Global Energy Crisis Drags Down Thailand; World Bank Downgrades GDP Forecast to 1.3%

The World Bank (WB) released its "East Asia and Pacific Economic Update" on the 8th, and simultaneously stated in a press release that the region's economic growth is slowing down. This year's economic growth is expected to decelerate from 5.0% last year to 4.2%, reflecting the adverse effects of an escalating energy crisis related to Middle East tensions, rising trade barriers, global policy uncertainty, and domestic economic difficulties.

The Nation reported today that Aaditya Mattoo, the World Bank's Chief Economist for East Asia and the Pacific, pointed out that Thailand, Laos, Cambodia, and Mongolia are the economies most vulnerable to the current energy crisis, particularly susceptible to rising global fuel prices.

Meanwhile, the World Bank also lowered Thailand's economic growth forecast to 1.3%, emphasizing the region's energy vulnerability.

The report noted that to mitigate the impact, the World Bank recommends that governments balance short-term relief with long-term reforms, and while supporting vulnerable groups and small businesses, strengthen structural reforms to drive future growth.

The World Bank's press release stated that the impact of the Middle East conflict depends on each country's reliance on energy imports, existing vulnerabilities, and the flexibility of economic policies. If the conflict persists and escalates, it could further exacerbate economic difficulties, reduce regional economic growth, and noted that "a sustained 50% increase in fuel prices could lead to a reduction of approximately 3% to 4% in household income in the region."

The Nation pointed out that when asked if a de-escalation of geopolitical tensions could change this outlook, Mattoo warned that even if the conflict subsides, economic losses could persist, and noted that soaring fuel prices and disruptions in oil and gas supplies have caused long-term effects rather than transient shocks. (Editor: Chen Cheng-kung) 1150409