23-11-2023 (BANGKOK) Thai Prime Minister Srettha Thavisin declared a state of economic “crisis” during a forum on Thursday, emphasising the urgency of implementing his contentious 500 billion baht (US$14.23 billion) digital handouts initiative.
Addressing the gathering, Srettha expressed concern about the nation’s economic health, citing a shortfall in foreign arrivals compared to targets. He outlined his commitment to attracting foreign investment and tackling household debt as top priorities.
“The economy requires substantial stimulus,” declared Srettha, who also serves as the finance minister. He hinted at a forthcoming plan to address the mounting debt situation, scheduled for announcement on December 12.
These remarks follow recent revelations from the state-planning agency indicating a lower-than-expected growth of 1.5 per cent in the July-September quarter compared to the previous year. This sluggish growth, attributed to weak exports and government spending, marks the slowest pace in the current year.
Thailand’s tourist industry, a significant economic driver, recorded 23.85 million foreign arrivals from January 1 to November 19, contributing 1 trillion baht to the economy. The nation had set an ambitious target of 28 million arrivals, striving to surpass the pre-pandemic record of nearly 40 million foreign tourists in 2019, who spent 1.91 trillion baht.
Srettha’s proposed “digital wallet” policy, entailing handouts of 10,000 baht to 50 million Thais next year for local spending, has faced criticism from economists and former central bankers. Concerns center around potential breaches of financial discipline.
In response to escalating concerns about the economy, government officials have characterised the situation as a crisis, underscoring the need for their signature plan.
Srettha, a real estate tycoon turned political newcomer, aspires to achieve an average annual growth rate of 5 per cent over the next four years in Southeast Asia’s second-largest economy. The nation has lagged behind regional peers, posting an average growth of 1.9 per cent over the past decade.
Speaking at the same forum, Bank of Thailand Governor Sethaput Suthiwartnarueput asserted that the country’s fiscal and monetary policies must allow room for resilience as the economy expands.
“Resiliency hinges on stability, robust balance sheets, and a flexible fiscal and monetary policy,” remarked Suthiwartnarueput. In a surprising move in September, the Bank of Thailand unexpectedly raised the key interest rate by a quarter point to 2.50 per cent, the highest in a decade, citing expectations of increased growth and inflation in the coming year. The policy is slated for review on November 29.
