Growth 'will be hit if Bt2-tn projects don't take off'
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If the Bt2-trillion borrowing law is shot down, economic growth next year might fall 0.5-1 percentage point short of the target of 5 per cent, according to the Fiscal Policy Office.
Ekniti Nitithanprapas, deputy director-general of the FPO, said last week that the office would closely monitor the progress of the loan bill.
The key risks are the ruling of the Constitutional Court on its legality, and the current political situation. It is quite difficult to evaluate the bill’s chances of survival at this moment, he said.
Benjarong Suwankiri, head of TMB Analytics, the economic analysis unit of TMB Bank, said that under the Bt2-trillion infrastructure project, about Bt100 billion is expected to be expended next year and that will stimulate GDP growth by 1 percentage point.
Without such public investment, GDP growth would be slowed down by 0.4-0.6 percentage point next year.
Government spending would be a significant driver of economic growth next year as it accounts for 14 per cent of GDP.
TMB Analytics forecasts GDP to expand about 4.2 per cent next year, but lacking major investment by the government, the rate might slip. Above all, the country’s long-term competitiveness would lose its edge.
However, the Bt2-trillion infrastructure project would likely not be abandoned, just delayed for a certain period of time.
Charles Kengchon, managing director of Kasikorn Research Centre, said that if the Bt2-trillion infrastructure project is successful, about Bt70 billion of actual investment under the project would be made next year, which is not so much.
However, if the project is delayed, then it has to be considered whether the government has any other stimulus campaigns coming out.
“If the Bt2-trillion project fails to take off next year, it would not have a significant impact, as the government might launch other projects to stimulate the economy,” he said.
Somprawin Manprasert, deputy dean of economics at Chulalongkorn University, said a delay in the Bt2-trillion infrastructure project, which might not start next year, would not have a direct impact on the economy, as such infrastructure projects will benefit the country in the long term.
However, a project delay might have some impact on the investment plans of the private sector, which might be delayed as well.
