The government's 2-trillion-baht infrastructure investment plan could drag Thailand out of the "middle-income trap" within a decade, a Finance Ministry think-tank says.
Kanit: ‘Per capita income will rise’
Speaking at a forum during the government-sponsored Thailand 2020 Exhibition, Kanit Sangsupan, director of the Fiscal Policy Research Institute, said the investment plan would raise annual per capita income from US$5,600 (166,000 baht) to $10,000 within 10 years.
The increase would push the economy out of the middle-income trap, he said, referring to the situation when a country's growth plateaus and eventually stagnates after reaching middle-income levels.
The plan would inject about 300 billion baht into the economy a year, which could contribute a 0.5-1% lift to gross domestic product (GDP), Mr Kanit said. The boost would see real GDP growth rise to about 5.5-6% and nominal growth, which accounts for inflation, rise to 8%.
Growth in that range would drive up Thailand's per capita income and help it escape the middle-income range, Mr Kanit said.
The plan to borrow 2 trillion baht to finance massive infrastructure projects is expected to be debated by parliament in the third quarter of this year, and if approved the investment could begin before year's end, Mr Kanit said.
Somchai Sujjapongse, director-general of the Fiscal Policy Office, said more than 100 billion baht would likely be borrowed in the first year, with additional loans being taken out over subsequent years.
The investment will ensure the boost of people's livelihood, he said.
Director-general of the Public Debt Management Office Chularat Suteethorn said the investment is expected to drive public debt beyond 50% of GDP.
The legal debt ceiling is capped at 60% of GDP.
Public debt stood at 45% of GDP on Jan 31, which was still well below Japan's 200% and Malaysia's 53%.
Current low lending costs also make it a good time for government investment, Ms Chularat said.
The interest rate for government bonds remains low at 3.6% for 10-year notes, 4.2% for 30-year notes and 4.4% for 50-year notes.