Amid Thailand’s political uncertainty, Finance Minister Apisak Tantivorawong has unveiled plans for Bt20 billion (US$629 million) of investment to kickstart the economy.
Growth was expected to fall to around 3 per cent for the first half of the year, the military-appointed minister added.
Asean’s second-largest economy reported its strongest growth in six years last year, at 4.1 per cent, compared to the Philippines’ increase of 6.2 per cent, Indonesian growth of 5.17 per cent and Malaysia’s rate of 4.7 per cent.
“We want the measures to be effective during the second and third quarters in order to make sure the economy won’t be slumping when the new government comes in,” Apisak said.
He said the junta was considering tax breaks to encourage Thailand’s healthy tourism sector and assistance for low-income families.
The Bank of Thailand said the economy could be hampered if no stable government was formed by August.
The official general election results are due on May 9 are expected to prove inconclusive.
Without a proper administration, the budget, public-sector projects and private-sector investment decisions could all be jeopardised, central bank governor Veerathai Santiprabhob said yesterday (Friday).
The bank’s forecast of 3.8-per-cent GDP growth this year assumed a stable government was formed by June, Veerathai added. He also threatened interest-rate rises.
Thailand’s finance chiefs said they feared for the kingdom’s fiscal health, particularly through debt.
“Household debt has been growing at a worrying rate and presents a risk to the financial stability of the country as well as the entire economy, as it may damage the productivity of the workforce in the long-run,” Veerathai said.
The central bank forecast that tourists arrivals would reach 40.4 million this year, a slight rise on last year’s eye-watering 40 million visitors.
But Titanun Mallikamas of the bank’s monetary group warned that the weakening global economy could reduce average tourist spending.
The Bank of Thailand has left its interest rates unchanged at 1.75 per cent since a tightening in December for the first time since 2011. It is due to review the policy on May 8.
Exports are expected to have fallen year on year by about 4 per cent in March, according to Bloomberg. If confirmed, it would mark the fourth decline in five months.
Thailand remains a magnet for tourists. Picture credit: Asean Economist