Analysts are expecting the government to introduce more stimulus following the first meeting of economic ministers yesterday under the Srettha Thavisin-led administration, saying a digital wallet alone cannot revive the slowing economy.
Tharavit Prayochvibul, senior dealer and chief officer for derivatives at Bangkok Bank, said the Thai economy is projected to expand by about 2.5-2.6% this year, following expansion of 1.5% in the first quarter.
However, more economic stimulus measures are needed to prop up the economy as government spending and foreign direct investments are not as strong as in the past, he added.
"The 2.5-2.6% growth rate is quite an optimistic estimate based on the economic fundamentals. But we do think more economic stimulus will be launched because implementation of the digital wallet alone is insufficient to boost the economy," Mr Tharavit said.
The 10,000-baht digital handout, meanwhile, must be well planned and distributed to reach small businesses to ease liquidity problems they are facing, he noted.
Chak Reungsinpinya, head of research at Maybank Securities (Thailand), expects the long-term equity fund (LTF) to be reintroduced to support the Thai stock market, along with accelerations of government budget disbursement.
The brokerage forecasts that a reintroduction of LTF could lead to inflows into Thai equities of 60-80 billion baht.
"Since the 2024 government budget was approved on April 26, we have seen a sharp acceleration in the disbursement rate, particularly for capital expenditure or government spending," Mr Chak said.
"We think disbursement will remain elevated in the coming weeks. With this, we think total disbursement (including purchasing orders) could reach 83% by the end of the fiscal year in September, matching the level seen in fiscal year 2020 when the budget was also delayed."
In addition to accelerating cash outlays, the government is also planning to increase the 2024 budget. Preliminary figures suggest the additional budget for this fiscal year could reach as much as 122 billion baht, which is another 3.5% on top of the existing budget of 3.48 trillion baht. The other 53 billion baht will be allocated from other parts of the 2024 budget.
"If the increased budget is approved by mid-August, according to the government's plan, then we could see additional spending by the start of October even if the digital wallet scheme may not pan out exactly as the government has initially envisioned," Mr Chak said.
Maybank believes that Thai GDP growth has already bottomed out in the first quarter at 1.5%. Mr Chak said: "Looking ahead, we forecast Thailand's GDP to grow 1.8% in the second quarter, then accelerate to 3.2-3.3% in the third and fourth quarters, respectively."