The first phase of the cash payouts scheme, which cost the taxpayer 140 billion baht (0.7% of GDP) and was distributed to about 14 million disabled people and state welfare card holders, has not increased domestic consumption, as envisaged by the government, according to the Kiatnakin Phatra Research Centre.
The growth in domestic consumption during the fourth quarter, following the distribution of the 10,000 baht per person benefit, was close to that in the first three quarters.
This is because less than 10% was spent on consumption, which helps to spur the economy. Most of the money was used to settle debt, pay utility fees, buy food and household items or was saved, according to the research centre.
Other economic factors are still on a downward trend, particularly consumption of durable products, said the centre, adding that consumption by the private sector is still slowing, due to the tightening of credit extension by commercial banks, high household debt and weak household revenue.
The centre predicts a further contraction in private sector consumption this year, with growth of just 2.3%, compared to last year’s 4.2%, particularly for durable goods.
Export growth this year is forecast to drop, from last year’s 5.4% to 2% or 3% during the first quarter, while the production index of the industrial sector is forecast to contract further, due to the rerouting of Chinese products, such as solar panels and Wi-Fi routers, through Thailand to the US market.
The research centre noted, however, that the rerouting of Chinese products to the US may face new challenges from the Trump administration, which is trying to reduce imports of products originating in China.
GDP this year is forecast to grow by 2.5%, based on the assumption that industrial sector production will recover, said the research centre, adding that the industrial sector is still facing a high degree of uncertainty over the trade policies of the Trump administration.
