Thai Finance Minister eyes 2025 GDP growth of 3.5%, plans more stimulus

By Kitiphong Thaichareon and Orathai Sriring

BANGKOK (Reuters) – Thailand is targeting economic growth of 3.5% in 2025 after 2.7% growth seen this year, and the government will soon consider more stimulus measures and the rollout of phase two of its $14 billion handout scheme, the finance minister said on Wednesday.

Growth has been slow due to low investment and employment as well as high household debt and troubles for smaller businesses, Pichai Chunhavajira told a business forum.

Southeast Asia’s second-largest economy grew just 1.9% last year, with the ratio of household debt to gross domestic product (GDP) at 89.6% at the end of June, among the highest levels in Asia.

“Thailand’s structural problems mean there is no investment in new technology,” he said. 

“Fiscal and monetary policy must work together to solve the problems,” he said, adding fiscal space was small as public debt rose.

Public debt to GDP was 63.28% as of September, and Pichai said the government would ensure it would not exceed the 70% ceiling.

After long resisting government pressure to ease policy to boost growth, the central bank unexpectedly cut the key interest rate by a quarter point to 2.25% last month, the first reduction since 2020. 

The next policy review is on Dec. 18.

Last month, the government agreed with the central bank to maintain the current 1% to 3% inflation target for 2025, in return for assurances of support for its fiscal policy.

The government will push inflation above 2% in 2025 to help the economy expand and create more state revenue, Pichai told reporters.

Headline inflation was just 0.26% in January-October, and Pichai said he expected it to be 0.7% to 0.8% for the full year.

The government will discuss more economic measures on Nov. 19, including the second phase of its “digital wallet” handout scheme, Pichai said, adding it was unclear when payments would be made.

The flagship programme will deliver 10,000 baht ($288) each to about 45 million people, a third of which have already received payments.

Thailand’s industrial sentiment index rose for the first time in three months in October, boosted by stronger tourism and exports as well as government handouts, the Federation of Thai Industries said on Wednesday.

Pichai said the government would urge the private sector to invest more and banks to help tackle household debt.

He said the contributions banks must pay to the Financial Institutions Development Fund could be lowered to provide more funds for tackling debt issues.

($1 = 34.72 baht)