The Thai government has set a growth target of 3% by 2025 and expects to exceed this thanks to $4.4 billion in economic stimulus measures and other policies.
Thailand’s economy is forecast to grow more than 2.5 percent this year, lower than previously expected, according to the minutes of the Bank of Thailand’s (BOT) February 26 monetary policy meeting released on March 19. The economic recovery has become increasingly uneven.
At the meeting, the BOT's seven-member Monetary Policy Committee voted six in favor and one against cutting the one-day repo rate to 2.0 percent, a 25 basis point reduction. A single member wanted to keep the rate unchanged.
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| In 2024, Thailand's economy will grow 2.5%, lower than other countries in the region. Illustrative photo |
The 25 basis point rate cut came as a surprise, after the central bank left rates unchanged in December 2024 and cut them by the same amount in October. The BOT had forecast economic growth of 2.9% in December.
According to the minutes of the meeting, the BOT Monetary Policy Committee said that growth may be lower than previously forecast, with increased risks in the coming period. The majority of members believed that the interest rate cut would help ease credit conditions, in which the 2.0% level still ensures enough policy space.
Household debt in Thailand reached 16.34 trillion baht ($486 billion) at the end of September 2024, equivalent to 89.0% of GDP – the highest in Asia. The government sees household debt as a major obstacle to consumption and growth.
“The economic recovery has been increasingly uneven across sectors,” according to the minutes of the BOT meeting. Tourism and exports have grown, but manufacturing, especially autos and real estate, has continued to decline due to structural challenges.
The BOT Monetary Policy Committee agreed that Thailand's economic slowdown is due to structural factors, requiring supply-side restructuring policies. Committee members who voted to keep interest rates unchanged said monetary policy has "limited effectiveness in addressing structural issues in the current economic environment" and mainly serves as a tool to regulate demand.
Last week, BOT Governor Sethaput Suthiwartnarueput said the policy rate of 2.0% was appropriate given the current circumstances and the central bank did not intend to change it frequently. The BOT also stressed that further rate cuts would need careful consideration as the current level remained appropriate given the economic outlook.
The Thai government has set a growth target of 3% this year and expects to exceed it thanks to $4.4 billion worth of stimulus measures and policies to boost economic activity.
| Southeast Asia’s second-largest economy grew 2.5 percent last year, slower than its regional peers. The central bank is scheduled to review its next interest rate policy on April 30. |
Source: https://congthuong.vn/kinh-te-thai-lan-nam-2025-du-kien-tang-truong-thap-hon-ky-vong-378996.html
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