Somkid warns of economic storm
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Somkid warns of economic storm

Ex-finance minister calls for war chest

Somkid Jatusripitak
Somkid Jatusripitak

Former deputy prime minister Somkid Jatusripitak has warned the government to brace for a perfect storm of global crises and have financial resources ready to cushion the blow for small and medium-sized businesses in the aftermath.

Delivering a speech at a seminar organised by the Mass Media Association of Southern Thailand in Songkhla on Tuesday, Mr Somkid said that the global economic situation is highly volatile and it will not be easy to deal with the impacts of the impending crisis.

"The problems are severe and run far deeper than many had originally thought," Mr Somkid said.

He said the International Monetary Fund has recently pointed out that the world is facing a perfect storm of multiple crises -- the Russia-Ukraine war which is pushing up prices of food and energy; the US's soaring inflation which could lead to a recession which in turn would have a considerable ripple effect of many other nations around the world.

In China, Covid-19 restrictions are hurting its economy while the real estate bubble is still developing, Mr Somkid said, adding that China's economic slowdown will adversely affect global trade and the fallout will cause the Thai export sector to suffer a slump in demand from one of its biggest customers.

"An economic recession will lead to a crisis. The government cannot afford to be complacent. Even though Thailand has foreign reserves of up to US$210 billion, the country also has foreign debt of up to $190 billion. It is a long-term debt, but when a crisis arises, it is still a debt," Mr Somkid said.

"Moreover, Thailand is now experiencing twin deficits -- a fiscal deficit and a current account deficit. A fiscal deficit shows the government cannot seek enough funds to cover its expenses.

"A current account deficit also occurs sometimes because imports face problems from the weakening baht and not many foreign tourists have returned to Thailand yet.

"A country that experiences twin deficits is at risk. If this is compounded by corruption, foreign investors will be reluctant to invest in the country," Mr Somkid said.

"In light of this, the government is duty-bound to prepare for the fallouts from these crises and communicate to the public how it will deal with the problems and ensure people will not be left unemployed.

"In the event of an economic recession, the government must have the budget ready to bolster employment because if a crisis such as this occurs, many will lose their jobs," Mr Somkid warned.

Moreover, the government must help small and medium-sized entrepreneurs (SMEs) which will be among the hardest hit.

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