As per a report by Reuters, Thailand’s economy may experience slower growth, potentially falling below 2.9% this year, as the fourth quarter saw a drop in consumption, despite government efforts to stimulate growth with cash handouts.
This assessment comes from the Bank of Thailand Governor, Sethaput Suthiwartnarueput, who expressed concerns about the weaker-than-anticipated economic performance.
The Bank of Thailand (BOT) had initially projected a 2.9% economic expansion for 2025, slightly under the finance ministry’s 3% growth forecast. However, the central bank chief acknowledged potential downside risks to this estimate.
He noted that the economy likely grew close to 2.7% in 2024, with the fourth quarter growth surpassing 3%, albeit underperforming earlier expectations.
The effect of governmental cash distributions and stimulus measures did not meet forecasts, as funds were often redirected towards debt repayment rather than boosting consumption, according to Sethaput. His comments mark the first public statement this year regarding economic growth prospects and the impact of the government’s $14 billion handout initiative.
The Thai government is set to roll out the third phase of its “digital wallet” initiative in April. Originally launched last September, following multiple delays, the third phase was intended to drive substantial economic growth during the first quarter of 2025.
The BOT maintains a neutral monetary policy stance, with expectations for inflation to rise to 1.1% this year, staying within its target range of 1% to 3%. Nevertheless, the central bank remains vigilant about the baht’s volatility.
The central bank held its key interest rate steady at 2.25% last month following an unexpected rate cut in October, with the next policy review scheduled for February 26. Sethaput indicated that the existing policy rate is currently well-balanced, but adjustments will be made if necessary.
Additionally, the central bank chief added in a Reuters interview that bitcoin does not meet criteria as a means of payment. The report did not specify whether the chief made a remark in general or addressed the government’s plan to create a sandbox in Phuket using digital token as a currency.
Earlier today, Thailand’s Finance Minister Pichai Chunhavajira told the media at a press conference that he believed Thailand’s economy to grow 3.0% this year, the same projection as last year. Growth would be led by increased tourism, exports and private consumption.
