Uttama gets agencies braced for war

Uttama gets agencies braced for war

Well-wishers place flowers and candles for the deceased Iranian military commander Qassem Soleimani at the embassy of Iran in Bangkok. (Photo by Varuth Hirunyatheb)
Well-wishers place flowers and candles for the deceased Iranian military commander Qassem Soleimani at the embassy of Iran in Bangkok. (Photo by Varuth Hirunyatheb)

Finance Minister Uttama Savanayana has instructed all agencies under the ministry to monitor the escalating US-Iran tension and stand ready to roll out measures to shore up economic momentum if needed.

If a war between the US and Iran takes place, the Thai economy will be affected, he said. The ministry's units must gear up and launch measures if the government decides they are necessary.

The ministry has yet to estimate the impact to the economy if a war erupts, but the Bank of Thailand and National Economic and Social Development Council have their own estimates, said Mr Uttama after a meeting with senior ministry officials.

The impact of the potential conflict on trade is unclear, but there is likely to be a ripple effect across the world, he said.

Though a US-Iran feud could help ease the trade conflict between the US and China, said Mr Uttama.

He delegated the ministry to comply with five missions to address income disparity and hone the country's competitiveness.

The five missions are pushing rural economies, developing small and medium-sized enterprises (SMEs) and startups, encouraging the private sector to invest, supporting the government to go digital and enhancing state welfare schemes.

The Bank for Agriculture and Agricultural Cooperatives (BAAC) and the Government Savings Bank (GSB) will be the main agencies working to improve the rural economy, while others including the Comptroller-General's Department, the Treasury Department and provincial treasury offices will provide support.

The BAAC and GSB could set development models in each area, which would hopefully lead to concrete results this year, said Mr Uttama.

The state-backed farm bank must also take responsibility for helping people handle drought.

The Comptroller-General's Department has been assigned to consider relaxing procurement criteria to enable SMEs to more easily participate in state auctions, while the State Enterprise Policy Office has been delegated to work closely with state enterprises and the private sector to ramp up investment.

Meanwhile, Kasikorn Research Center (K-Research) said the US-Iran conflict is unlikely to end soon and headline inflation is estimated to rise by 0.75 percentage points from a base case scenario to a range of 1.15-1.65%, decreasing Thai economic growth by 0.08 percentage points if Dubai crude oil stays at US$80 per barrel for six months.

The forecast does not take into account government subsidies of domestic oil prices, K-Research said.

Higher oil prices could ease pressure on the baht's strength because of a lower current account surplus, leading monetary policy to become more constrained, said K-Research.

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