BoT sees small stimulus impact
The Bank of Thailand's initial estimation has the government's new economic measures contributing less than half a percentage point of economic growth.
The planned stimulus is worth 316 billion baht and focuses on cash giveaways, but the economic bump will not be significant, said Don Nakornthab, senior director of the economic and policy department at the central bank.
The Finance Ministry has forecast the new stimulus package to provide a boost of 0.5 percentage points for the economy in 2019.
Kobsak Pootrakool, deputy secretary-general for political affairs to Prime Minister Prayut Chan-o-cha, expects the stimulus to boost growth by at least 0.3 percentage points.
The central bank is likely to cut its forecast next month for economic growth this year from 3.3%, Mr Don said, following disappointing GDP figures in the second quarter.
The Bank of Thailand cut its GDP growth view for 2019 in June to 3.3% from 3.8% and the its export growth forecast to zero from 3%.
The economy grew by 2.3% year-on-year in the second quarter, down from 2.8% in the first quarter and the slowest pace in 19 quarters.
Mr Don said the economy must expand by 3.4% in the second half to produce full-year growth of 3%. He said 3.4% growth from July to December is possible because of a low-base effect.
Against the economic backdrop, the country's current account surplus is expected to continue in the next several years, Mr Don said.
Although Thailand's currency account surplus is expected to gradually narrow, the decline will be minimal because the larger service account surplus from the tourism sector will partly offset the lower trade surplus, he said. The baht will continue to rise against the greenback in the above scenario, unless the US dollar reverses the depreciation trend.
The central bank has several instruments in its toolkit, including monetary policy and baht intervention to manage capital movement, both onshore and offshore, to tame the baht's gain.
"The central bank is considering further relaxing conditions related to individual investment abroad to facilitate capital outflows as a means to weaken the baht," Mr Don said.
Mr Kobsak said the 316-billion-baht stimulus will boost full-year growth to 3%.
The government is preparing various measures to sustain the country's economic growth in the long run, he said. The first package with a focus on low-income earners was approved by the cabinet yesterday.