Thai govt plans more stimulus packages to prop up economy

[webfact]

Govt plans more stimulus packages to prop up economy

By The Nation

 

Kobsak Pootrakool, secretary to the Council of Economic Ministers

 

More stimulus packages are in the pipeline to counter the impact of the Covid-19 outbreak, a senior official said, while an economist has urged the government to expand the fiscal deficit to up to Bt 600 billion.

 

Kobsak Pootrakool, secretary to the Council of Economic Ministers, said that economic ministers would consider extra packages as relief for certain sectors hit hard by the coronavirus pandemic after the government had recently implemented a stimulus package.

 

He said that the spread of the coronavirus is expected to end by the end of June and after that it would be a recovery phase for the economy.

 

The government had implemented 14 measures on March 6 to counter the virus impact, but they may not be adequate, according to Korbsak who is also deputy secretary-general to the Prime Minister for Political Affairs.

 

He said currently half of the foreign tourists visiting Thailand las year still visited this year, but they are all expected to leave soon, resulting in an even larger impact on the already reeling tourism industry. The number of tourists last year touched 39.7 million, up 4.2 per cent year on year, while total revenue was Bt1.93 trillion, up 3 per cent over 2018.

 

If things go as forecast, the Thai economy will return to normal in the fourth quarter of this year, he said.

 

However, the government has to closely monitor the situation as Europe has become the epicentre of the pandemic and the United States has declared a national emergency in its efforts to deal with the infections. “The virus outbreak could stay with us for the whole year, then we have to think about how we could do more to shore up the economy,” he warned.

 

Phatra Securities has cut its gross domestic product forecast from 1.4 per cent to a contraction of 0.4 per cent due to the impact of the coronavirus outbreak.

 

 

The tourism industry, which accounts for 12 per cent of GDP, will be hard hit as the number of tourists will drop by 50 per cent in the first half of the year, said Phatra. Then it will slowly recover in the third and fourth quarters and lower oil prices will have little positive impact on growth. For the full year, the number of visitors are expected to drop by 25 per cent over 2019, said Phatra.

 

The US Federal Reserve is expected to cut its benchmark interest rate to zero at its meeting on March 25. The Fed's move would press the Bank of Thailand to lower by 25 basis points the key policy rate to 0.75 per cent, which will be a historic low, added Phatra.

 

Meanwhile, Anusorn Tamajai, director of the Economic and Business Research Centre at Rangsit University, said that the BOT may need to introduce quantitative easing, or bond purchases in the next few months, as the central bank may need to inject large liquidity into the market to support businesses as the Fed, Bank of Japan and European Central Bank have been doing. The Thai central bank may also need to drastically cut policy rate, he suggested.

 

The Finance Ministry should consider increasing the fiscal deficit from Bt450 billion to Bt600 billion for the current fiscal year in order to have more funding to fight the coronavirus and shore up the economy. More stimulus package should prevent the economic growth rate from going below 1 per cent, he said.

 

If the government can maintain economic growth at around 1 per cent this year, public debt would stay at below 50 per cent of GDP. However, if economic conditions deteriorate further, debt-to-GDP could shoot up to 70-80 per cent of GDP in next five to seven years, he warned. As of January 31, public debt-to-GDP was 41.3 per cent, totalling Bt 6.98 trillion, versus Thailand’s GDP value of Bt 16.9 trillion. The government targets public debt at below 60 per cent of GDP given its fiscal prudence benchmark.

 

Source: https://www.nationthailand.com/business/30384138

 

-- © Copyright The Nation Thailand 2020-03-16

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[Justgrazing]

2 minutes ago, webfact said:

He said that the spread of the coronavirus is expected to end by the end of June and after that it would be a recovery phase for the economy.

 

3 minutes ago, webfact said:

 

If things go as forecast, the Thai economy will return to normal in the fourth quarter of this year, he said.

Pure wishful thinking that things will be returning to normality in 3 mths considering how this virus situation seems to be gathering a worsening global pace on a daily basis now .. 

[leeneeds]

A blowout given this governments squandering of public monies, with their history, 

oh to have saved the money that we outlandishly spent on military hardware.

[saengd]

Take note of the ex. rate forecast for USD/THB at 2021E and the trend between now and then, exports and current account values. Note also the total absence of Armageddon or Baht crash! 

Edited March 15, 2020 by saengd

[legend49]

Cant make up their minds, other day SET and economy were strong? Why does it need propping up. We wont talk about the over valued baht.

[christophe75]

When the thai officials talk, think, consider, do press conferences and meetings, and mull several "plans"....

 

The FED cuts interest rates to 0  (New Zeland did a large cut this week end as well) and launches QE5, with 800 billions to buy up all the sxxxx paper around.

