Uttama says further stimulus ready
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Uttama says further stimulus ready

Finance Ministry has enough fiscal space

Finance Minister Uttama Savanayana
Finance Minister Uttama Savanayana

The Finance Ministry has enough fiscal space available for additional stimulus measures if needed to avert recession, says Finance Minister Uttama Savanayana.

"The stimulus measures that were recently approved by the cabinet might not be only one shot, and we're ready to launch an additional stimulus if needed," he said.

The ministry has ample room to do so if the global economy becomes more volatile.

The government must mobilise to stop the country from entering a recession because it is difficult to pull the economy out of such a condition, Mr Uttama said.

"We don't know yet how the global economy will respond in the third and fourth quarters," he said. "We must develop our immunity to prevent the domestic economy from stalling, or investment will shrink and demand will be tepid. If that happens, the government will need to use a lot of resources to turn around the economy."

The economy can rebound at a fast pace if the country can manage itself during the slowdown, Mr Uttama said.

The government bond yield curve briefly inverted on Monday as the two-year bond yield was higher than the 10-year yield, marking a first since the devastating floods of 2011.

The inverted yield curve signalled escalating concerns about a possible recession as trade tension deepens, the global economy grows at a slower pace and the economy loses momentum.

The economy grew by 2.3% year-on-year in the April-to-June quarter, easing from 2.8% growth in the first and marking the slowest pace since the third quarter of 2014. For the first half of the year, the economy grew by 2.6% on the same period last year.

The global stock market was rattled by the US-China tit-for-tat tariffs, which appear to be a risk that could last for a while, Mr Uttama said.

Amid global uncertainties, the government is able to push short-, medium- and long-term policies at full throttle to cushion the impact on the economy, he said.

Public debt, which is a common indicator of the government's solvency capability, was 6.88 trillion baht at the end of June, down from 6.98 trillion baht the preceding month. The ratio of public debt to GDP fell slightly to 41.3% at the end of June from 42% a month earlier, according to PDMO data.

Nearly 90% of public debt was long-term liabilities, while a meagre 3.2% of the total debt was denominated in foreign currency.

Mr Uttama said Moody's Investors Service and Fitch Ratings recently raised Thailand's rating outlook to positive from stable, as fiscal space is flexible enough to buffer impacts from the global economy and they believe that Thailand's forward-looking strategies can sharpen its competitive edge.

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