By: NUNTAWUN POLKUAMDEE
Published: 17/02/2009 at 12:00 AM
Newspaper section: Business
Economic growth is expected to turn positive in the second half of the year, as the global environment improves and government stimulus measures take effect, according to Prime Minister Abhisit Vejjajiva.
We aren’t worried about criticism that we are copying TRT policies. The global economic crisis has hit worldwide demand sharply, and we need to push money into the system. Abhisit Vejjajiva, Prime Minister
But he said while the government was optimistic of a turnaround, contingency measures were in place to further pump funds into the economy if needed in the second half, with financing provided by loans from international financial agencies.
Mr Abhisit, speaking at an economics conference organised by the Krungthep Turakij daily, brushed aside criticism that the government's strategy smacked of populist measures previously used by Thaksin Shinawatra's disbanded Thai Rak Thai party.
The Democrat-led coalition has announced a 117-billion-baht supplementary budget to help finance subsidies for public utilities, job training programmes, a 2,000-baht handout to workers earning less than 15,000 baht per month and free education to students nationwide.
A 40-billion-baht tax programme has also been launched to spur new home purchases this year and benefit small businesses, while state-owned financial institutions have been directed to increase lending to provide liquidity to households and companies. Local administrations and state enterprises are also gearing up to spend hundreds of billions of baht in already-budgeted funds to help boost domestic demand and investment.
Mr Abhisit, whose government is targeting economic growth of at least 2% this year, vowed that state spending would be transparent and open.
"We have to tell the truth to people and let them know what will happen in the near future," he said.
"We will set targets clearly ... We aren't worried about criticism that we are copying TRT policies. The global economic crisis has hit worldwide demand sharply, and we need to push money into the system."
Mr Abhisit said the government would hold talks with private retailers on the 2,000-baht handout programme, expected to begin in March. Authorities hope that department stores and retailers offer discounts and promotions to entice recipients to spend their handout cheques.
The midyear budget meanwhile will go to the Senate next week for final approval. Mr Abhisit said even with the higher spending and projected budget deficit this year, Thailand's fiscal position remained sound.
He played down calls for the government to intervene in foreign exchange policies to boost exports, saying that the global crisis had resulted in a global decline in demand.
But the government continued to support policies positioning Thailand as a food production hub and agricultural exporter.
Mr Abhisit said the current crisis differed significantly from past crises, such as the 1997 Asian economic crisis that started with the crash of the Thai baht.
"In the past, we saw crises in Mexico, in South Africa, in Thailand ... Most countries depended on support from the US, Europe and Japan. But the current crisis started in the US, the centre of the world economy and the world's largest importer, so the impact is spread out across the globe," he said.
Thailand was monitoring the stimulus programmes being launched by other countries, and its implications on Thai trade and investment.
But Mr Abhisit said the priority for the government was to build up domestic consumption and investment, revive confidence and ensure liquidity remained plentiful within the system.
The National Economic and Social Development Board was also working on a framework to help avoid the current economic crisis from developing into a social one, he added.