
BANGKOK - Thailand’s economic growth may falter this year, following a weaker-than-expected fourth quarter when consumption cratered despite a government cash handout aimed up firing up sluggish growth, according to Bank of Thailand governor Sethaput Suthiwartnarueput.
The central bank previously forecast that the economy could expand by 2.9% this year, lower than the Ministry of Finance projection of 3%.
“I have to say that there is some downside risk to that figure,” Mr Sethaput told Reuters in an interview.
He estimated the economy expanded by 2.7% in 2024, with the final-quarter pace above 3% but still weaker than forecast.
The National Economic and Social development Council will release the official 2024 growth figures on Feb 17.
“The impact of the handouts and the stimulus was less than we had expected,” Mr Sethaput said. “The handouts that went out sometimes were used to pay down debt and whatnot, so you didn’t see that translation into consumption.”
His remarks were his first this year on the growth outlook and the effectiveness of the government’s vaunted 500-billion-baht consumption stimulus policy. The second phase of the cash handouts, to 3 million senior citizens over age 60, took place earlier this week.
The government hopes to roll out the third phase of its signature “digital wallet” programme in April, aiming to spur “very high” growth. The scheme, the Pheu Thai Party’s core election campaign policy, was launched last September after repeated delays.
The Bank of Thailand’s monetary policy stance remains broadly neutral and inflation will rise to cross to hit 1.1% this year, remaining in the target band of 1% to 3%, but the central bank remains concerned about the volatility of the baht, Mr Sethaput said.
“We feel that at present, when you take it all together, the current policy rate is appropriate for striking the right balance for those things,” he said.
“That said, if things change, right, we’re prepared to change.” Last month, the central bank left its key interest rate unchanged at 2.25% after a surprise rate cut in October. It will next review rates on Feb 26.
Trump adds uncertainty
The return of US President Donald Trump for a second term has injected more uncertainty but it was still too early to say what impact it would have on Thailand, the governor said.
“It’s highly uncertain, and it’s very, very early days,” said Mr Sethaput, who is set to finish a five-year term in September.
Thailand is seeking to benefit from an expected reorientation of supply chains triggered by tariffs threatened by the new US administration.
Mr Sethaput also underlined the central bank’s hesitation on cryptocurrency, even as the government makes a push to use it as an alternative payment system, with a proposal for a so-called sandbox on the tourist island of Phuket.
Cryptocurrencies lack a stable value, their underlying technologies are not very scalable and can lead to a fragmented payment system, he said, pointing out that the existing PromptPay digital payment platform was working well.
“The benefits of the use case have to be very, very clear because they are downside risks to moving to that.”