Since the U.S. economy is the largest in the world, a recession would affect the global economy. The U.S. is Thailand’s No. 1 export market, worth $15.503 million in the first four months of 2022, accounting for 15.96% of Thailand’s total exports.
Exports will continue to be a key driver of the Thai economy in 2022 as tourism is slow to recover.
Many countries around the world that depend on energy imports are affected and traumatized, resulting in high inflation problems around the world. This is also the case in Thailand, where the latest inflation rate was 7.1% in May 2022. However, the increase in prices for energy products is much higher.
In the past, the Thai government has used the Fuel Fund to monitor energy prices. The status of the fuel fund will be negative ฿ 100,000 million in June 2022 according to the oil account, which has collected money from gasoline consumers into the fund. And the money from the fund will be used to subsidize diesel prices at high levels resulting in the oil account being negative by about ฿ 60 billion.
The subsidy on the price of diesel is 11.31 ฿ per liter and is considered very high, although the retail price of diesel has been raised to a ceiling of 35 ฿ per liter.
This situation has led many product manufacturers to file a complaint with the Domestic Trade Department of the Ministry of Commerce to request a price increase.
The bus operators, Transport Company Limited, announce to reduce their operation by 80% from July 1, 2022, because they cannot absorb the high cost of fuel prices, including Chao Phraya Express Boat operators who have also increased the fare. In other industries, fertilizer prices have increased dramatically.
A possible recession in the U.S. economy will be another problem for which the government will have to come up with a plan. High inflation in the U.S. and the fact that the Federal Reserve has begun to raise interest rates to combat rising inflation are already promising.
The Fed’s move reflects the volatility in the U.S. economy that will occur in the next phase. U.S. inflation reached 8% in the first quarter of 2022, the highest level in 40 years. This means people in the U.S. have less savings and purchasing power.