Prime Minister Srettha Thavisin pushes for stimulus measures and a potential rate cut to boost the economy.
BANGKOK: Thailand’s economy is in a “critical situation” and needs urgent stimulus measures to avoid further stagnation, officials from the prime minister’s office warned on Monday (Mar 4). The country is working to attract new investments, including from electric vehicle (EV) giant Tesla, as part of efforts to revive Southeast Asia’s second-largest economy.
Prime Minister Srettha Thavisin, who took office in August, has been focused on reigniting economic growth, which has been hampered by weak exports and a slow recovery from the pandemic. According to Prommin Lertsuridej, chief of staff to the prime minister, figures show that the economy is struggling with a range of issues, from low industrial capacity utilization to rising household debt.
“Figures show we are not in good shape,” Prommin told reporters, underscoring the country’s economic challenges. The economy unexpectedly contracted in the fourth quarter of 2023, and the government has lowered its growth forecast for the year. This has put additional pressure on the central bank, which is under increasing calls from the prime minister for a rate cut to support households.
Prommin acknowledged that there is room to lower interest rates, which could help struggling households by increasing disposable income, but clarified that the government would not interfere with the central bank’s independence in its decision-making process.
Prime Minister Srettha has ambitious plans to position Thailand as a regional hub in key sectors such as electric vehicles (EVs), aviation, finance, and the digital economy. Additionally, he has called for boosting Thailand’s status as a food, wellness, and tourism hub.
“We are doing everything we can,” Prommin said, referring to efforts that include visa-free tourism, policies to address household debt, and measures to support the critical agriculture sector. One of the government’s key election promises, to distribute 10,000 Thai baht (US$279) to 50 million Thai citizens for local spending, is still in progress, with plans for implementation expected by late May.
However, critics have raised concerns over the fiscal viability of these measures, particularly the US$14 billion “digital wallet” scheme, warning that it could exacerbate inflation.
Talks with Tesla
Thailand is also in ongoing discussions with Tesla regarding a potential investment in the country. According to an official from the prime minister’s office, the government has offered the EV maker access to 100% clean energy for a potential facility that would include both EV and battery production. “It is up to Tesla right now,” said Supakorn Congsomjit, though he declined to provide further details.
Tesla, which surveyed potential sites for a plant in Thailand last year, is considering the country as part of its expansion in Southeast Asia. Thailand has long been dominated by Japanese automakers such as Toyota and Honda, but in recent years, there has been a wave of investment from Chinese EV manufacturers like BYD and Great Wall Motor, with investments totaling over US$1.44 billion.
To attract more foreign investment, Prommin said the government is working to ease visa regulations, amend business laws, and upgrade both physical and digital infrastructure to improve the country’s ease of doing business.
