The senior economics minister and deputy PM has rebuffed claims that the new government finds itself in a tight funding situation to support government spending and policy initiatives. At the same time, he has stated that a new goal of the incoming government will be to expand the government’s revenue base. Somkid Jatusripitak rejected other rumours that the government may consider increasing value-added tax rates from 7% to 8%.
Deputy Prime Minister Somkid Jatusripitak has revealed that an economic stimulus package has been finalised and is ready to be submitted for approval to the Thai cabinet. The move comes as Thailand faces mounting economic challenges with a sharp fall in consumer confidence and the very real possibility that this year will see a contraction in exports to other countries.
Today is the first day of business for the new Thai cabinet and one of the initiatives that the new government is looking at is an economic stimulus to address Thailand’s declining economic prospects. This was confirmed yesterday by Thailand’s deputy prime minister and economics czar, Somkid Jatusripitak. He revealed that the Fiscals Policy Office of the government has now finalised preparation of the stimulus package which will be submitted to the new cabinet for approval.
Stimulus of financial measures and aid to workers, farmers and small business with bank loans
It is believed that the package consists of two strands. The first is a range of measures to be introduced by Thailand’s finance ministry where Palang Pracharat leader Uttama Savanayana is the new minister. The second is a package of financial aid targeted at workers, farmers and small business. This includes loans to be made available through key state banks such as the Government Savings Bank, the Small and Medium Enterprise Development Bank as well as the Bank of Agriculture and Agricultural Cooperatives (BACC) which are owned by the ministry.
Growth slowed in the first quarter to 2.8% from 3.6% in the last quarter of 2018 and go far lower
The economics minister said that growth in Thailand had slowed in the first quarter of this year to 2.8%. This is the figure published by the kingdom’s National Economic and Social Development Council. It is the weakest in four years and a further deterioration from the 3.6% recorded in the last quarter of 2018.
Strong possibility of a contraction in exports this year
The slowdown has been attributed to the world’s more negative economic environment ushered in by the US-China trade war, political uncertainty and the abnormally high value of the Thai baht. Thailand is not the only country in Southeast Asia to see a slowdown of growth, something which has also impacted its economic peers. Even Vietnam the younger tiger at Thailand’s heels will see it’s GDP growth down this year but to a still impressive figure of 6.5%. Thailand, the second-largest economy in the region, is facing the distinct possibility this year of an export contraction and signals that the domestic economy is in trouble with sharp declines in consumer confidence.
New goal of expanding government revenue while also engaging in stimulus spending
Somkid promised that the new government will keep pushing the economic policies of the previous administration. He highlighted the goals of attracting inward investment and stated the government was prioritising plans to expand state revenue. This is interesting given what is perceived to be depressed domestic economic conditions right now and hence the stimulus. However, consumer spending in Thailand in the first quarter rose as did disposable income. But consumer sentiment in recent months has dropped sharply in line with a range of economic data.
Deputy PM rejects speculation that Thai government funding is tight, also rejects VAT rise
The economics minister rejected speculation that the government was currently tight on funding. At the same time, he also rejected talk of an increase in Value Added Tax which has been mooted to rise from 7% to 8%. The deputy PM said such a move would cause direct hardship to people in the country and was therefore not acceptable.
Transport minister briefed on new rail link plans
Meanwhile, new government ministers are being presented with measures to kickstart capital investment programmes. The permanent secretary at Thailand’s Transport ministry was expected to brief incoming minister Saksayam Chidchob on a number of strategically important rail projects on Thursday. He will also seek his approval to give the undertakings the green light.
Sales of cars in Thailand down 2.1% in June
On Thursday also, it was confirmed that sales of cars in Thailand were down 2.1% in June from last year, the figures for May, however, were up 3.7% but it was expected the car would drop in Thailand following stringent regulations imposed by the Bank of Thailand in April after it detected an unhealthy surge in loans last year. Many observers see the June figures as this new environment kicking in.
Provincials airports report 1% drop in passenger numbers for this year compared to last
A telling indicator of the slow down in the Thai economy over the last year since the first impact of the US-China trade war began to be felt from July last year is a contraction in flights and passenger numbers from Thailand’s 28 provincial airports controlled by the Airports Department.
On Thursday, the director-general of that body Ampawan Wannako, revealed figures from October last year to the end of June this year which is the first 9 months of the fiscal year. The figures showed there were 115,000 flights from the airports carrying some 14.4 million passengers. This represented a 1% drop from the corresponding previous period.
Curtailment of domestic flights by airlines in Thailand
The airports boss said that the primary reason for the curtailments in flights and numbers was the axing of domestic routes by airlines operating in Thailand. There was positive news significantly centred on the growing tourist hotspot of Krabi in southern Thailand.
Good news for Krabi as 5 budget airlines from all over the world want to fly direct
Two budget airlines have announced new regular flights to the beautiful unspoilt tourist town while three other European airlines are in talks to also fly to Krabi. T’way Air from South Korea will fly seven flights a week to the Thai tourist resort. This service has already begun. In October, Blue Panorama Airlines, a low-cost Italian airline will fly tourists and visitors from Warsaw in Poland to Krabi with a weekly flight.
Final tally will show passenger numbers down
The director-general gave an indicative assessment of the numbers flying through the Thai provincial airports in July, August and September. They would be up very marginally she suggested. However, her department was forecasting the overall number of passengers for this year to be 18.82 million. This would represent a 1.33% drop on the same period last year.