Thailand's Economic Growth Target for 2025

By Kitiphong Thaichareon and Orathai Sriring

BANGKOK (Reuters) – Thailand is targeting economic growth of 3.5% in 2025 after 2.7% growth projected for this year. The government aims to soon consider additional stimulus measures and the rollout of the second phase of its $14 billion handout scheme, according to Finance Minister Pichai Chunhavajira at a business forum.

Growth has been sluggish, hindered by low investment, high household debt, and challenges faced by smaller businesses. Southeast Asia's second-largest economy grew just 1.9% last year, with household debt reaching 89.6% of GDP at the end of June, among the highest in Asia.

> "Thailand's structural problems mean there is no investment in new technology," Pichai stated.

He emphasized that fiscal and monetary policies must act in concert to address these issues, noting limited fiscal space due to rising public debt. As of September, public debt stood at 63.28% of GDP, with the government committed to keeping it below 70%.

The central bank recently cut the key interest rate to 2.25%, marking its first reduction since 2020, amidst government pressure to ease policies for growth. A policy review is scheduled for Dec. 18.

Last month, the government aligned with the central bank to maintain the 1% to 3% inflation target for 2025, agreeing to push inflation above 2% to stimulate economic growth and increase state revenue. Headline inflation was just 0.26% from January to October, with expectations of 0.7% to 0.8% for the entire year.

On Nov. 19, the government will discuss additional economic measures, including phase two of its digital wallet scheme, which will provide 10,000 baht ($288) each to about 45 million people. So far, a third of recipients have received payments.

Thailand's industrial sentiment index improved for the first time in three months in October, buoyed by stronger tourism, exports, and government handouts, according to the Federation of Thai Industries.

Pichai urged the private sector to increase investments and called for banks to help mitigate household debt. He suggested reducing the contributions banks must pay to the Financial Institutions Development Fund to provide more funds for addressing debt issues.

($1 = 34.72 baht)