Can US$275 handout to citizens benefit Thailand’s economy and property market?
- The general view is that the plan may be a short-term solution, making foreign investors cautious about Thailand, Tisco Securities analyst says
- Government’s focus on stimulating the economy is ‘generally a positive sign’ for the residential market: CBRE Thailand
Thai Prime Minister Srettha Thavisin’s plan to stimulate the economy and consequentially prop up a flagging property market by ramping up government spending and boosting consumption has received mixed reactions from analysts.
The success or failure of the 60-year-old former real estate tycoon’s plan is likely to have a huge impact on Thailand’s property market, including foreign buyers from Hong Kong and mainland China.
The prime minister, who is also concurrently serving as Thailand’s finance chief, has sought to relieve debt and reduce energy costs. His party’s main promise – of handing out 10,000 baht (US$275) each to Thai citizens aged 16 and above at an estimated cost of 560 billion baht to the government – has been causing anxiety for many investors, with Thailand’s former central bank chiefs among those clamouring for Srettha to drop the plan.
Where the funds will come from is the main problem. Bangkok has said that it will raise its borrowing by 8 per cent for the current financial year that began this month, and the budget deficit is likely to hit 693 billion baht as spending is projected at 3.48 trillion baht.
Given the planned allocation, the public debt to gross domestic product (GDP) ratio, a metric that assesses a state’s ability to pay back its debt, would be at 64 per cent, higher than its typical 60 per cent ceiling, according to the Thai government.
