The first phase of the Thai government's economic stimulus program for 2024, which includes a one-off payment of 10.000 baht to vulnerable groups, is expected to give the economy a significant boost.
According to the Ministry of Finance's forecasts, this program will generate economic growth of about 0,3%. In particular, the industrial sector, with an emphasis on the production of consumer goods, is expected to experience a 0,1% increase in GDP.
Focus on money circulation and impact
Worawan Chit-arun, Director of the Office of Industrial Economics (OIE), stressed that the ultimate impact of the stimulus program will depend greatly on the speed at which the funds provided continue to circulate within the economy. The OIE aims to have this money spent at least three times over, thus significantly boosting economic activity in the country.
Revised forecasts for the industrial sector
Despite the optimistic expectations of the stimulus program, the OIE has revised down its forecast for the Manufacturing Production Index (MPI) for 2024. Previously, growth of 0-1% was expected, but this has now been revised down to an expected contraction of 1% to a growth of up to 0%. Forecasts for industrial GDP have also been revised down. Instead of growth of 0,5-1,5%, a contraction of 0,5% to a modest growth of 0,5% is now expected.
These revisions are mainly due to concerns about the high debt burden of Thai households. Currently, household debt has risen to 90,8% of GDP, causing financial institutions to restrict their lending. Loan rejections for new cars have increased by 20%, while loan rejections for used cars have increased by 30%. In addition, corporate debt stands at 87,6% of GDP, which is almost equal to household debt.
Challenges for industrial production
Rising production costs, high energy prices and the continued risk of flooding are putting additional pressure on the MPI. While positive monthly results for the MPI are expected for the remaining months of the year, overall growth for 2024 is likely to be limited to 0%. In addition, recent flooding has severely disrupted production in several industries. The automotive industry in Chiang Rai, furniture production in Phayao and agricultural processing in Sukhothai are among the worst-affected areas. If recovery efforts take longer than expected, this could further pressure regional production and purchasing power.
Highlights and points of interest
Despite the challenges, there are also some sectors that are benefiting from the current situation. In particular, the production of consumer goods, such as household cleaning products, has shown positive growth. However, there are other factors that need to be closely monitored, including policy norms, the Baht exchange rate, adjustments to the minimum wage and the possible impact of the upcoming US elections. These factors could significantly affect the direction of the Thai economy in the near future.
With this stimulus program, the Thai government hopes to not only support vulnerable groups in society, but also promote the country's overall economic growth and resilience, despite the many challenges the industrial sector is currently facing.
The expectation is that it will yield an economic growth of 0,3% says the Ministry of Finance. Now that only 14,5 million poor people are being served this year and only 5000 baht will be paid to the rest next year and in 2026 the second 2 baht (I read today in the Bangkok Post) I myself expect that it will yield a phenomenal increase of 5000% growth this year and that is 0,1/1 of the expectation of the Ministry. The Prime Minister called the 3% total additional growth a "whirlwind". The total expected economic growth in Thailand is around 0,3% this year according to the Central Bank. If you look at the neighboring countries then they are doing much better in terms of growth, Malaysia for example has a strong appreciation of the currency by 2,6% recently (more appreciation than the Thai baht), but the expectation is that the economy there will grow by 9% this year. Vietnam is doing a bit better with 5% growth this year and Indonesia is expected to grow 6,1% this year. My advice is to look at our neighbours to see why they are succeeding with double digit growth compared to Thailand and then no excuses for Thailand's stronger currency or natural disasters or export problems and more because other countries in the region are just as affected if not more. In fact, the last 5,2 months of July and August saw an increase in exports in Thailand despite the sharply increased baht and there has been no decrease in tourism. The latter has also been explained here before because a tourist is not guided by a somewhat stronger or weaker currency but comes for the country. All the attention is too much focused on the one-off stimulus programme, "ethical" problems with political appointments and other political squabbles; progress requires a bit more and that is why they can travel again as far as I am concerned, but then to the neighbouring countries and ask why they are successful there.
Speaking of vulnerable groups:
a group of homeless people spent their 10.000 baht budget well. They bought alcohol with it and were so completely wasted that they actually didn't know from the front that they were still alive from the back, so to speak.
https://tinyurl.com/mu8ddee3
The result of populism and fraud. On the other hand. During Covid there was also free money and that was also spent on nice things like good and lots of food and drinks by those who didn't even need it but did get it.
