The Bank of Thailand estimates the government’s 66-billion-baht stimulus package will contribute roughly 0.2% to GDP growth.
Chayawadee Chai-anant, assistant governor for corporate relations at the central bank, said the package including the “Khon La Khrueng” (half-half) co-payment scheme is expected to raise nominal GDP by about 0.4%, with the contribution to real GDP growth closer to 0.2%.
“The stimulus will have a limited impact on GDP as the measures are focused mainly on increasing consumption rather than creating employment. Moreover, a portion of the spending is likely to be for imported goods,” she said.
Even so, the package should help improve public confidence. If the co-payment scheme stimulates spending among higher-income groups, it could provide a greater boost to domestic consumption, said Ms Chayawadee.
The regulator reported Thai economic conditions softened in August compared with the previous month, mainly due to weaker agricultural and industrial output, which weighed on trade and freight transport services.
In contrast, the tourism sector improved, supported by both domestic and foreign visitors. Seasonally adjusted foreign arrivals rose 2.8% month-on-month in August to 2.6 million. Tourism income also increased by 2.7% in August, up from 1.1% growth in July. The tourism recovery was driven by short-haul visitors from China, Japan and South Korea off for their school summer break as well as long-haul arrivals from Germany and Russia. Revenue from foreign tourism after seasonal adjustment edged up, in line with the arrival uptick.
Merchandise exports to the US grew 5.5% in August, slowing from 9.7% in July and the first deceleration since the US import tariff was implemented. Exports of electronic products eased slightly after several months of strong growth, noted the central bank.
Exports are expected to continue slowing in the third quarter, though a contraction will depend on global trade conditions and the impact of US tariffs on each country, she said.
Following criticism over proposals to use the central bank’s foreign reserves to establish a sovereign wealth fund, Ms Chayawadee said the structure of reserves varies by country. For Thailand, borrower reserves are relatively high, making it essential for the regulator to maintain a solid buffer against potential capital outflows. She said the central bank remains open to hearing different viewpoints.
Speaking at a ThaiPublica seminar, Supavud Saicheua, chairman of the National Economic and Social Development Council, said Thailand holds excessive foreign reserves amounting to roughly 9 trillion baht, which is kept idle instead of being put to productive use.
He said the IMF assesses Thailand’s international reserve adequacy ratio at 237%, well above the benchmark of 193%.