'Economy crying for stimulus'
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'Economy crying for stimulus'

Digital baht handout plan seen as saviour

People visit a trade fair in Bangkok in June. (Photo: Somchai Poomlard)
People visit a trade fair in Bangkok in June. (Photo: Somchai Poomlard)

The government insists the economy is in a crisis and requires a stimulus package to prevent the situation from deteriorating and a recovery harder to mount.

Such sentiments emerged amid a growing debate on the state of the economy, with some questioning whether it is genuinely in crisis and in need of the government's proposed 10,000-baht handout scheme, which would entail a loan of 500 billion baht.

Prommin Lertsuriyadet, secretary to the Prime Minister, told the Bangkok Post that several indicators show economic growth is slower than other countries in the region and household debt is rising, firmly putting the nation in the grip of a crisis.

Without intervention to stimulate the economy, the situation will go downhill rapidly, he said.

Dr Prommin said the government sees "every single individual as an economic engine to create growth" and the 10,000-baht digital money handout scheme, backed by blockchain technology, is deemed the most effective way to restart the economy.

He added the policy was announced in parliament and the government has an obligation to implement it.

Surapong Suebwonglee, a member of the national committee on soft power development, wrote on Facebook on Tuesday to justify the implementation of the digital currency giveaway and counter objections by a group of 99 academics including former governors of the Bank of Thailand.

He cited the small GDP growth, slower money supply growth that has affected liquidity, and ballooning household debt and GDP growth projected by freelance economist Chartchai Parasuk as causes for concern.

In a post that likened the country's economy to a bleeding patient, Dr Surapong said this year's GDP growth was likely to be below 2%, or lower than previous forecasts.

Last year, the Finance Ministry's Fiscal Policy Office projected GDP growth this year would reach 3.85% before later revising the figure down to 2.7%. The Bank of Thailand has predicted 2.8% growth.

However, with GDP growth in the first and second quarters at 2.6% and 1.8%, respectively, it is unlikely the overall growth for 2023 would reach 2.8%, Dr Surapong said.

He cited comments by Mr Chartchai, who predicted growth in the third semester of 1.4% or 1.8% for the year as a whole.

Dr Surapong said GDP growth corresponds to money supply growth. In the third quarter, the latter grew 1.8%, compared to 3.3% and 2.0% in the first and second quarters.

Additionally, in the first three weeks of October, there was a capital outflow of 7.73 billion baht, which raised concern as to whether overall GDP growth would meet the forecast of 2.8%.

Dr Surapong said Thailand started facing liquidity problems in the middle of this year, prompting banks to withhold new lending. In July, excess liquidity was negative 858 billion baht and this hit 1 trillion baht in August.

"This was due to the large capital outflows and the withholding lending, which has led to a third concern," he said.

He said 7.4% of household debts have been registered as non-performing loans since the second quarter.

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