How is the Thai government addressing negative inflation?

How is the Thai government addressing negative inflation?

The government is implementing measures like:
- Monetary policy: The Bank of Thailand has maintained low interest rates to stimulate borrowing and spending.
- Fiscal support: Subsidies on utilities, fuel, and public transport keep prices low, while stimulus checks boost demand.
- Tourism promotion: Efforts to revive tourism aim to increase foreign income and consumer spending.
- Structural reforms: Investments in infrastructure and digitalization aim to enhance productivity.

How does negative inflation affect the Thai economy?

Negative inflation impacts Thailand's economy in several ways:
Positive effects: Lower costs of living can ease household budgets, potentially benefiting low-income groups.
Negative effects: Deflation discourages business investment as profit margins shrink, increases debt burdens as nominal incomes fall, and risks a downward economic spiral by reducing demand. Long-term, it may lead to job losses and slower GDP growth.

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What is negative inflation?

Negative inflation, also known as deflation, occurs when the general price level of goods and services in an economy decreases over time, resulting in a negative inflation rate. This can happen due to reduced consumer demand, technological advancements lowering production costs, or tight monetary policies. While lower prices may seem beneficial, deflation can harm economic growth by discouraging spending and investment, as consumers and businesses delay purchases expecting further price drops.

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