New government budget to focus on economic stimulus
Thailand’s economic Deputy Prime Minister Somkid Jatusripitak has alerted the Budget Bureau to prepare to set aside a significant portion of the 2016 government budget for use in economic stimulus measures including the building of new infrastructure, a government spokesman said last week.
Somkid told the Cabinet that disbursement of the budget was a vital part of maintaining economic momentum until the third and fourth quarters, when government spending on mega-projects is expected to start entering the economy and should power growth higher. The Deputy Prime Minister said growth would not be as strong in the early part of the year.
Although he not reveal the amount to be set aside, the alert reflected Somkid’s concerns that the global economic recovery would be weaker than expected in 2016 and that could negatively affect Thailand’s exports, and by extension its growth rate. Reflecting similar concerns, the World Bank said last week that “weak growth among major emerging markets will weigh on global growth in 2016, but economic activity should still pick up modestly to a 2.9 percent pace, from 2.4 percent growth in 2015.”
That outlook also prompted to the Bank of Thailand to trim its forecast for growth this year to 3.5 percent from an earlier prediction of 3.7 percent, still an improvement over what is expected to be 3.2 percent growth for 2015 after the final numbers are tallied.
Last year began in an even more lackluster fashion, but two stimulus packages designed by Somkid and implemented by the government helped growth gain momentum as the year progressed. These packages were mainly designed to relieve pressure on consumers and spur them to spend, and to reduce taxes on businesses to encourage them to hire and produce more.
They presage a larger program to restructure the economy towards less dependence on exports and more reliance on consumption, creativity and higher technology in the longer term. In the shorter term, Somkid had already said that a third stimulus package would be unveiled in coming months. He added last week that the package may need to be larger and more extensive because of the weak global recovery.
Somkid “told the [Budget Bureau] that the 2016 fiscal budget would be mainly used to support economic reform towards a more domestic-led economy so that the budget is not wasteful,” said Government Spokesman Major Sansern Kaewkamnerd, adding that this infrastructure includes water-supply and irrigation facilities, and processing facilities for agricultural and value-added products. Also included are projects to increase coverage and speed of the Internet in rural areas under the National Broadband Strategy.
The central budget for fiscal year 2016 was set at just over $11 billion, or 14.8 percent of the overall state budget of nearly $75 billion.