Sirikanya criticises the government’s economic strategy as just focusing on cash handouts without addressing debt issues. With Thailand’s 2024 growth projected at 2.7%, experts warn of private investment declines and risks from global trade shifts under a second Trump presidency from January 20, 2025.
New data released on Monday shows Thailand on course for 2.7% growth this year. However, there is concern about falling private investment and the future in 2025 in a world trade environment dominated by U.S. policy under a second Trump presidency. This week, the People’s Party’s economic spokesperson, Sirikanya Tansakul, strongly criticised the present government for its “willy-nilly” approach to the economy. Ms. Sirikanya argued that no real effort is being made to manage household and private sector debt. At the same time, Professor Sompop Manarungsan of the Panyapiwat Institute of Management (PIM) warned that Thailand is too reliant on trade to drive GDP. In short, he called for a stronger domestic economy and increased spending.
Thailand’s economy grew by 3% in the third quarter of 2024. This followed a review of data released by the National Economic and Social Development Council (NESDC) on Monday.
This performance exceeded market expectations, highlighting a rebound driven by domestic consumption and export strength. Exports surged by approximately 10% during the period.
Danucha Pichayanan, Secretary-General of the NESDC, briefed reporters. He revealed that third-quarter growth marked an increase from the 2.2% recorded in the previous quarter.
Thailand’s third-quarter growth exceeds expectations, driven by domestic consumption and strong exports
“The overall Thai economy expanded by 2.3% in the first nine months of 2024,” Danucha said, adding that this trend aligns with the government’s projections of 2.6–2.7% GDP growth for the full year.
Experts credit improved export performance and domestic consumption as key factors in a modest economic recovery. Associate Professor Sompop Manarungsan of the Panyapiwat Institute of Management (PIM) explained, “Thailand’s exports performed quite well, growing by more than 10%, which was an important variable alongside strong private consumption.”
Despite the stronger-than-expected growth, real concerns remain over declining private-sector investment. To prop up the domestic economy, the government has announced several stimulus measures.
For instance, the distribution of ฿10,000 to approximately four million elderly citizens by the Lunar New Year. Finance Minister Pichai Chunhavajira said the scheme, costing ฿40 billion, would prioritise those in need.
He spoke after a stimulus committee meeting on Tuesday, following Prime Minister Paetongtarn Shinawatra’s return from the Asia-Pacific Economic Cooperation (APEC) summit in Lima, Peru.
Government announces ฿40 billion stimulus plan, including cash handouts for elderly citizens
Critics, however, question the effectiveness of the measures. Sirikanya Tansakul, deputy leader of the opposition People’s Party, expressed scepticism about the government’s reliance on cash handouts.
“Will ฿10,000 really help solve the problem? This feels like short-term relief rather than a sustainable solution,” she posted on social media.
Sirikanya also pointed to delays in implementing meaningful economic policies. “Two months after taking office, the government seems hesitant and lacks clarity on economic stimulus,” she said.
She argued that addressing underlying issues like household debt must be a priority. Furthermore, she suggested that supporting small businesses should take precedence over handouts.
While domestic consumption and government spending have provided short-term boosts, the economy remains weak. Long-standing vulnerabilities in Thailand’s economic structure persist.
Professor Sompop highlighted Thailand’s reliance on imports and exports, which collectively surpass the country’s GDP. “Our imports and exports are around $600 billion, while our GDP is approximately $500 billion. This dependence makes us vulnerable in the evolving global landscape,” he noted.
Opposition criticises government’s reliance on cash handouts and delays in addressing economic policies
A key concern for economic planners is Thailand’s informal economy, estimated to be over half of Thailand’s real GDP. This sector serves as an escape valve for grassroots income generation but limits the government’s ability to manage and develop the economy effectively.
Efforts to address the informal economy may lead to unintended consequences, such as higher inflation and an increase in Thailand’s unemployment rate. These changes could certainly also have political ramifications.
Adding to concerns, private-sector investment has contracted for two consecutive quarters, particularly in the automotive and construction sectors.
Both Sompop and Sirikanya linked this trend to banks’ reluctance to lend, driven by risks associated with borrowers’ insufficient income. “Improving incomes and business confidence is essential to stimulate investment,” Sompop emphasised.
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Thailand also faces external challenges, particularly with the return of Donald Trump to the U.S. presidency.
Trump’s proposed tariff policies and focus on reshoring production could disrupt global trade. Sompop warned, “The incoming Trump administration aims to strengthen U.S. manufacturing at the expense of exporting nations like Thailand.”
Thailand’s informal economy poses long-term challenges to economic management and growth
While some Thai exporters may benefit in the short term as the U.S. seeks alternatives to China, long-term risks are significant. “If Trump imposes high tariffs on China, Thailand might face similar scrutiny. We must diversify our economy to reduce dependence on foreign trade,” Sompop said.
The slowing Chinese economy adds another layer of uncertainty. Beijing is scaling back overseas investments. This was evident in its withdrawal this week from Cambodia’s Funan Techo Canal project. Regional economies must brace themselves for reduced Chinese engagement.
Thailand also faces stiff competition in Asian markets from cheaper Chinese products, which flood the region in response to raised tariffs and protectionist policies in Western countries led by the United States.
A key challenge highlighted in the third-quarter report is the continued rise in household debt and declining access to credit.
NESDC data shows household debt is affecting consumer spending and small business growth. Banks have tightened lending criteria as a result.
Global challenges and rising household debt pose growing risks to Thailand’s economy
The government has announced significant debt restructuring initiatives for December, targeting ฿1.3 trillion in non-performing loans (NPLs) in the consumer, housing, and vehicle sectors.
However, sceptics fear the initiative is more about reducing banks’ non-performing loan status than injecting cash into the economy, particularly in the small business and grassroots sectors.
This measure is touted as providing relief to borrowers while reducing bad debt provisions for banks.
Government’s debt restructuring plan aims to alleviate non-performing loans but faces scepticism
Experts, however, remain cautious about its effectiveness. “Restructuring NPLs may reduce risks for banks, but it won’t necessarily increase lending without addressing income growth and credit risk concerns,” Sirikanya noted.
Nevertheless, foreign tourism remains a bright spot for Thailand’s economy, significantly driving GDP growth.
The industry continues to recover post-pandemic, attracting visitors from Europe and Southeast Asia. Increased spending during the holiday season is expected to further bolster the sector.
The NESDC also noted that public spending, supported by timely budget disbursements, played a role in Q3 growth. Analysts underline the importance of maintaining this momentum in the final quarter of 2024.
While challenges persist, Thailand’s steady recovery in 2024 has shown resilience amid global and domestic uncertainties. Growth for the year may reach 2.7%, up from 1.9% in 2023 and 2.5% in 2022.
The government must address the country’s chronic structural weaknesses and implement effective solutions to achieve significantly higher growth rates in 2025 and beyond.
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