A PROMINENT think tank has branded as wasteful government plans for expansionary economic policies when the country’s growth is still healthy.
The Thailand Development Research Institute (TDRI) said the policies recently flagged by the government are unnecessary for an economy that is growing in the range of 3 to 4 per cent a year.
The government should use its budget to build a long-term economic foundation for the country, such as through investing in public infrastructure and upskilling the workforce, the privately run body said.
TDRI Somkiat Tangkitvanich was referring to a government announcement that it had tasked the Finance Ministry with coming up with ways to stimulate growth in the economy. Healthy annual expansion in gross domestic product (GDP) of up to 4 per cent indicated that stimulatory measures were not justified, Somkiat said.
For the goal of building a long-term economic foundation for the country, more investment was needed in investment, though he acknowledged the policies already pursued in this area.
He identified as pressing the need for the government to usher in policies to increase the skills of the workforce, saying that more funds should be directed to this goal.
“When the skills of the workforce are increased, workers’ income will also increase,” he said. “This will lessen the need for the government to push out short-term policies to stimulate the economy and instead enable it spend taxpayers’ money on other matters.”
Somkiat conceded the necessity for government welfare that helps low-income earners. “During a time when the world economy is fragile and uncertain, there will be people at the lower level of the economy that will suffer before other groups,” he said.
“When there is an economic recession, stimulating policies are necessary. However, if stimulants are used unnecessarily on an economy that is merely slowing down in growth, it may only produce short-term benefits and can be unhealthy for the economy in the long-run.”
He suggested that the government, in its remaining time, should refrain from stimulatory policies given that government funds are limited. “If the budget is excessively spent in this period, the new government will struggle to meet their promises to the people,” he said.
The permanent secretary of the Ministry of Finance, Prasong Poontaneat, said the details of the economic stimulus package under consideration will be finalised after the Songkran festival. The proposals would then be forwarded for approval at an executive meeting of the ministry to be chaired by Deputy Prime Minister Somkid Jatusripitak.
Somkid has asked the Finance Ministry to consider whether the economy needs further stimulus. His instruction comes in the wake of the private sector cutting its forecast for economic growth this year to 3.8 per cent. The Finance Ministry estimates growth will come in at 4 per cent.
A source from the Finance Ministry said exports are trending much lower than the ministry’s estimates.
The source said, given that a new government may take some time, to be formed, any stimulus measures may not take shape until the third or fourth quarters of this year. The ministry is considering measures to help prevent a further economic slowdown in the second and third quarters of this year, the source said.