Cash assistance, shopping tax break ‘will only work short term’
CASH handouts to help low-income people and the upcoming shopping tax break will only spur the economy in the short term and will cease have an impact if continued for over six months to one year, Thai News Agency quoted Bank of Thailand Governor Veerathai Santiprabhob as saying today,
Helping low-income people by giving them 1,500 to 3,000 baht each and reintroducing the ‘shop to help the country’ campaign offering tax breaks worth 15,000 baht or more per person are good steps to boost short-term consumption and this also shows that the government is taking action after seeing signs of economic slowdown in the fourth quarter, he said.
That the Thai economy is slowing down in the last quarter of the year is due to several factors including agricultural product prices sliding in global markets due to large amounts of rice flowing in, action taken to curb the so-called ‘zero-dollar’ tours which has decreased the number of Chinese tourists and a lack of interest in shopping because the people are mourning.
This made it imperative to introduce these measures to ensure that there is enough money circulating in the economy during the transition to the full implementation of state infrastructure projects next year.
Mr Veerathai stressed that these measures to spur the economy are only short term because if they are stretched till six months or even one year they will not help the economy because it would mean pulling future demand into use and might lead to the people’s debt burden increasing.
The Bank of Thailand is also confident that the Thai economy this year will grow by 3.2% as earlier projected even though growth is decreasing in the fourth quarter. Next Year the economy should also grow at 3.2% similar to this year.
Aside from this the central bank governor also warned exporters and importers to keep an eye on currency exchange fluctuation because US President-elect Donald Trump’s policy changes are leading to funds that previously flowed to emerging markets in Asia, including Thailand, flowing back to speculate in the US bond market and to obtain higher interest rates there.
The private sector has use its skills to manage the risk while the Bank of Thailand is confident of its ability to manage any fluctuations that could emerge because the Thai economy is strong and there are adequate steps in place.
Top: A woman window shopping at a Bangkok shopping mall. Photo: Side Guacamole (CC-BY-SA-2.0)
Inset: Bank of Thailand Governor Veerathai Santiprabhob talking to reporters today. Photo: Thai News Agency