FPO: Stimulus can boost GDP to 2%

FPO: Stimulus can boost GDP to 2%

Economic growth is likely to reach 2% this year if stimulus measures that will come into force in the fourth quarter are taken into account, says the Finance Ministry's think tank.

Without these short-term measures, GDP will expand by at least 1.6% this year, said Kritsada Jinavijarana, director-general of the Fiscal Policy Office (FPO).

The stimulus will include accelerating disbursement of the leftover budget of 90 billion baht from fiscal 2005-13, another 100 billion from fiscal 2014 and budget expenditure in the first quarter of fiscal 2015.

Sommai: Big rise in growth next year

Mr Kritsada said exports, accounting for 70% of GDP, were likely to record minimal growth this year, below the FPO's forecast of 1.5%, so the stimulus must be efficient in driving growth to offset weak exports.

The FPO is due to release its updated economic forecast next month.

It has projected growth of between 1.5% and 2.5%, with 2% as average growth.

Finance Minister Sommai Phasee said economic growth could be lower than 2% this year, as Thailand had faced a double whammy from the slow global economic recovery and a lacklustre domestic economy plagued by recent political uncertainty.

However, growth is expected to rise to 4.5% next year on the back of the planned economic stimulus, accelerated budget disbursement and the launch of projects that have already won investment incentives from the Board of Investment, he said.

Unobligated and leftover budgets offer funding for the stimulus package, which will focus on creating jobs through construction of hospitals and schools.

Manas Jamveha, director-general of the Comptroller-General's Department, said 200 billion baht of the budget that has not been drawn down in fiscal 2014 ending today could be set aside for the stimulus package, provided the money had not been committed to any projects.

Mr Kritsada said domestic consumption, exports, tourism and private investment remained in the doldrums last month.

Revenue collection from value-added tax, an indicator of domestic consumption, shrank 0.8% year-on-year in August after July's 1.4% contraction.

Taxes on property transactions, a gauge for construction activities, fell by 14.1% compared with July's 4.5% contraction.

In the important tourism sector, 2.08 million foreign visitors were recorded last month, down by 11.9% year-on-year but up by 2.1% month-on-month.

Mr Kritsada said the country's economic stability remained robust with low inflation of 2.1%, an unemployment rate of 0.7% of the workforce and high foreign reserves of $168 billion, which is 2.7 times higher than the country's short-term amount of foreign debt.

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