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BANGKOK : Thailand announced a US$1.4 billion economic stimulus package on Tuesday to help ease financial hardship for its poorest.
Thai Prime Minister Samak Sundaravej unveiled six key measures designed to boost the kingdom's economy in the next six months.
The initiative came after a series of blows to his administration's credibility and Thailand's underperforming economy which will probably miss its growth target of 6 per cent this year. Inflation is at 8.9 per cent - a 10-year high - and expected to hit double digits.
The government's stimulus plan is designed to help lower-income Thais who have been hit the hardest by rising fuel and food prices. But the ongoing political instability that looks likely to continue is also a major cause of the economic downturn.
Aat Pisarnwanich, Assistant Professor of Economics at University of the Thai Chamber of Commerce, said: "Compared to neighbouring countries like Vietnam, Malaysia as well as Singapore, I think we are unlucky, because we have the other factor that those countries don't have - the political factor. The political factor is the main problem for Thailand."
The main parts of the stimulus package are a range of tax cuts designed to encourage Thais to use cleaner fuel. There is also a food stamp programme and free water, electricity and transportation for households earning less than US$200 per month.
Thailand's politicians favour populist policies, but economists warn they will not help the country's main bourse, which has lost 18 per cent since the end of May. Analysts said a longer-term approach is needed to create jobs.
"This is the weak point of Thai people - because they are poor. 60 per cent or more than 50 per cent of Thais are poor, so they need help. They need money to survive," said Professor Aat.
The central bank said it will raise interest rates for the first time in a year to help tame inflation, but it also runs the risk of hurting economic growth. - CNA /ls
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