Thailand Approves $13.5 Billion Stimulus to Boost Sluggish Economy

The Thai government has approved a 500 billion baht digital wallet policy that will provide 10,000 baht ($270) to 50 million Thais to spend in their local communities over a six-month period.

Prime Minister Srettha Thavisin announced the stimulus measures on Friday, saying he has asked Thailand's four largest banks - Bangkok Bank, Kasikornbank, Krungthaibank, and SCBX - to decrease interest rates to support the economy during this time," Srettha said.

The government expects the 500 billion baht stimulus to add 1.2 to 1.6 percentage points to economic growth and help the economy expand by at least 5% in 2025. The Thai economy unexpectedly shrank in the final quarter of 2023, prompting the government to cut its 2024 growth outlook.

Why this matters: Thailand's economy has been struggling with soaring household debt and weak growth. The massive stimulus package highlights the government's concern about the economic situation and its determination to boost consumer spending and investment.

The launch of the digital wallet plan, a key platform of the ruling Pheu Thai party, had been delayed due to funding concerns and criticism from some economists who warned it could violate fiscal discipline. However, the government has rejected these concerns, saying the policy will be financed from the 2024 and 2025 budgets and using capital from the state-owned Bank for Agriculture and Agricultural Cooperatives.

Deputy Finance Minister Santi Promphat reaffirmed a fourth-quarter launch date for the digital wallet policy. "The government has found a way to finance the stimulus by drawing funds from the 2024 and 2025 fiscal budgets, as well as capital from the state-owned Bank for Agriculture and Agricultural Cooperatives," Santi said. Despite the criticisms, the government is moving forward with the stimulus project that received cabinet approval in hopes of delivering a much-needed boost to the Thai economy.

Key Takeaways

• Thailand approves 500B baht digital wallet policy to provide 10,000 baht to 50M Thais.
• PM asks banks to lower interest rates to support the economy during this time.
• Stimulus expected to add 1.2-1.6 percentage points to economic growth, aiming for 5% in 2025.
• Digital wallet plan was delayed due to funding concerns but now approved and set for Q4 launch.
• Government aims to boost consumer spending and investment through this massive stimulus package.