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Published on January 19, 2008

The Finance Ministry plans to implement short-term economic-stimulus measures to cushion the effect from a possible US recession, the ministry's spokesman said yesterday.

Somchai Sujjapongse said a US stimulus package, due to be announced late yesterday, should help boost the economy in the third or fourth quarter.

Somchai said the ministry believed the impact on Thailand of any economic slowdown in the US should not be very severe. Washington will introduce measures to ease economic problems in the US, in terms of both fiscal policy to stimulate the economy and monetary policy.

The Federal Reserve (Fed) is expected to cut overnight lending rates from 4.25 per cent now to 3.75 per cent.

"It's a good sign that the US is serious about tackling the problem. It should lessen the impact on itself and other countries," Somchai said.

"But Thailand's economy may still be affected by economic woes if the US measures don't work."

Fed chairman Ben Bernanke told US lawmakers he could support tax cuts or spending measures to stimulate the economy now that there was growing evidence the US economy was slipping into recession.

Somchai said the Finance Ministry was preparing short-term measures to stimulate domestic demand.

"There's still room to do that without fuelling inflation," he said. "The Fiscal Policy Office has prepared measures to propose to the new government, which will have to closely monitor the sub-prime problems in the US and oil prices. These are problems that the new government must watch closely."

Somchai conceded that the export sector would perform worse this year than last, due to the world economic slowdown. Nonetheless, he believes this will not severely affect economic growth, because Thailand's competitiveness remains strong.

The Nation