Thailand to spend S$14.3b to spur economic growth this year

BANGKOK — Thailand’s Cabinet has approved a 364.5 billion baht (S$14.3 billion) budget for the remainder of the year to create jobs and boost incomes to spur economic growth, even while the central bank said a broad-based recovery has not taken hold.

Of the budget, 23 billion baht will be spent on repairing schools, government buildings and roads, and 40 billion baht will go to rice farmers to help them cope with low prices, Deputy Prime Minister Pridiyathorn Devakula said yesterday after a Cabinet meeting. The government will also speed up approvals for 380 projects worth 429.2 billion baht and quicken investment spending for fiscal 2014 and 2015.

The measures “should be more than enough to jump-start the economy”, said Mr Pridiyathorn, adding that the nation should return to 4 to 5 per cent potential growth next year.

The military government led by junta leader Prayuth Chan-Ocha had pledged to quicken state spending, promote investment and create jobs to spur expansion. While Thailand avoided a technical recession in the second quarter, the central bank said in the minutes of its Sept 17 policy meeting released yesterday that a broad-based recovery had not taken hold, though the stimulus should help bolster long-term potential growth.

“These measures should be enough to boost the economy in the fourth quarter,” said Mr Pimonwan Mahujchariyawong, an analyst at Kasikorn Research in Bangkok. “The government’s main task is to stimulate local demand because exports remain weak.”

The economy grew 0.9 per cent in the second quarter from the previous three months when it shrank 1.9 per cent. While consumer confidence climbed to the highest in a year in August, exports fell the most since 2011.

The central bank last month held its interest rate for a fourth time and last week maintained its growth forecast for this year at 1.5 per cent, while cutting its estimate for next year to 4.8 per cent from 5.5 per cent earlier. Thailand’s ratings remain resilient, though its average growth rate is sluggish compared with its peers, Fitch Ratings said yesterday. BLOOMBERG