stimulus package 'to revive economy in q4'

The economy would still head downhill in the third quarter but would turn the corner in the fourth quarter after the government's stimulus-spending kicks in, a seminar heard yesterday.

"Overall, the economy in the second half of this year should report zero growth, with the growth in the fourth quarter netting out the contraction in the third quarter," said Ampon Kitti-ampon, secretary-general of the National Economic and Social Development Board.

He was a panellist at a roundtable on the prospects of the economy this year organised by the Thai Enlightenment Institute Foundation.

The Bt116-billion mid-year budget, Bt2,000 cheques handed out to some 9 million workers and farm-price support schemes will be the key to reviving the economy, he said.

The worst is over as judged by the indicators for exports, employment and government disbursements, he said.

Bandid Nijathavorn, deputy governor of the Bank of Thailand, said an improvement in economic conditions should start showing up, depending on consistent government spending, renewed confidence by the private sector and the lack of any unexpected incidents.

"There is a high possibility that we have experienced a bottoming out. But both the government and the private sector will have to continue to make the necessary adjustments to keep the economy going," he said.

Interest rates are not at an appropriate level, though businesses should have access to credit. Domestic demand might keep the economy humming but it can't offset the fall in earnings in the export sector, he said.

Somchai Jitsuchon, an economist at the Thailand Development Research Institute, said the economy would likely level out in the third or fourth quarter in line with the global economy.

But government spending would continue to be the main engine of growth, he said.

"Any recovery will be fragile, however, because the global economy is still beset by shaky consumption in the US and Japan, falling home prices in the US and volatile financial markets," he said.

Financial institutions in the developed economies have not been tackled in both recapitalisation and credit extension, he said.  While the US is trying to reduce consumption by importing less and exporting more, China is relying more on the domestic market for growth.

This adjustment process would take time to work its way through, he said.

Mangkorn Thanasarnsin, vice chairman of the Federation of Thai Industries, said the economy here should start rallying in the third quarter while the private sector would need to break the mould to keep up with the changing economic environment.