FPO predicts 3% growth despite headwinds

Amid the bleak economic outlook, the Fiscal Policy Office (FPO) remains optimistic that the economy will expand at least 3% this year, says its chief.

Although the global economy is a drag on Thai economic growth, the government will launch stimulus measures to prevent the country’s economy from slowing, said FPO director-general Lavaron Sangsnit.

He voiced confidence that Thailand’s export growth would not contract this year, though the trade spat between the US and China has had an adverse impact on the country’s merchandise shipments.

The FPO is set to cut forecasts next month, as the second-half economy is expected to perk up, but the pace is likely to be weaker than earlier expected.

In April the Finance Ministry’s think tank cut its forecast for 2019 growth to 3.8% from 4%, assuming export value in US dollars growing 3.4%.

The Bank of Thailand recently signalled a projection rollback, saying the economy was likely to expand at a slower clip than the 3.3% forecast for the year.

The economy grew at its slowest pace in more than four years in the first quarter, up 2.8% yearon-year, and the central bank predicts that secondquarter growth will be the trough this year.

Mr Lavaron said the state’s pump-priming will be seen by December to stimulate the country’s economy. Stimulus measures will include aid for low-income earners and domestic tourism.

Regarding the government’s campaign promises, particularly for pregnant women, he said it’s unpredictable when money will be available for the schemes.

According to the Palang Pracharat Party’s election pledges, a 3,000-baht monthly allowance will be given for nine months to pregnant women, a 10,000-baht allowance for births, and a child allowance of 2,000 baht a month for newborns until six years of age, constituting 181,000 baht per child.

A source close to the budget process who requested anonymity said recently that recipients of the government’s populist largesse could be restricted to state welfare smartcard holders because of budget constraints.

Commenting on a change in the state welfare criteria for low-income earners, the source said the Finance Ministry was considering using 100,000 baht per family as the benchmark for a familybased income approach.