Playing Santa Claus is of course nice and certainly if the recipients continue to behave like children. "Money must go" mentality and that also applies to many office workers with their credit cards... and therefore a mountain of debt of over 90%. Nice work everyone. The longer I live here the less I can feel sorry for someone. A la Thai, it must be karma so just live with it.
Free money for the Thais, you know who doesn't complain about it, retired Belgians, or Belgians on benefits in Thailand.
Those retired Belgians have received an automatic index adjustment of 2021% of their benefit/salary or wages 2022 times in the period 5/2. (Exceeding the pivot index in Belgium)
If a Belgian pensioner had a pension of 2021 euros in 2:
2 + 300% = 2
2 + 346% = 2
2 + 392% = 92
2 + 440% = 78
2 + 489,60% = 2 Euro
Take in 1 year, a difference of 2 – 539 = 2 Euro extra per month, or 346 * 193 = 193 Euro per year. (Take 12 THB extra per year)
And this is not a one-off payment, their pension has been increased, so every year they receive at least this “extra” compared to 2020/2021.
If you take 1 Euro as a pension, as a basis of monthly income for an extension based on pension: 800 / 65 = 000 Euro per month, you end up with 36 Euro after 1 adjustments. Is also 805 Euro extra per month for doing nothing.
Of course, if you yourself get an extra 85 THB per year, it is “hypocritical” to complain that a Thai gets a one-time compensation of 000 THB. (Just look at the Belgian national debt)
And between 2022 and now there have been a few more exceedances of the pivot index and the next one is back sometime early next year. (2025)
And what do you think the retired Belgians spent it on in Pataya?
The same discussion also applies to: increasing the minimum wage in Thailand to 400 THB.
In Belgium, opponents of the index adjustments say: Wages/benefits up, companies have to pay more, products become more expensive, wages/benefits will rise again.
People who receive an index adjustment will also dismiss this as nonsense and will lash out in Belgium if a political party dares to say, abolish automatic index adjustments or index jump.
It would be hypocritical if they in Thailand would complain when a Thai gets a pay rise and then use the same argument as the opponents of an automatic index adjustment.
This stimulus program is already more than 1,5 years old. From before the 2023 elections, for people who were going to vote. When the elections were over, it suddenly became a payment study that had to be done. Clearly a monetary shock, an overplaying of budgetary possibilities. Outcome: Only for the vulnerable groups. That made a big difference. Now the whining about paying in installments.
I know Thai people in Phuket who didn't have time (they didn't get time off from their employers) or money to travel to their hometown to vote. These people don't get Baht.
Besides: staying registered in Isaan hometown for years and not registering as resident/worker on Phuket is of course a strange train of thought. That is why Phuket authorities have no idea how many Thai actually live on Phuket.
(we foreigners are registered watertight up to 90 day reports)
If I move from Deventer to Zierikzee, I have to deregister in Deventer and register in Zierikzee.
Why is this not the case in Thailand?
That's right. That's how I think about it too. It was an election promise of PT. When Pita's MFP was not allowed/could not form a government, the PT was put forward, and they were left holding the baby in the form of promises and no money. First it was 50 million people aged 16 and over. Then it became 5 million less because they were too rich or did not register. In all kinds of ways they tried to free up the budget, but the 450 billion baht are simply not there. Now only 5 million people in cash instead of digital, and 10 million next year half and the rest in 2026. That year the night candle method will be introduced, just you wait.
A matter of not having a clue what politics does and can mean. The big problem why the country as an Asian tiger from the past is now a wimp, but the people are too lazy to work.
There are plenty of people working hard for too low a wage but even more have the lying under the coconut tree mentality. That arrogance pays off and unfortunately with free money.
I even know ladies who have lived in the Netherlands for years, who have registered for this populist scheme and are getting it.
Registered with their family somewhere in Thailand, have no money in the bank, BINGO!!
Oh, the Thai government consists of a large number of corrupt money grabbers. They grab a lot more than 10000 THB.
I totally agree with those Thai ladies abroad. If they can 'take' something back... I wouldn't resist. Even worse, you'd have to be stupid not to.