Govt policies will spur economy, say experts

Govt policies will spur economy, say experts

Economists are confident that the government's policies will boost consumption and business sentiment this year while increasing private investment next year.

Aphichat Wisitkitchakarn, an economist at Tisco Financial Group, said he was confident the government's short-term economic policies would stimulate consumption by 0.8 per cent this year and its long-term economic plan would increase private investment next year depending on the clarity of the public investment roadmap.

He said the short-term policy to accelerate government budget disbursement and the leftover budget in 2014 would stimulate the economy in the first quarter of the budget year and an increase in employment would lead to higher purchasing power and eventually a rise in consumption.

The policy to lower the people's financial burden will also contribute to increase in consumption but the potential increase in the price of compressed natural gas and liquefied petroleum gas might lead to a hike in taxi fares, which could put a strain on consumption power, he added. 

Aphichat said the government's plan to invest in infrastructure projects would improve business sentiment next year but there were risks in terms of managing the projects, while exports and tourism remained subdued.

However, the expected return of private investment should help the economy expand 5.3 per cent next year.

Somchai Amornthum, executive vice president of the research department at Krung Thai Asset Management, said the new government and the announcement of its polices had increased confidence and business sentiment although there were fears over public sector expenses and income channels.

Somchai said the budget, which had a deficit of around Bt250 billion, was similar to last year's but he expected it to be disbursed easier this year due to the absence of political turmoil and the presence of a functioning government.

He said the aim to disburse around 30 per cent in the first quarter of the next budget year would, if achieved, help expand the economy.

He expected the government's policies to result in the Kingdom's gross domestic product growing 1.1 per cent this year and 5.2 per cent in 2015.

Somchai, however, is concerned about what impact the expected removal of tax incentives on the long-term equity fund (LTF) would have on long-term investment sentiment.

He is also worried about the lack of clarity on increasing the value-added tax next year and the possibility of the introduction of a capital gains tax, which could affect foreign investor sentiment.

"The government's expansion of revenue channels can increase its income but it might hamper the expansion of economic growth," he said.

Vallop Vitanakorn, vice chairman of the Federation of Thai Industries, said the government's policies were along the lines of suggestions from the private sector and the implementation period must begin.

"I am confident about the new economic policies and I believe that the new government is committed to implementing the economic strategy that has been proposed to them by the private sector," he said.

He said if the government did that the economy would grow 2 per cent this year as a result of the acceleration of the 2014 budget and the acceleration of the 2015 budget. This would create jobs, boost purchasing power, and increase consumption.
 
The Nation September 13, 2014 1:00 am

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