Govt to speed up stimulus spending as growth stagnates

By The Nation

 

Somkid

 

The government will speed up its investment in infrastructure projects to boost the country’s growth rate to 3.5 per cent for the rest of this year, Somkid Jatusripitak said on Thursday after being appointed Deputy Prime Minister on Wednesday.

 

“I have confidence we can manage the country’s economy under the coalition government to boost its growth to 3.5 per cent, after the World Bank revised down [its forecast for] Thailand’s economic growth from 3.8 per cent to [instead] 3.5 per cent in this year,” Somkid said.

 

He added that the coalition government will work together to drive the country’s economic growth for the rest of this year during a period of a declining global economy. Thailand’s economy has to be driven by domestic actions such as investments in infrastructure projects and a boost to domestic consumption.

 

“We have already discussed this with the new Transport Minister from Bhumjaithai Party, who wanted to speed up investment to develop the country’s infrastructure in order to boost the country’s economy in the rest of this year,” he said.

 

Meanwhile, Somkid said, he had also held talks with the new Finance Minister over launching, perhaps soon, a stimulus package to boost domestic spending by focusing on lower-income people.

 

“The Finance Ministry has a sufficient budget to boost domestic consumption for the rest of this year,” he said.

 

Somkid said if the plan was implemented, he was confident it would boost the country's economy for the remainder of 2019 and perhaps drive economic growth above 3.5 per cent.

 

Source: https://www.nationthailand.com/business/30372790

 

-- © Copyright The Nation Thailand 2019-07-11

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Many countries would love to have growth at 3.5%

Sadly it is likely that the "stimulus" will consist of easy credit for the low income earners to purchase vehicles from the flagging auto industry to be driven on an increase in roading infrastructure built rapidly but poorly by preferential contracts. The importance of economic growth is mainly for the haves reliant on the have nots being relieved of total  income via consumerism in one form or other.

Is this an effort to keep the Bht strong ?????

35 minutes ago, webfact said:

.....boost the country’s growth rate to 3.5 per cent for the rest of this year......

3.5% seems an ambitious GDP growth number. To quote:

The Economic Intelligence Center (EIC), Siam Commercial Bank's research unit, has cut its forecast for the country's 2019 economic growth to 3.1% from the 3.3% previously seen.

Rather than going up it seems to be on a permanent downhill slide despite what Somkid seems to think.

Recession looming?

Sorry not allowed to give a link to this story but it can be researched from Google.

16 minutes ago, canopus1969 said:

Many countries would love to have growth at 3.5%

They probably did when they too were still developing!

Better also talk to the new Health Minister also from Bhumjaithai Party to get the party started on legalising Hemp as I'm sure that would boost the economy and raise the living standards of Thai farmers and that would be like killing two birds with one stone.555555

24 minutes ago, mok199 said:

Is this an effort to keep the Bht strong ?????

I would suggest more of an effort to stop it bombing rapidly now that the chickens have come home to roost. 40 THB and 50 THB to the US $ and GBP respectively would put it back to more realistic levels given the poor economic performance of the criminals in the last 5 years.

 

Then once Trump is booted out next year and Brexit is cancelled 45 and 65 should be realistic again.

I have confidence we can manage the country’s economy under the coalition government to boost its growth to 3.5 per cent, after the World Bank revised down [its forecast for] Thailand’s economic growth from 3.8 per cent to [instead] 3.5 per cent in this year,” Somkid said.

 

What he really means absolutely no confidence whatsoever ???? 

17 hours ago, geoffbezoz said:

I would suggest more of an effort to stop it bombing rapidly now that the chickens have come home to roost. 40 THB and 50 THB to the US $ and GBP respectively would put it back to more realistic levels given the poor economic performance of the criminals in the last 5 years.

 

Then once Trump is booted out next year and Brexit is cancelled 45 and 65 should be realistic again.

17 hours ago, Dumbastheycome said:

Sadly it is likely that the "stimulus" will consist of easy credit for the low income earners to purchase vehicles from the flagging auto industry to be driven on an increase in roading infrastructure built rapidly but poorly by preferential contracts. The importance of economic growth is mainly for the haves reliant on the have nots being relieved of total  income via consumerism in one form or other.

Probably, since there is a strong appetite for Thai bonds denominated in THB they will sell bonds at extremely low interest rates to further develop the country's infrastructure. Hopefully it will be countrywide development and the corruption won't be worse than the benefit the development brings.

 

 

 

 

 

 

 

 

 

 

20 hours ago, webfact said:

Govt to speed up stimulus spending as growth stagnates

Economics 101: When things aren't going well throw money at the problem. Maybe the 'economists' should look at how well this has worked for other countries. The Keynes stimulus model didn't work during the great depression or most other times. It is something economists do when they don't know what else to do.

20 hours ago, Dumbastheycome said:

Sadly it is likely that the "stimulus" will consist of easy credit for the low income earners to purchase vehicles from the flagging auto industry to be driven on an increase in roading infrastructure built rapidly but poorly by preferential contracts. The importance of economic growth is mainly for the haves reliant on the have nots being relieved of total  income via consumerism in one form or other.

Sadly, consumer debt is already at 80% of GDP, so there are currently too many cracks in the dam to keep filling it up with water...

22 hours ago, webfact said:

The government will speed up its investment in infrastructure projects to boost the country’s growth rate

There is little to support for this theory.

First, Investment in infrastructure projects is "reactive" and not "proactive." It is intended to fill a perceived need of a society that already has already the economic resources in place (ie., GDP) to finance such projects.

Second, the financial return on infrastructure investment is long-term and not short term from a national perspective (there will be "locality" short term economic benefits). Revenues from the investment must not only over the life of the project recover the capital investment and cost of operations, but provide a reasonable return on investment that would contribute to the GDP. Such return becomes even more high risk when capital is borrowed from foreign sources, ie., China.

Third, during periods of national economic reversals (especially from factors beyond the reach of an infrastruture project such as trade wars), infrastructure revenues tend to be 'inflexible" and thus unable to provide any additional economic relief. Furthermore, in declining national economic fortunes, infrastructure investment is more likely to further exacerbate or accelerate a drain on a nation's economic resources, fall into disrepair and nonfunctionality - a "white elephant" phenomenon.