Thailand’s economy grew at a slower pace in the third quarter, prompting the new government to push for a $14 billion cash handout program.
Gross domestic product (GDP) rose 1.5% year-on-year in Q3, lower than the estimated 2.2%.
Despite a partial recovery in domestic activity and an uptick in tourism, Thailand’s economic growth continues to trail behind its neighboring countries. This can be attributed to a significant decline in exports and reduced government spending.
- The NESDC revised its 2023 GDP growth forecast to 2.5%, down from the previous estimate range of 2.5%-3%, in response to the disappointing print.
- Thailand’s slower economic growth in the third quarter supports the need for the planned $14 billion cash handout program.
- The borrowing to fund the cash aid plan has raised concerns about widening the fiscal deficit and stoking inflation, triggering backlash from opposition parties.
The government plans to boost annual growth to 5% by implementing a digital wallet program that would provide a one-time cash handout to millions of Thais.
The plan has faced opposition due to concerns about borrowing and inflation. The slower growth in Thailand’s economy has highlighted the need for stimulus measures.
The government hopes that this cash handout will boost the economy by over 2 trillion Thai baht. However, there are concerns about whether this scheme can address the country’s socioeconomic issues, such as poverty, income inequality, and a deteriorating education system.
However, it remains uncertain whether the implementation of the digital wallet scheme can effectively address the socioeconomic challenges that Thailand is currently grappling with. Thailand has been experiencing an increase in poverty rates even prior to the pandemic, despite experiencing modest economic growth.
What are the main factors behind Thailand’s slow growth?
Some analysts point to the political instability and social unrest that have plagued the country for more than a decade. Others cite the lack of structural reforms and innovation that have hampered the competitiveness and productivity of the Thai economy. Moreover, Thailand faces demographic challenges such as an aging population and a shrinking labor force, which limit its potential growth.
How can Thailand overcome these challenges and boost its growth prospects?
The World Bank suggests that Thailand needs to implement a comprehensive and inclusive recovery strategy that addresses both the immediate and long-term impacts of the pandemic.
This includes strengthening the public health system, supporting vulnerable groups, promoting digital transformation, enhancing regional integration, and fostering green and resilient development. By doing so, Thailand can leverage its strengths, such as a diversified economy, a strategic location, and a skilled workforce, and achieve more sustainable and equitable growth in the future.
About the author
Boris Sullivan is a business news editor based in Hong Kong. He has over 15 years of experience in covering the latest trends and developments in the Asian markets, as well as the global economy.