Report plays down growth prospects from Thai govt stimulus

[webfact]

Report plays down growth prospects from govt stimulus
The Nation

BANGKOK: -- The government's new stimulus package announced last week is helpful but it is unlikely to boost growth as much as many people expect, according to a new Credit Suisse report.

The package comprises a Bt324-billion fiscal programme and Bt40 billion in one-off payments to assist 3.4 million farming households.

Santitarm Sathirathai, a research analyst at Credit Suisse, said in the report that the package implied that total spending from October to December would be 43 per cent of the full-year budget compared to 33 per cent disbursed during the same period last year and the 24-per-cent long-term average.

Santitarm said that assessment was based on Prime Minister General Prayut Chan-o-cha's earlier announcement that his government was looking to boost last-quarter spending to around Bt1.1 trillion. The fourth quarter is the first quarter of the fiscal year 2015.

"We believe this is essentially the details of that programme, with Bt324 billion probably being the amount that will be spent on top of the regular spending," he said, adding that there needed to be fiscal prudence and transparency.

Santitarm said the implementation of the package would be the key challenge. If fully implemented, the year-on-year increase in fiscal spending would be sizeable but not unprecedented.

He said there were concerns that some market observers might have overestimated the medium-term growth impact of the programme.

Even if the government successfully executed the stimulus in full, the year-on-year increase in government spending (nominal) would be around 30 per cent in October to December. It would be about half of the growth rate observed in October to December in 2012.

The current version of the programme could boost gross domestic product in 2014 at the expense of 2015 growth as spending that would have happened next year was being shifted to this calendar year.

Santitarm said to prevent this from happening, the government needed to deliver a supplementary budget that expanded its deficit beyond the previous Bt250-billion target but the government had not indicated this would be done.

He said the Bt40 billion in one-off cash payments to farmers, which equated to 0.3 per cent of 2014 GDP, was needed because farmers were being squeezed by weak rice prices and higher cost of production.

However, the amount was probably too small to fully offset the hit the farmers took as a result of the scrapped rice-pledging scheme.

It was difficult to estimate the resulting short-term negative impact on growth given the scheme had severe leakages.

"We think the [stimulus] programme is helpful in boosting 2014 growth, and see small upside risk to our 0.9-per-cent GDP projection for 2014, though we still doubt that the economy can achieve the 1.5-per-cent growth the Bank of Thailand is looking for," he said.

Source: http://www.nationmultimedia.com/business/Report-plays-down-growth-prospects-from-govt-stimu-30244818.html


-- The Nation 2014-10-06

[cloudhopper]

"He said the Bt40 billion in one-off cash payments to farmers, which equated to 0.3 per cent of 2014 GDP, was needed because farmers were being squeezed by weak rice prices and higher cost of production.

However, the amount was probably too small to fully offset the hit the farmers took as a result of the scrapped rice-pledging scheme.

It was difficult to estimate the resulting short-term negative impact on growth given the scheme had severe leakages."

Translation - it is impossible to accurately asses the damage to the Thai economy and particularly to the farmers caused by fraud and theft in the rice-pledging scheme. Hope they can plug a few of these leaks before the next round of freshly printed baht gets distributed.

Deficit spending is code for currency devaluation.

[Cake Monster]

The Government still have a 11.5% shortfall in Tax revenues for the 2014 fiscal year end to make up somehow as well.

A huge drop in revenue income to absorb.

[Suriya4]

"He said the Bt40 billion in one-off cash payments to farmers"

What about giving a once off payment to ALL people in Thailand.

This is unfair, non rice farmers need help too.

[rickirs]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

"He said the Bt40 billion in one-off cash payments to farmers"

What about giving a once off payment to ALL people in Thailand.

This is unfair, non rice farmers need help too.

You mean, like with the rubber farmers?

UBON RATCHATHANI, 4 September 2014 (NNT) -- The province of Ubon Ratchathani has extended 1.5 billion baht worth of loans to rubber farmers.

The province has given the nod to more than 15 billion baht worth of loans to rubber tapper cooperatives. The loan is intended for them to buy rubber from farmers and put it into the processing system, in order to help shore up the prices of natural rubber.

According to Governor Serm Chainarong, the province has followed the government's policy to help rubber farmers who have been seriously affected by low prices of rubber. The government has also demanded that the loan program be transparent and free of fraud of any kind.

-- NNT 2014-10-04

[Thai at Heart]

"He said the Bt40 billion in one-off cash payments to farmers"

What about giving a once off payment to ALL people in Thailand.

This is unfair, non rice farmers need help too.

But if farmers stop producing then CP with have a problem. And when CP has a problem, the Thai government really has a problem.

CP paid good money to get its farmers on the farm.working. and that's the way it's going to be.

[cloudhopper]

"He said the Bt40 billion in one-off cash payments to farmers"

What about giving a once off payment to ALL people in Thailand.

This is unfair, non rice farmers need help too.

Printing and distributing money to everyone won't help anyone either and will only result in price increases and supply shortages of both commodities and labor.