Bank of Thailand gauges effect of handout
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Bank of Thailand gauges effect of handout

Could have 3% impact on GDP

The central bank assesses the 10,000-baht digital wallet handout would contribute 3% to GDP growth next year.
The central bank assesses the 10,000-baht digital wallet handout would contribute 3% to GDP growth next year.

The Bank of Thailand expects the Pheu Thai Party's proposed 10,000-baht digital handout scheme will require a total budget of around 500 billion baht, adding 3% to GDP growth next year.

The central bank projects the GDP contribution will be dependent on the economic multiplier, said Sakkapop Panyanukul, director of the economic and policy department at the bank.

The 3% GDP contribution is based on the Bank of Thailand using a one-time cash transfer multiplier model.

The regulator wants to wait for more details on the scheme before making a definitive forecast, he said.

According to the scheme, citizens age 16 and older are given a digital wallet of 10,000 baht to be spent within six months at shops within a four-kilometre radius of where they live.

The party said the scheme is a one-time giveaway aimed at spurring economic activity and driving GDP growth to 5%.

The scheme is expected to be implemented next year.

Mr Sakkapop said even though the consumer sentiment index for August was lower than for July because of concerns about the formation of a new government, the index should improve for the next three months after an administration is formed.

The central bank is waiting for the new government to present its economic policy before it makes predictions about the Thai economy next year.

The bank's most recent projection for 2024 GDP growth was 3.8%.

He said the central bank may slash its growth forecast for 2023 from 3.6%, mainly because of slower than expected expansion of external demand.

Given the global economic slowdown and China's sluggish recovery, Thai exports are expected to contract this year.

Thai GDP growth in the second quarter this year was 1.8%, lower than the central bank's assessment.

However, internal demand has been showing positive momentum and could support Thai economic expansion, along with the tourism sector, said Mr Sakkapop.

Tourism is still the key fuel supporting the Thai economy, with foreign arrivals tallying 15.4 million from January to July.

"Even though foreign tourist arrivals have continued to increase, spending per person is lower than expected, as most of them are short trips," he said.

The central bank reported yesterday Thai economic and monetary conditions for July indicate a continued recovery.

Private spending increased for both consumption and investment, with consumption benefiting from a long holiday in July.

Private consumption for the month grew 7.3% year-on-year, rising from 5.5% the previous month.

Mr Sakkapop said the number of foreign tourists, after seasonal adjustment, continued to increase, which supported activities in the service sector.

Foreign arrivals increased to 2.49 million in July, up from 2.24 million the previous month, mainly attributed to tourists from China, Malaysia, Europe and Russia.

However, the value of merchandise exports excluding gold contracted by 4.5% in July year-on-year, easing from a 5.9% contraction in June, as electronics and agricultural products dipped in part from weaker demand from trading partners.

Kiatnakin Phatra Securities Research cut its Thai growth outlook for this year from 3.3% to 2.8% after the growth rate in the second quarter was lower than expected.

In addition, the research arm revised its 2024 growth projection from 3.6% to 3.3% because of higher risk from external factors, which could dampen the export and tourism sectors.

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