Government on preemptive path to counter simultaneous deflation, inflation



BANGKOK, July 12 (TNA) -- The Thai government does not want to see both deflation and inflation occur at the same time due to the increase in goods prices resulting from rising oil prices in the country, Finance and Deputy Prime Minister Surapong Suebwonglee said Saturday.

He said the government has been seeking measures to prevent and rectify problems of deflation and inflation, so they don't happen simultaneously, because it would be difficult to solve such an economic problem.

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, Mr. Surapong said he is optimistic that if the government could tackle the inflation crisis, liquidity could improve.

Banks are also overseeing liquidity problems, Mr. Surapong said, but they have sufficient financial instruments to mobilise deposits.

Meanwhile, Kasikorn Bank president Prasarn Trairatvorakul allayed anxieties expressed by some economists who are fearful of possible liquidity problems during the second half of this year, saying 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, Mr. Prasarn said, adding that they should not have many problems in attracting deposits from the public, but there still is no sign from 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, Mr. Prasarn added. (TNA)-E111

enews.mcot.net


.............................


deflation :

A persistent decrease in the level of consumer prices or a persistent increase in the purchasing power of money because of a reduction in available currency and credit.

inflation :

A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.

answers.com