The H1N1 flu pandemic could cause the economy to contract by 2.2 percentage points this year in a worst-case scenario, the Fiscal Policy Office says.
The FPO, a Finance Ministry unit, estimates that the flu could cause the economy to contract by 0.51 to 2.2 percentage points. A base scenario, where the flu has a high immediate impact but a rapid recovery is seen, would hurt the economy by 0.85 percentage points.
The FPO last month estimated that the Thai economy would contract by 3% this year, with a range of -2.5 to -3.5% overall. But the forecast did not include estimates on the impact of the flu, which has so far claimed the lives of 65 people in Thailand with over 8,800 local cases recorded.
Somchai Sujjapongse, the FPO's director-general, said that while global economic conditions were showing signs of improvement, fiscal spending needed to be accelerated to help mitigate the extent of the economic downturn this year.
Budget disbursements by state agencies as of June totalled 67% of total expenditures budgeted for the current fiscal year ending September, just under the 69% target.
"Under the current economic conditions, spending should be faster and greater than it is now,'' Dr Somchai said.
From March to June, budget disbursements totalled 442.2 billion baht, up 4.1% from the same period last year. Spending included 342.8 billion baht for current expenditures, including civil service salaries, and 80.2 billion for investment.
Of the 116 billion baht supplementary budget, only 60 billion or 50% has been spent to date. The stimulus budget included funding for public subsidies on water and electricity, free education for schoolchildren and a 2,000-baht cheque handout for workers earning less than 15,000 baht per month.
Economic growth fell sharply in the first half due to double-digit declines in exports and tourism as a result of the global economic downturn and domestic political instability.
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- Writer: Bangkokpost.com