 

We agree : it won't be enough. The virus does not care about "balance sheets" and "papers".

 

But... Thailand is doing nothing.

 

They do nothing to fight seriously againts the virus, and nothing to keep the system afloat.

 

This time, the thai people won't forget and won't forgive.

 

Say bye bye to the "Mandate of Heaven"....

Edited March 16, 2020 by christophe75

[RichardColeman]

Confused by a current account ($) % of GDP drop of 33% with only a supposed hit of -3% across the board on everything else

[saengd]

24 minutes ago, RichardColeman said:

Confused by a current account ($) % of GDP drop of 33% with only a supposed hit of -3% across the board on everything else

It should read, "current account surplus" which is historically around 7% of GDP or circa USD 19 bill. So the fall in the current account is of the surplus which is a fairly small number by comparison.

 

GDP = USD 500 bill, imports 240 bill., exports 250 bill. but there's more to the current account than just trade.

[Vigilante]

Truth is..

Faced with an unpredictable pandemic, all projections are pure speculation.

Unless a cure/vaccine is found we are in uncharted territory

This applies to all countries obviously

This being said, I believe the virus is less dangerous/infectious than most people believe.

 

Thailand should be teeming with it after millions of Chinese visited these shores since Nov.

...and although the official figures are being massaged, I believe they are relatively low.

 

Lastly...with the Fed (and others) pouring trillions into the markets, the thai response is just a face-saving exercise

Supporting directly the workers in the sectors hit by the slowdown will be more effective

 

 

 

 

[yellowboat]

Don't break down the wall.  Scatter some crumbs instead.

[Isaan sailor]

Just let the Baht fall back to normal, and things we work out OK.

 

[yourauntbob]

11 hours ago, Isaan sailor said:

Just let the Baht fall back to normal, and things we work out OK.

 

If they let the baht float with no interference, it wouldn't "fall back" to normal, it would rise.  

 

With all the QE and other monetary measures of the EU/USA, Thailand has needed to print money like everyone else just to keep the currency weak.   but as i have stated in this forum numerous times, a weak currency is NOT a good thing.  If it was, they could simply accept blades of grass for their work and demand would go through the roof.

[saengd]

7 hours ago, yourauntbob said:

If they let the baht float with no interference, it wouldn't "fall back" to normal, it would rise.  

 

With all the QE and other monetary measures of the EU/USA, Thailand has needed to print money like everyone else just to keep the currency weak.   but as i have stated in this forum numerous times, a weak currency is NOT a good thing.  If it was, they could simply accept blades of grass for their work and demand would go through the roof.

I'm not sure it would actually go through the roof although I agree it would surge. The managed float or dirty peg system of foreign exchange management still means the Baht must track USD for trade purposes, if it doesn't the value of exports will take a beating and we're right on the edge of that currently. The other need is for THB to stay within range of other ASEAN currencies, if it doesn't it violates the ASEAN agreement. Fortunately, most of the other ASEAN currencies also need to track USD, for the same reasons. 

 

The future points at Asian countries having less reliance on USD, membership of the Asian Development Bank might be a vehicle for this and Thailand already has SDR's. Another vehicle is the expanded use of currency swaps, particularity with China, this encourages trade without needing USD to settle the trade bills, unfortunately Thailand still uses USD to settle about 60% of trade bills so the reliance on USD remains heavy.

[Don Mega]

I was expecting an announcement to waive visa on arrival for 3 months.

[fforest1]

Govt plans more stimulus

 

I know this bar girl that gives very good stimulus....

[WalkingOrders]

This is no easy task attempting to shore up the Thai economy through this mess. I can only wish the best to all Government officials, businesses, and people in Thailand to come through this as best they can. My hope is that suffering is minimized, and no one takes advantage of the weakness of others during this crisis.

[WalkingOrders]

On 3/16/2020 at 9:29 PM, yourauntbob said:

If they let the baht float with no interference, it wouldn't "fall back" to normal, it would rise.  

 

With all the QE and other monetary measures of the EU/USA, Thailand has needed to print money like everyone else just to keep the currency weak.   but as i have stated in this forum numerous times, a weak currency is NOT a good thing.  If it was, they could simply accept blades of grass for their work and demand would go through the roof.

I expect a temporary drop in baht against USD perhaps 33...max in crisis 34, but I think that is stretched, perhaps out to a year, and as this may trigger a longer global lag, baht stabilizing at 30-31 long term, rather then the 29 which has been a long term projection showing from before the virus kicking in.

[Grumpy John]

My wife is a mango farmer and we should be in the middle of mango selling season but buyers are thin on the ground and those remaining have slashed the price in half.  She stands to lose 100.000 baht + .  Would be nice if the government stumped up with some funds to soften the impact of the disaster.