Thailand approved a $10bn stimulus package on Tuesday to revive the kingdom’s economy by putting more money in the pockets of farmers, domestic tourists and low-income earners.
Prime Minister Prayuth Chan-ocha’s cabinet approved the measures a day after Thailand reported that its economy grew just 2.3 per cent in the second quarter, the slowest rate in nearly five years.
South-east Asia’s second-biggest economy has been hurt this year by US-China trade tensions, a drought and a bull market for the Thai baht, which has made the country’s exports and large tourism industry less competitive at a time when other world economies are also slowing.
Uttama Savanayana, the finance minister, announced the Bt316bn ($10.3bn) package last week, in the hope that it would help Thailand achieve economic growth of 3 per cent this year.
The stimulus measures agreed on Tuesday include debt relief and loans for drought-affected farmers.
In an attempt to bolster its flagging tourism sector, Thailand extended free-visa-on-arrival provisions for several countries for another six months. The government, however, rejected a proposal from the tourism ministry to allow tourists from China and India to enter visa-free, citing security concerns.
Thai domestic tourists who travel outside their home provinces will receive Bt1,000 ($32) worth of pocket money and 15 per cent rebates on hotel accommodation, food and shopping costs of up to Bt30,000.
The government will also extend subsidies to low-income earners and increase allowances for the elderly and babies.
Analysts said that while the stimulus measures would inject more money into the economy, their impact might be limited because of the souring outlook for the global economy and Thailand’s own struggle to tackle bigger problems around skills and competitiveness.
“This stimulus package . . . only looks at the fast distribution of money into the system,” said Pavida Pananond, an associate professor at the Thammasat Business School in Bangkok. “This stimulus is good for the short term, but I don’t think it would address the root cause of the problems in the Thai economy, which would require much more profound structural reform.”
Thailand’s central bank said on Monday that it would lower its 2019 growth forecast of 3.3 per cent because of escalating trade protectionism.
“Obviously, [the government stimulus] will help to sustain private consumption, and to not let this downbeat environment disrupt domestic sentiment,” said Suchart Techaposal, head of Thailand research with CLSA, a brokerage. “Whether it will keep GDP growing at 3 per cent this year is harder to say, given that we don’t know how the global trade environment will be.”
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