Finance Ministry eyes pushing 2025 GDP expansion to 3.5%
More must be done to stimulate the economy and attract new investment, Finance Minister Pichai says
The Finance Minister said Thailand needs to push measures that stimulate the economy instead of focusing on belt-tightening by attracting new investments in the digital and green economy to drive gross domestic product (GDP) in 2025 to expand at 3.5% year on year.
Thailand’s GDP is estimated to grow by 3% in 2025 under the inflation target of 2-2.5%, Deputy PM and Finance Minister Pichai Chunhavajira said on Wednesday.
“However, there is a chance that ‘real GDP’ can grow up to 3.5% if we attract new investments in key industries that serve the changing global trends, such as the digital and green economies,” he said. “Thailand also needs to invest further in labour skill development to support these industries.”
Pichai was speaking on the topic “Thailand 2025: Opportunities, Challenges and the Future” at the CEO Econmass Awards 2024, hosted by the Economic Reporters Association.
The minister noted that Thailand’s GDP expansion has been growing slowly over the past 10 years, with average GDP expansion after Covid-19 at just 0.4% annually. GDP in 2024 is expected to grow around 2.7% due to this year’s flooding.
“Before looking at future opportunities and challenges, we must first assess the current situation. Over the past 10 years, Thailand has experienced low inflation rates, leading to a decline in production capacity, which at times has been only 50%.
Pichai pointed out that low inflation makes products cheap, but it also reduces people’s purchasing power. “To solve this, we must stimulate the economy to increase people’s revenue instead of using belt-tightening measures,” he said.
“Thailand’s policy rate is now 2.25%, which is not very high compared to that of other countries. However, we still need to bring the rate down further to fix the debt problems, allowing people to gain access to new loans and restoring the market’s liquidity,” said Pichai.
He stressed that the debt issues cannot be overlooked, as currently the debts of households and SMEs amounted to 89% of GDP. However, the government has been helping these two sectors, resulting in public debt making up 66% of GDP.
This also means the government has a smaller fiscal space of around 1 trillion baht to support the economy, he said.
