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9 Oct 2020

Econ Digest

“Shop Dee Mee Kuen” program will boost consumption in the final quarter of 2020

The government has launched its “Shop Dee Mee Kuen” program (Shop and Payback), which offers taxpayers income tax deductions when spending up to THB30,000, in order to stimulate consumption over the 70 day period from October 23rd to December 31st 2020. KResearch expects that the program will help bolster consumption in the final quarter of the year, resulting in a cash flow of up to THB5.55-120 billion being generated in the economy, if 1.85-4.0 million taxpayers participate in the program. When combined with other stimulus measures introduced earlier, namely the “Kon La Khrueng” program (Let’s Go Halves), a cash handout to welfare card holders (they will receive an additional THB500 every month for three months) and the gradual opening up of the country to foreign tourists, the measure will help improve the Thai economy in the fourth quarter of the year with a smaller contraction than in the previous two quarters.

        

The “Shop Dee Mee Kuen” program will not only help deplete high inventory levels of goods, but will also help boost sales volume and increase liquidity for various businesses. In addition, the increased spending will help create a better economic atmosphere and restore economic confidence. Overall, the retail sector will benefit the most from this program, while the increased spending is likely to benefit the banking sector as well due to the higher spending using credit cards.

         

However, KResearch sees that the “Shop Dee Mee Kuen” program will boost spending only for a short period and will have a limited contribution to employment, because manufacturers may not increase production if they do not see a continuing recovery of the demand. The biggest gainer will probably be VAT-registered large-to-medium businesses , while small and medium enterprises (SMEs) outside the VAT system may not directly benefit much from the program. Nevertheless, the recovery of consumption after expiration of the program will depend on fundamental driving forces of the economy, especially the tourism sector, employment income and agricultural income.  

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