MONDAY, April 15, 2024
nationthailand

More measures needed for an economic turnaround 

More measures needed for an economic turnaround 

Economists see more government stimulus packages in the pipeline amid the bleak economic outlook for next year.

“The government should be credited for the latest economic stimulus package as it would at least shore up growth this year,” said Charl Kengchon, executive chairman at Kasikorn Research Centre.
His comment comes as the Cabinet on Tuesday approved economic packages targeting farmers, villagers, homebuyers and property developers. Finance Ministry estimated the package would inject about Bt144 billion into the economy with Bt80 billion in the next 3-4 months.
The government expected the package to shore up economic growth to 2.6 per cent this year, after a mere 2.4 per cent in the third quarter.
Charl, said economic impact of the latest package would not be significant this year as there is only a few week left. Government spending has been constrained, pending the passage of the fiscal 2020 budget by parliament early next year. The government would start public investments, if the proposed budget is approved, he said.
Economic outlook remain bleak as major economies such as US, China, Japan would continue to face growth deceleration next year,according to projection by the International Monetary Fund, he said.
For Thailand, economic growth would be at 2.5 per cent this year and 2.7 per cent next year, he said. The Thai economy largely depend on exports, and we need to monitor world trade and impact from the US-China trade conflicts, he said.Thai exports contracted 4.5 per cent in October. 
If the two countries could reach a trade deal this year as expected, it would still take sometime before the global economy returns to normal, he said, adding that Thai exports next year might recover to a certain extent.
Somprawin Manprasert, executive vice president and head of research at Krungsri Bank said that it was not sure yet how the latest stimulus package would help small and medium-sized enterprises hard hit by falling exports.
He forecast exports to contract by 2.5 per cent this year and may grow 1.5 per cent next year.
“Global economy may be better than the Thai economy next year,” he said.
“Central banks in major economies have implemented monetary easing measures to stabilise their economies, but they may not be strong enough to pull our economy out of a slowdown,” he said.
Krungsri forcast Thai GDP growth at 2.4 per cent this year and 2.5 per cent in 2020. The growth rate is lower than the full potential of 3.5-3.8 per cent, Somprawin added. Public spending on infrastructure projects may start to enter the economy in the second half of next year but it would take time to gather momentum. Currently private investment remains at a low level and consumption flat, he said. 
Public investment and private investment grew 3.7 per cent and 2.4 per cent respectively in the third quarter, according to the National Economic and Social Development Council.
The government may need to offer tax incentives for the middle income group to spend more, he added.
Meanwhile, Lavaron Sangsnit, director general of the Fiscal Policy Office, is more optimistic, saying that the latest package would inject about Bt144 billion into economy. For example the cash back offer of Bt50,000 for 100,000 potential home buyers would help to clear up the inventory of about 270,000-280,000 residential units. Property developers could start investing again, he said.
Previous measures such as cash handouts via welfare card scheme, income guarantee for farmers and local tourism stimulating package have somewhat failed to spur private consumption, he said, referring to the 4.2 per cent growth in private consumption in the third quarter.

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