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Call for stimulus as slowdown looms

BUSINESS: The Thai economy, which is struggling to recover from the impact of the COVID-19 pandemic and the Russia-Ukraine war, likely faces a new slowdown as a global recession is expected next year, says the Federation of Thai Industries (FTI).

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By Bangkok Post

Thursday 10 November 2022, 10:51AM


Commuters at the Siam skytrain station in Bangkok. The FTI is warning the Thai economy could face a retrenchment next year. Photo: Pornprom Satrabhaya

Commuters at the Siam skytrain station in Bangkok. The FTI is warning the Thai economy could face a retrenchment next year. Photo: Pornprom Satrabhaya

The group advised the government to continue supporting the economy, although the Thailand Industry Sentiment Index increased in October for the fifth consecutive month to 93.1 points, up from 91.8 in September, reports the Bangkok Post.

The federation urged the government not to be complacent about the country’s economic recovery, which started when Thailand reopened late last year, as various negative factors remain.

“If the government does not implement new stimulus measures to further grow the economy amid a global economic contraction, the Thai recovery will lose momentum,” said Montri Mahaplerkpong, vice-chairman of the FTI.

The World Bank warned in September of the possibility of a global recession next year after central banks raised interest rates in response to high inflation.

Thai exporters will be among the first entrepreneurs to bear the brunt as a result, said the FTI.

Many manufacturers have already been affected by this year’s severe flooding.

The federation wants the government to continue the “Khon La Khrueng” co-payment scheme, one of the stimulus measures launched during the pandemic.

“This scheme directly boosted the economy because it created a multiplier effect of 1.5 to 1.8 times as it encouraged people to spend money to buy many products,” said Mr Montri.

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He also wants authorities to relaunch the “Shop Dee Mee Khuen” tax rebate scheme to bolster spending during festive celebrations next month, while adjusting the “Rao Tiew Duay Kan” (We Travel Together) scheme by increasing the number of room nights to 2 million to stimulate local tourism.

Mr Montri said these schemes are good for the economy, which has been significantly affected by floods in recent months.

Up to 14,995 of more than 60,000 factories surveyed by the FTI have been flooded.

“The floods caused damage worth B6-12 billion, more than our estimate of 5-10bn,” he said.

The FTI also called on the government to deal with expensive electricity bills, driven by high global energy prices, by reducing the national power generation capacity reserve.

The power reserve currently stands at around 51% of total capacity.

Analysts have stated a higher power reserve results in a greater tariff charged on power bills.

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