Even though effects from the government's first round of economic stimulus measures have not yet gained traction, a fresh round is planned for December in hopes of jump-starting the economy next year.
The new stimulus measures will include permission for companies to operate nanofinance businesses to address the loan shark problem, Finance Minister Sommai Phasee said without providing further details.
Finance Minister Sommai Phasee: Fear of stagnation.
The Finance Ministry plans to open applications for nanofinance licences soon. Eligible companies must have registered capital of 10 million baht, and licensees can lend up to 100,000 to 120,000 baht to each borrower, charging maximum annual interest of 36%.
A second batch of stimulus was floated amid growing uncertainty about the global economic recovery, as the euro zone and Japan lack any economic momentum, while Thai growth remains at a standstill.
Mr Sommai recently said the country was facing stagnation, as high household debt had crippled low-income earners' spending and medium-income earners were reluctant to spend due to feeling uncertain about the near future.
He is confident GDP will grow by at least 1.5% this year thanks to gains in tourism and domestic consumption, reflected by rising value-added tax collection.
The government approved a 364.5-billion-baht stimulus package earlier this month.
Measures include 23 billion baht for repair work under the Education and Public Health ministries and for irrigation projects, expediting payment of 129 billion baht from the fiscal 2015 investment budget across all ministries and a cash handout of up to 15,000 baht each for over 3 million rice farmers.
Kampon Adireksombat, Tisco Financial Group's chief economist, said the government's new stimulus measures could improve public sentiment since they were more massive than the recent cash handouts for rice and rubber farmers, plus their effectiveness should be more tangible than the 2.4-trillion-baht infrastructure development schemes.
The government should hurry to implement new stimulus measures, as a recent raft of monthly economic data was disappointing, he said.
Mr Kampon declined to comment on whether these new stimulus measures would affect macroeconomic stability, saying more details would need to be disclosed.
Tim Leelahaphan, an economist at Maybank Kim Eng Securities (Thailand), said additional stimulus measures should try to spur domestic consumption, as it will take time to see the effects from infrastructure investment, while exports were dependent on external demand.
The measures could include cash handouts and discounted commodity prices, using populist policies to shore up economic growth, he said.
The government may be tempted to implement another round of stimulus measures to improve the stagnant economy, as up to this point only short-term economic stimulus policies have been approved, while policies related to taxes and energy reforms are considered long term, said Mr Tim.
"The new stimulus measures could bridge the gap between short- and long-term economic policies, looking ahead to next year," he said.
Regarding the timing of new measures, the government may want to consider assessing the effects from the first stimulus package before embarking on newer measures, Mr Tim said.
He pointed out it was not too late to implement new stimulus measures later this year or early next, as that would be in line with the government's economic policy of growing at a gradual pace.
The Finance Ministry is hopeful GDP growth could reach 2% this year if stimulus measures can lift momentum.