K-Research: Next regime needs stimulus
The new government is likely to need short-term economic stimulus packages to boost growth momentum as the global economy lags, says Kasikorn Research Center (K-Research).
The next government will inherit a global economic slowdown caused in part by the Sino-US trade dispute, which has dented global trade and Thai export growth, said Nattaporn Triratanasirikul, assistant managing director of K-Research.
With anticipated headwinds, short-term economic stimulus packages could be necessary for the two main political parties vying to form a government coalition, Ms Nattaporn said.
Such packages could focus on the rural economy to boost household consumption, she said.
If the new government continues the existing economic schemes of the current regime, this would shore up the country's GDP value by 20-30 billion baht and contribute to economic growth of 0.2-0.4%, Ms Nattaporn said.
The three main stimulus schemes adopted by the military-led government are agricultural price subsidies, state welfare smartcards and tax deductions. These measures have gone to 15.6 million, 14.5 million and 10.3 million people, according to K-Research.
The new government, however, may not use all of the existing economic stimulus schemes, Ms Nattaporn said.
"If these economic stimulus schemes are used, results will occur in the fourth quarter and they will lend support to annual GDP growth by 0.2-0.4%," she said. "[The schemes] will improve economic growth momentum in the second half, under the assumption that a new government is formed by June."
According to the unofficial results released by the Election Commission last Thursday, the Palang Pracharath Party won more than 8.4 million votes, while the Pheu Thai Party was the winner in terms of seats with 137, 19 more than the PPRP (assuming 21 party-list seats for the PPRP).
Official election results will be announced by May 9.
Based on a K-Research survey conducted a day after the March 24 election, 47.5% of respondents had higher economic confidence, while 35.7% expressed lower confidence and 16.8% were neutral.
The research house has, however, revised down Thailand's economic growth forecast to 3.7% from 4% this year, with a base-case growth range projected at 3.2-3.9%.
Delays in the new government's formation will cause the country's annual GDP growth to ebb to 3.2%, while better-than-expected Thai shipment growth will propel the growth to 3.9%, K-Research said.
The lower growth forecast is mainly due to the Sino-US trade spat, which will further dent Thai export growth, Ms Nattaporn said. Thai exports are projected to expand by 3.2% in 2019, down from 4.5% seen earlier.
In 2018, the economy expanded 4.1% year-on-year, inching up from a revised 4% for 2017, the quickest expansion in six years, according to the National Economic and Social Development Council.
Export value grew by 7.7%, while private consumption and total investment increased by 4.6% and 3.8%, respectively.