FPO: Public investment offers cushion for growth
text size

FPO: Public investment offers cushion for growth

Higher-than-expected public investment could offset tepid exports and offer a cushion for the economy to expand, says the Fiscal Policy Office (FPO).

Even though exports, which account for 60% of GDP, are still shrinking, the economy is expected to grow by at least 3% this year, said Krisada Chinavicharana, director-general of the Finance Ministry's think tank.

Last month's dismal exports dimmed hopes that shipments would escape a third straight year of contraction.

Mr Krisada said 68 billion baht of the budget for infrastructure projects had been disbursed, with another 9 billion drawn down for road construction and repairs and water management projects.

The FPO is scheduled to review its 2015 economic growth forecast next month.

Its current projection stands at 3.7%, down from 3.9% previously predicted and well above the central bank's latest forecast of 3%.

The FPO's GDP estimate is based on 0.2% export growth, while the Bank of Thailand assume exports will contract by 1.5%.

In another development, Somsak Kangteerawat, a senior executive vice-president of the Bank for Agriculture and Agricultural Cooperatives, said the Agriculture and Finance ministries would next week jointly assess effects from the ongoing drought to seek measures to help those suffering from the problem.

The Agriculture Ministry estimates 850,000 rai of farmland is at risk of drought as an initial forecast, but exact damages are unavailable, he said.

Finance Minister Sommai Phasee on Thursday said the worsening drought was expected to shave half a percentage point from full-year GDP growth.

Thailand is facing its worst drought in more than 10 years, adding a burden to farmers already struggling with debt and low farm prices.

The state-backed farm bank recently launched financial assistance to its drought-hit borrowers by rescheduling debt payments and injecting fresh funds to those in dire need of money.

Farmers who have bought crop insurance will receive compensation if their crops are damaged by the drought.

About 160,000 rai of farmland are covered by crop insurance.

Under the scheme, farmland is divided into five areas depending on risk exposure.

Farmers are required to pay 60-100 baht a rai, while the government contributes the rest.

Premiums have been set at 124-484 baht a rai according to risk.

Do you like the content of this article?
COMMENT