THAILAND’S finance ministry on Monday (Apr 29) revised down its economic growth forecast for this year to 2.4 per cent, but said it could reach 3.3 per cent if the government’s 500 billion baht (S$18.37 billion) stimulus plan is deployed in the fourth quarter as planned.

The ministry said the economy had seen weaker exports and manufacturing output but was still stable despite the downward revision from the 2.8 per cent expansion seen in January, with growth likely to be driven by disbursement of a delayed but recently approved fiscal budget.

South-east Asia’s second-largest economy expanded 1.9 per cent last year, slower than expected and less than 2.5 per cent growth in 2022, lagging regional peers due to what the government says is high household debt and borrowing costs alongside China’s slowdown.

The ministry also revised down its annual exports projection to growth of 2.3 per cent compared to a January forecast of 4.2 per cent, while lowering its inflation outlook to 0.6 per cent from 1.0 per cent seen earlier.

Exports fell 10.9 per cent in March from a year earlier, data showed on Monday, compared to a forecast for a 4.5 per cent year-on-year fall in a Reuters poll.

Deploying the government’s signature “digital wallet” handout scheme on time could help bring growth up to 3 to 3.3 per cent, a senior official said.

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“We are assuming that 350 billion baht is disbursed in Q4, which will increase purchasing power,” Pornchai Thiraveja, director general of the Fiscal Policy Office, told press conference.

The growth expectations come after former energy executive Pichai Chunhavajira was named the next finance minister at the weekend, confirming a Reuters report on Thursday that he would take over the portfolio from Prime Minister Srettha Thavisin.

Pichai joins a government at odds with the Bank of Thailand (BOT) over the US$13.5 billion stimulus plan and the BOT’s holding of interest rates steady at 2.5 per cent.

The finance ministry expects at least a 25 basis point reduction in key rates by the end of the year, Pornchai added, citing economic data.

The controversial handout, which has been criticised by economists and some former central bankers as fiscally irresponsible, was delayed due to lack of funding sources. The government says it will maintain fiscal discipline.

BOT governor Sethaput Suthiwartnarueput on Monday told CNBC the current rates were appropriate and slow growth was due to weak exports and the delayed passing of the budget.

“The short-term boost you would get from lowering rates in terms of either easing the debt burden or in terms of stimulating the economy... if you weigh that with some of the longer-term unintended consequences, it’s not an efficient trade-off at this point,” he said. REUTERS