The economy could grow by slightly more than 4% this year, driven by measures to boost the property sector approved on Tuesday, the Ministry of Finance said, as the government attempts to revive economic activity.
The measures are expected to lead to about 800 billion baht in property transactions, more than 400 billion baht in investment and 120 billion baht in consumption, said Pornchai Thiraveja, head of the ministry’s Fiscal Policy Office.
“With the measures, the economy this year will grow a little over 4%,” he said, adding the stimulus would lift growth by 1.7 to 1.8 percentage points.
The World Bank recently cut its forecast for Thailand’s GDP growth in 2024 to 2.8%, from 3.2% predicted earlier, citing a global trade slowdown and delays in the fiscal budget disbursement.
Lavaron Sangsnit, the ministry’s permanent secretary, said on Tuesday that using fiscal policy to stimulate the economy was still necessary. “I hope the economy will return to appropriate growth levels again,” he said.
Southeast Asia’s second-largest economy expanded 1.9% last year, slower than the 2.5% rate seen in 2022.
Prime Minister Srettha Thavisin said this week that the economy needed big stimulus measures, as the government also forges ahead with a delayed flagship digital wallet handout scheme worth 500 billion baht in the final quarter of 2024 to boost consumption.
The property measures approved by the cabinet on Tuesday include reduced transaction fees for houses worth up to 7 million baht, with ownership transfer fees and mortgage registration fees cut to 0.01%, from 2% and 1%, respectively.
Currently, only residential properties valued at a maximum of 3 million baht are eligible for the fee cuts.
The government will also offer home loans worth 30 billion baht from state banks, tax breaks for some property developers as well as tax deductions of up to 100,000 baht for people who want to build their houses.
Deputy Finance Minister Krisada Chinavicharana said the cabinet also asked relevant agencies to consider easing rules on foreign ownership of Thai property.
The ministry will also ask the Bank of Thailand to relax loan-to-value rules for property, he added. Mr Srettha earlier said the LTV rules should be removed.
The cabinet also raised the threshold of value of properties developed by companies that are eligible for Board of Investment tax incentives to 1.5 million baht from 1 million baht.
The measures will help lift industry sentiment and speed up the transfers of houses in the 3 million to 7 million baht price range, said Veeravat Virochpoka, an analyst at Finansia Syrus Securities.
Buyers of those residential properties are the major customers and have a low rejection rate for mortgage loans, he said.
The government estimates the fee reductions will result in foregone revenue of about 2 billion baht.