Thailand plans a 316-billion-baht ($10.2 billion) package of government spending and loans to counter an economic slowdown caused by the US-China trade war and currency strength.
The package includes help for farmers and people on low incomes, as well as initiatives to bolster consumer spending and investment, Finance Minister Uttama Savanayana said in a briefing Friday in Bangkok. The proposal needs approval from the Cabinet.
“We want to support the economy in the second half of the year so people have more confidence and spend money,” Uttama said.
About 200 billion baht of the package would be loans from state banks, he said. Some 100 billion baht would come from the annual budget, roughly evenly split between fresh stimulus spending and already allocated funds.
Calls are growing for governments around the world to loosen their budgets to tackle economic slowdowns. Central banks say they can’t do the job with monetary stimulus alone. The Bank of Thailand unexpectedly lowered borrowing costs this month, but elevated household debt limits its scope for aggressive easing.
“Current math for the 2020 fiscal year suggests that there is ample room to increase spending and still keep within statutory limitations for the deficit and public debt levels,” said Radhika Rao, an economist at DBS Group Holdings Ltd. in Singapore.
The proposed stimulus package includes compensation and emergency loans for farmers afflicted by drought, more money for welfare card holders and efforts to encourage tourism.
Uttama said he planned to withdraw an earlier Facebook post that detailed a 200-billion-baht economic boost because it needs to be updated.
The government said it’s seeking at least 3% economic growth in 2019, and 3.5% next year, but signaled that expansion slowed in the second quarter.
Gross domestic product likely rose 2.3% in April through June – the weakest pace in almost five years – as exports and tourism struggled, a Bloomberg survey shows. The nation is vulnerable to US-China tension, as Asia’s top economy is its largest trading partner and biggest source of tourists.
Currency strength is another challenge for Southeast Asia’s second-largest economy. The baht is up more than 5% against the dollar this year, making it one of the strongest performers in emerging markets.