The Fiscal Policy Office (FPO) is likely to slash its economic growth forecast this year from 3.7%, but the revised figure would remain higher than the Bank of Thailand's new forecast of 3.1%.
Even though a series of government stimulus packages could not prevent a sluggish economy because of a drop in shipments, they would partly support economic expansion prior to the launching of infrastructure projects, said the FPO.
Exports contracted for two consecutive years, falling 0.3% in dollar terms in 2014 before nosediving 5.6% in 2015.
For 2016, the FPO projected a 0.1% expansion in shipments, but they contracted 8.9% the first month this year.
The Finance Ministry expects Thai shipments in February will see slight growth of 2% excluding gold and oil exports.
Somchai: Mulling cash handout details
Somchai Sujjapongse, finance permanent secretary, said new measures such as the Pracha Rat initiative will have a positive effect on the GDP of 0.07% this year and 0.08% in 2017.
The latest measure involves a 1,000-baht cash giveaway for C7-grade government officials and lower as well as Thai citizens earning annual income of 80,000 baht or less. The ministry is cautiously considering the details to avoid loopholes before it is implemented, Mr Somchai said.
The funding source for the cash giveaway will be the Finance Ministry itself as it believes it can save 30 billion baht from big-budget government projects through its e-bidding system.
Recently, Finance Minister Apisak Tantiwong told the media it was imposing a short-term tariff stimulus measure by allowing a personal income tax deduction for food and travel expenses during the Songkran holiday. The deduction has a ceiling of 15,000 baht and is meant to quickly boost domestic consumption.
In a related development, the ministry yesterday signed a memorandum of cooperation with the Secondary Mortgage Corporation and the Korea Housing Finance Corporation (KHFC) to share knowledge, especially regarding reverse mortgage methods, which should be useful in serving Thailand's ageing economy in the future.
A reverse mortgage is a special type of home loan designed for elderly homeowners so they do not have to pay their monthly mortgage payments. Homeowners can borrow money from the financial institution against the value of their home with no repayment of the loan until the borrower dies or the home is sold.
The ministry is interested in reverse mortgages as the percentage of Thailand's population aged 60 and over is increasing. The Secondary Mortgage Act must be amended to allow the new instrument.
In the US the federal government allows people over 72 to request a reverse mortgage, while in Korea the minimum age is 65.
KHFC has completed 23,000 reverse mortgage deals, which have financially supported its participating retirees with US$1.3 billion during its first seven years of operation.