Thailand is not expected to encounter economic deflation as a result of government injections of Bt800 billion into its economic stimulus programmes, Prime Minister Abhisit Vejjajiva said on Thursday.
Mr. Abhisit said he is confident that after the government invests Bt800 billion in its economic stimulus programmes, domestic consumer prices can be supported as the funds could generate more employment and money would circulate in the system.
Economic deflation will not occur, he said, which is why the government opted to borrow funds to finance the stimulus programmes instead of letting money remain idle in the banking system.
Parliament last month approved an executive decree and public loans bill allowing the Finance Ministry to borrow Bt800 billion to finance programmes to shore up Thailand’s domestic economy.
Mr. Abhisit’s remarks were made after the Commerce Ministry announced Wednesday that Thailand’s headline inflation contracted 4 per cent in June from one year ago and that it had fallen six consecutive months.
The core inflation index, which excludes fresh food and fuel costs, fell 0.1 per cent in June year-on-year but rose 0.2 per cent from the previous month.
The ministry said it projects inflation during Calendar 2009 to be in a zero to 0.5 per cent range, despite a decline of 1.6 per cent in consumer prices during the year’s first half. (TNA)