Thailand’s Economic Leaders Advocate Swift Stimulus Actions Amid Slow Growth
BANGKOK (NNT) – Thailand’s top economic officials are emphasizing the urgency of rapid stimulus measures and improved credit access for small businesses to stimulate growth in the face of the highest interest rate in a decade and minimal inflation. On May 27, Finance Minister Pichai Chunhavajira unveiled plans to boost manufacturing and extend more loan guarantees to small and medium enterprises (SMEs), aiming to achieve an annual growth rate exceeding 3.5%.
Following a sluggish economic performance indicated by a mere 1.5% growth in the first quarter, which lags behind regional peers, the government, led by Prime Minister Srettha Thavisin, is seeking to recalibrate its strategies. The economic Cabinet convened to address these challenges, with key figures including Bank of Thailand Governor Sethaput Suthiwartnarueput participating in the discussions. There is a consensus that the current inflation target range of 1%-3% might need adjustment to better support monetary policy and economic growth. Pichai highlighted the necessity for increased manufacturing output and the restoration of purchasing power, noting that the country’s persistently low inflation reflects undervalued products, which harms manufacturers.
The economic stagnation is attributed to weak global demand, a decline in manufacturing, and delays in public spending. These issues have been exacerbated by a nearly 7% decline in the baht since the beginning of the year. To counter these trends, the government plans to launch a digital wallet campaign in the fourth quarter to boost consumption and revitalize manufacturing. Additionally, the fiscal and monetary policy committee has agreed to increase this year’s budget spending by 122 billion baht to support the financial program, which aims to benefit about 50 million Thais with a disbursement of 10,000 baht each.
This new expenditure is part of a broader fiscal strategy, which includes widening the budget deficit to 693 billion baht, or 3.6% of GDP. Despite repeated requests from Prime Minister Srettha for a rate cut, the Bank of Thailand has maintained the borrowing rate at 2.5%, citing the need for flexibility to address currency volatility and other geopolitical uncertainties.
Attendees at the economic Cabinet meeting included key figures such as Bank of Thailand Governor Sethaput Suthiwartnarueput, who joined Finance Minister Pichai Chunhavajira and other officials in discussing the urgent need for economic recalibration. The meeting underscored the collective commitment to implementing effective measures to steer the country towards a more robust economic trajectory.
