‘Critical’ Thai economy needs urgent stimulus, says PM’s office
Tourists shop for street foods ahead of Lunar New Year celebrations in Bangkok’s Chinatown, Thailand, January 19, 2023. REUTERS/Athit Perawongmetha/File Photo
By Panu Wongcha-um and Devjyot Ghoshal
BANGKOK (Reuters) -Thailand’s economy is in a “critical situation” that requires urgent stimulus measures and a potential rate cut, officials from the prime minister’s office said on Monday, as the country pushes to draw new investments from the likes of EV maker Tesla (NASDAQ:TSLA).
Prime Minister Srettha Thavisin, who took power last August, has been pushing to revive Southeast Asia’s second-biggest economy, which has suffered from weak exports and a slow recovery from the pandemic compared with regional peers.
“Figures show we are not in good shape,” Prommin Lertsuridej, chief of staff to the prime minister, told reporters, outlining a series of challenges ranging from low industrial capacity utilisation to ballooning household debt.
The economy unexpectedly contracted in the fourth quarter of 2023 and policymakers have downgraded the growth outlook for this year, adding to pressure on the central bank to give in to the prime minister’s near-daily demands for an interest rate cut.
Prommin, a veteran political strategist, said there was room to reduce rates, which would help struggling households by putting more money in their hands, but said the government would not intervene in the central bank’s decision making.
Srettha has outlined ambitions to make Thailand a regional hub for several sectors including electric vehicles (EVs), aviation, finance and the digital economy. He has also urged lawmakers to boost Thailand as a food, wellness and tourism hub.
“We are doing everything we can,” Prommin said, referring to measures including visa-free tourism, policies to address household debt, and support for the critical agriculture sector.
A key election promise to give away 10,000 Thai baht ($279) to 50 million Thais to spend in their local communities was still in the pipeline, with implementation likely by late May, he said.
Critics have cautioned that the government’s raft of measures – especially a $14 billion “digital wallet” handout scheme – may not be fiscally viable and could stoke inflation.
TALKS WITH TESLA
Thailand is continuing talks with auto major Tesla for a potential investment in the country, an official from the prime minister’s office said.
The government has offered the EV maker access to 100% clean energy for a facility in Thailand that could encompass EVs and battery production.
“It is up to Tesla right now,” Supakorn Congsomjit said, declining to provide further details.
Late last year, Tesla surveyed potential locations in the country, he added.
Long dominated by Japanese carmakers such as Toyota Motor (NYSE:TM) and Honda (NYSE:HMC) Motor, Thailand has seen a wave of investment by Chinese EV makers, including BYD (SZ:002594) and Great Wall Motor, amounting to more than $1.44 billion.
In a bid to draw more foreign investment, Prommin said the government was working on multiple fronts, including easing visa regulations, amending laws for improving ease of doing business and upgrading physical and digital infrastructure. ($1 = 35.8100 baht)
