Thai economy: Hot to sour

The reasons for the slowdown are varied and vexing. Steep oil prices are certainly playing a part, pushing up costs for businesses and draining the government’s coffers because it subsidizes fuel prices. Add to that a tourist season that was literally washed out by the tsunami. Oil prices are contributing to inflation, which is expected to rise to between 3.5 and 4% for the year. Many analysts thought this would necessitate an interest rate hike by the central bank, especially in the wake of hikes by the US Federal Reserve, but the Bank of Thailand declined to raise rates while admitting it was pursuing a weak baht policy to keep exports competitive.