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Thai economy in ‘critical situation’, stimulus measures needed

The economy contracted in Q4 2023 and policymakers have downgraded the growth outlook for this year.

Thai economy in ‘critical situation’, stimulus measures needed

Thailand’s economy is in a “critical situation”, the prime minister’s chief of staff said today, stressing the need for stimulus measures aimed at tackling household debt, boosting tourism and attracting foreign investment.

“Figures show we are not in good shape,” Prommin Lertsuridej told reporters.

His remarks come as Prime Minister Srettha Thavisin’s government pushes to revive Southeast Asia’s second-biggest economy, which has suffered from weak exports and a slow recovery from the pandemic compared to regional peers.

The economy unexpectedly contracted in the fourth quarter of 2023 and policymakers have downgraded the growth outlook for this year, adding to pressure on the central bank to give in to the prime minister’s near-daily demands for an interest rate cut.

Srettha has outlined ambitions to make Thailand a regional hub for several sectors including electric vehicles (EVs), aviation, finance and the digital economy. He has also urged lawmakers to boost Thailand as a food, wellness and tourism hub.

“We are doing everything we can,” Prominn said, referring to measures including visa-free tourism and policies to address household debt that is at a ratio of 91% of gross domestic product.

He also said Thailand must “improve almost every kind of legal framework” to make it easier to do business. He added companies like Alphabet Inc’s Google and Tesla had expressed interest in investing in the country.

Critics have cautioned that the government’s raft of measures – especially a US$14 billion ‘digital wallet’ handout scheme – may not be fiscally viable and could stoke inflation.

Prommin said the government’s 3.48 trillion baht (US$97.29 billion) budget should be approved and ready to spend by next month.

The budget has been on hold since October due to a delay last year in forming a government.

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