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WORLD> Asia-Pacific
Thai leader proposes $8.7 billion stimulus package
(Agencies)
Updated: 2008-12-26 23:33

BANGKOK, Thailand -- Thailand's prime minister said Friday the government wants to spend 300 billion baht ($8.7 billion) next year to jump-start the country's ailing economy.

Thailand's Prime Minister Abhisit Vejjajiva (C) sits with Deputy Prime Minister Suthep Thaugsuban (L) and Deputy Prime Minister Korbsak Sabhavasu during the first new cabinet meeting at the Government House in Bangkok December 23, 2008. Abhisit said Friday the government wants to spend 300 billion baht ($8.7 billion) next year to jump-start the country's ailing economy. [Agencies]

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Prime Minister Abhisit Vejjajiva said the economic stimulus package would include increased lending from government banks for agriculture projects and direct lending to local governments for infrastructure projects.

The plan must first be approved by Parliament, where Abhisit's coalition has a slim majority.

"The plan will be announced in January and the budget needs to be approved by the parliament first and it is expected that the money could be injected (into the economy) from March or April," Abhisit told reporters.

The Thai government is desperate to help the country's ailing economy which the Fiscal Policy Office projected this week could grow by only 1 percent next year. It attributed the weak growth next year a drop in domestic consumption and damage to the export sector from the worsening global economy.

The Federation of Thai Industries on Thursday told The Bangkok Post that it expects 1.1 million employees will lose their jobs by the second quarter of next year as a result of the slowdown.

On top of that, the tourism sector which is a key engine of growth is expected to suffer next year from the global slowdown and lingering effects from the shutdown of Bangkok's two main airports for a week last month by anti-government protesters. The tourism authority estimates the number of tourists will decline over the next six months by 2.5 million, costing the industry 100 billion baht ($3 billion).

Together, these factors could push the economy into a recession.

Sompob Manarungsan, an economics professor at Chulalongkorn University, said he felt the stimulus plan could help counter the slowdown in exports and inflow of foreign investment. But he said much will depend on how it is carried out.

"First, we have to see how fast it can stimulate the economy," Sompob said.

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