Thai FM: Gov't alert to prevent simultaneous deflation, inflation

The Thai government is trying to prevent simultaneous occurrence of deflation and inflation as rising oil prices have brought increases in goods prices in the country, Finance and Deputy Prime Minister Surapong Suebwonglee said Saturday.
Surapong was quoted by Thai News Agency (TNA) as saying that the government has been seeking measures to prevent and rectify problems of deflation and inflation, so that they do not happen simultaneously, because such an economic problem would be difficult to solve.
Speaking of concerns over a possible tight money situation in the country during the second half of 2008 -- a condition which could cause problems for industrial and financial systems, Surapong said he was optimistic that if the government could tackle the inflation crisis, liquidity could improve.
Banks are also overseeing liquidity problems, Surapong said, but they have sufficient financial instruments to mobilize deposits.
President of Thailand's Kasikorn Bank, Prasarn Trairatvorakul meanwhile allayed fears of some economists about possible liquidity problems during the second half of this year, according to the TNA report.
A known banker, Prasarn said that a short-term problem may occur with some industrial enterprises if banks reduce credit terms or debt repayment periods.
Commercial banks have developed lending-problem and risk prevention systems, Prasarn said, adding that they should not have big problems in attracting deposits from the public, but there is still no sign from the government that it would absorb excess liquidity for use in spending on public utilities.
Lending by commercial banks during the second half of 2008 may slow, but it would still be higher than last year because of continued private investment, said Prasarn.
Source:Xinhua