Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong says.
But the government will still need to take measures to curb an imminent rise in unemployment in the textile, electronic, jewellery and rubber industries, he said yesterday.
The assurance came after Prime Minister Yingluck Shinawatra chaired an economic ministers' meeting yesterday to discuss the eurozone crisis and its possible impact on Thailand.
The Bank of Thailand and the National Economic and Social Development Board have been instructed to prepare for fallout from Europe's economic crisis.
Mr Kittiratt said the crisis would affect exports and the financial sector but its impact on the Thai economy would ultimately be a small one.
"However, the government will not be careless because this crisis is not an ordinary one, although I believe the EU will manage to prevent the problem from spreading worldwide," he said.
The Finance Ministry said treasury reserves were healthy and at present amount to more than the normal level of 300 billion baht because of high inflows of tax revenue and income from state enterprises.
The ministers yesterday decided to maintain the country's economic growth target for this year at 5.5-6.5% and an export growth target of 15%.
They instructed the Bank of Thailand to closely monitor currency exchanges.
The ministers agreed the interest rate should remain at 3%.
The economic ministers also ordered the Labour Ministry to prepare measures to cope with a possible rise in unemployment in the case of a drastic plunge of exports to the EU in four industries _ jewellery, textiles, electronics and rubber.
Exports from the four sectors to the EU stood at US$21.5 billion (678 billion baht) last year.
The Office of Agricultural Economics projected a severe impact on the Thai rubber industry due to the eurozone crisis, forecasting exports to fall 33%.
They said the food sector is likely to be stable.
Sales of rubber to re-exporting nations like China, India, Brazil, Australia and South Korea are also expected to be affected as the EU is a significant trading partner of these countries.
Thai exports of rubber and rubber products to China were down by 15% in the first four months of this year compared to last year.
The office provided three projections for GDP growth in the agriculture sector _ the three scenarios projected growth rates of 5%, 3.4% and a contraction of 2.5%. The forecasts were based on different assumptions _ that Greece can manage its debt, that Greece fails to receive sufficient support, and that the crisis spreads to other nations.
Mr Kittiratt said state-owned enterprises have been instructed to restructure their foreign debts and to look at domestic loans instead.
Thai financial institutions currently have 56 billion baht of credit and investment in EU banks, or 0.4% of their total assets.
The amount borrowed by Thai banks from the EU stood at 4 billion baht, or 0.3% of their total assets.
Branches of European banks in Thailand have deposits of 132 billion baht, or 1.7% of total deposits, while Thai exporters owe 19 billion baht to the EU, or 0.2% of their total credit.