Fiscal Stimulus Thai Style

Thais wait for their checks at a Bangkok shopping center

The banking system in Thailand is in much better shape than the banks in the US and Western Europe, and the Thai budget is not nearly as out-of-whack as in the US. But because 60-70% of the Thai economy is tied to exports, Thailand is in recession as global demand for its products shrinks. One way to stimulate the economy is to encourage Thais to spend money in local stores, and one way to try to make this economic stimulus happen, is to pass out money for Thais to spend. So, the Thai government came out with a 2,000฿, or about a $57 per person handout, timed to be paid around the beginning of the Thai New Year celebration known as Songkran, which this year is officially on April 13-15, but which really lasts from April 11 to April 19, as most Thais take the week off. A mass migration takes place from the cities to the villages, where most Thais were born, and where their extended families still live.

I would have thought that the "help the country checks," as they are known, would have been mailed to the recipients, since all must be currently registered in the social security system, but a letter to the editor from a farang (western) owner of a small Thai business, complained that all of his staff left work for the day to wait on long lines at locations where the government had set up temporary paying stations for Thais to collect their checks. Still, I wasn't quite prepared for the scene that confronted me as I paid my regular Sunday afternoon visit to a Starbucks located in the lobby of a high-rise office building attached to Bangkok's largest shopping mall, Central World Plaza.

At first, I didn't know why they were there, but I quickly figured out that it was to receive their "help the country checks." Forever patient, the wait had to be for many hours, but while not a joyous crowd, there was an air of quiet anticipation. After checking-in at several computer-ladened desks, each Thai exited with a government check issued in his or her name.

Thais patiently waiting on long lines for their "help the country checks"

How clever of the government to place paying stations within shopping malls. After all, the sole purpose of the handouts is to have people spend them on goods, and to make it this easy for them to do so, is quite compatible with the goal of stimulus package, which could add is much as .3% to.5% to GPD. To ensure that the money is quickly spent, the shopping malls and other retail outlets are running special promotions, and a Thai can use his 2,000 baht check to buy more than 2,000 baht worth of goods, i.e., a handy and immediate discount. But, is it working?

Early statistics say that it is. About 80% of recipients are cashing their checks immediately. However, a small number are holding onto their checks as keepsakes in the belief that such a government grant was impossible in the future. The national feel-good shopping spree will be over after Songkran. Then what?

Some Thais are keeping their checks as keepsakes