Thailand’s authorities plan to increase spending on investment to the highest level in seven years in an effort to boost local demand and offset weakening exports, says Bloomberg.
The budget for the fiscal year starting Oct. 1 will have a deficit of 390 billion baht ($11.7 billion), which is 56 percent higher than the current year. As Prime Minister Prayuth Chan-Ocha said Thursday, investment will account for a fifth of total spending.
Prayuth, who seized power in a coup d'etat last year, is speeding up spending to stimulate the economy amid falling exports and dim domestic demand.
The authorities will allocate 543.6 billion baht for investment in 2016,
or about 20 percent of the total, Prayuth said. Of that, about 297
billion baht will be used for investments in rural areas or cities and
towns outside Bangkok. Spending will be based on urgency, Prayuth commented.
Last quarter, gross domestic product saw a weak expansion from the previous three months. The statistics agency thus reduced its forecasts for GDP growth and exports despite the central bank cutting the interest rate for a second straight meeting in April.
According to a number of experts, higher investment spending for construction works like
roads and rails will definitely help boost the economy.
“We decided to set such a high budget deficit so we can increase investment, which is much needed for Thailand,” said Arkhom Termpittayapaisith, secretary general of the National Economic and Social Development Board.
Total spending will rise 5.6 percent
from a year earlier to 2.72 trillion baht, with revenue of 2.33
trillion baht, as it was indicated in the draft of the budget presented in parliament on Thursday.
The budget projects real GDP growth of 3.7 percent to 4.7 percent with inflation at 1.1 percent to 2.1 percent next year.
According to the Office of the Budget Bureau, investment compiled about a fifth of total spending in fiscal years 2002 through 2009. It dropped to 12.6 percent in 2010 during the global financial crisis, and hasn’t gone back to the 20-percent level since.
