Thai economy in crisis: Government seeks foreign investment and tackles debt

The economy in Thailand is in crisis and needs some significant stimulation, according to the nation’s Prime Minister Srettha Thavisin, who also acts as the Thai Finance Minister. The nation’s reliance on tourism has been heavily impacted by lower-than-expected foreign arrivals, resulting in a need to prioritise foreign investment and tackle household debt.

The 61 year old prime minister made his remarks at a forum, citing the recent state-planning agency data that showed the economy grew at an unexpectedly low rate of 1.5% in the third quarter of this year, compared to the same period last year. This marked the slowest growth rate this year, attributed to weak exports and limited government spending.

The finance minister’s controversial plan to stimulate the economy involves a digital wallet policy, which will provide 10,000 baht handouts to 50 million Thai citizens to spend within their local communities next year. Despite attracting criticism from economists and former central bankers over concerns of financial discipline breaches, government officials have vocally supported the stimulus plan, referring to it as a necessary response to the country’s economic crisis, reported Bangkok Post.

PM Srettha, a political newcomer and real estate mogul, has set an ambitious target for Thailand’s economy. The Bangkok-born PM aims to achieve an average growth rate of 5% annually over the next four years. This is a bold goal considering the economy’s average growth rate of 1.9% over the previous decade, which falls behind regional counterparts.

In a move to control inflation and stimulate growth, the Bank of Thailand (BoT) unexpectedly increased the key interest rate by a quarter point to 2.50% in September, marking a ten-year high. The BoT is set to review this policy again on November 29.

Addressing the issue of household debt is also a priority for the finance minister. He announced plans to propose measures to improve household debt on December 12.