Govt spending expected to shore up economy

Meanwhile the Ministry of Finance says state expenditures could reverse the present slowdown in the Thai economy.

Ekniti Nitithanprapas, deputy director-general and spokesman of the Fiscal Policy Office, said government expenditure would become a main engine to drive the economy. So far, 69 per cent of the national budget has been disbursed and about 94 per cent is expected to be disbursed for the whole of this fiscal year. The remaining budget for disbursement amounts to Bt600 billion.

“We haven’t received a policy about the mid-year budget yet. And now we have the remaining amount for disbursement and the budget for the next fiscal year will become available in October. We expect to have enough money” to boost the economy, Ekniti said. He cited the export contractions, slowing local spending and a slowdown in private investment for the economic slowdown in June and the second quarter.

Exports contracted by 3.4 per cent in June and 2.2 per cent in the second quarter year on year. Local spending dropped partly because of a high base. Private investment fell from lower imports of machinery.

Domestic demand also edged down, reflected by shrinkage of value-added tax at constant prices at 2.6 per cent year on year in June and 0.2 per cent quarter on quarter in the second quarter. 

The number of passenger-car sales, which reflected consumption of durable goods, contracted 17.7 per cent year on year in June and 3.3 per cent quarter on quarter in the second quarter. Sales of commercial vehicles, which indicated private investment, shrank 10.7 per cent year on year in June and 3.2 per cent quarter on quarter. 

Ekniti pointed to some good signs for the economy, including exports to Cambodia, Laos, Myanmar and Vietnam (CLMV), expanding tourism, higher farm income from improved rubber prices, government spending and higher imports of electronic goods. 

Exports to CLMV, which accounted for 7.5 per cent of the total, expanded 10 per cent in the first quarter of the year and remained positive in the second quarter. 

The FPO estimates gross domestic product this year will grow in a range of 4-5 per cent. It is scheduled to revise its projections in September. 

 

Signs of slowdown 

Meanwhile, The Thai Chamber of Commerce (TCC) remains concerned about the Kingdom’s economic prospects because of strong signs of a slowdown in all regions except the East. 

In the second half of the year, agriculture, tourism and border trade look set to be the key sectors supporting economic growth, it said.

A survey of 250 of the chamber’s provincial chairmen, vice chairmen and secretaries, representing all regions, found that 43.2 per cent expect the Kingdom’s economy to get worse – while 38.3 per cent see the outlook remaining moderate. 

Somkiat Anurat, TCC vice chairman, said the economic outlook was expected to recover in the fourth quarter, unless there were sudden fluctuations in Thailand and abroad. 

The East is still expected to outperform other regions of Thailand economically in all categories – consumption, investment, tourism, agriculture, industry and trade – said the chairman of the Committee on Economic Development in the Eastern Region, Pradchaya Samalapa.

Furthermore, border trade with Cambodia has expanded substantially by 15-25 per cent at the checkpoints in Klong Yai and Aranyaprathet districts.

The chairman of the Committee on Economic Development in the Northern Region, Wirote Jirattigalachote, said tourism was the strongest sector supporting the regional economy in the second half, especially as the weather is good for travelling.

Furthermore, border-trade volume has expanded by 15-20 per cent. 

Jit Siratranont, chairman of the committee on Economic Development in the Central Region, said the industrial and trading sectors would remain sluggish in the second half, leading to a decline in domestic consumption. 

The chairman of the Committee on Economic Development in the Northeastern Region, Prapan Techasakolkijkoon, was worried about labour-intensive industries, which could move their production bases to Myanmar because of higher wages and labour shortages.

Noppong Theeravorn, vice chairman of the Committee on Economic Development in the Southern Region, said the low price of rubber and palms had seriously affected consumption, investment and employment in the region. 

On the other hand, the region’s border-trade volume was expected to be between Bt500 billion and Bt600 billion this year. 

Last year, it was Bt550 billion, accounting for 70 per cent of the Kingdom’s total border trade.