Amidst Thailand’s economic uncertainties, experts are voicing concerns over the nation’s growth trajectory, highlighting structural weaknesses and urgent issues surrounding the banking and credit system. Dr. Amrathhep Mongkhonnavin, a senior executive at CIMB Thai Bank, has pointed out that while the government’s proposed initiative to buy bad debt may alleviate some burdens faced by banks, it presents a dual-sided challenge.
On one hand, this initiative aims to enhance liquidity in the banking system, which has seen stagnant loan growth across various sectors including consumer, corporate, and automotive financing. According to Dr. Amrathhep, the hesitation among financial institutions to extend credit is driven not solely by increasing bad loans but also by a considerable number of creditworthy customers aware of the risks associated with borrowing.
“In the long run, we must be cautious about moral hazard where individuals might feel that accumulating debt means they do not need to repay it since the government will intervene,” Dr. Amrathhep stated, warning that such a mindset could lead to unsustainable growth in the Thai economy.
Dr. Amrathhep emphasized the need to stimulate inclusive economic growth, particularly for lower-income segments, by reducing credit risks through better income generation mechanisms rather than solely relying on financial guarantees. He suggested that structural issues in the economy, particularly in the industrial sector that accounts for about 25% of GDP, need urgent addressing to avoid over-reliance on tourism, which is subject to fluctuations.
Recent data revealed that the Thai economy is projected to expand by only 2.3% in 2025, which marks a notable decrease from previous estimates partly due to disappointing tourism recovery, especially among Chinese tourists. As of late February 2025, the number of Chinese travelers has not rebounded as expected, dropping to 400,000 monthly visits, accounting for only 35% of pre-pandemic levels.
KKP Research’s analysis suggests that ongoing uncertainties surrounding U.S. trade policies contribute significantly to the economic challenges that Thailand faces, with the potential for higher tariffs further straining trade dynamics. According to their projections, Thai exports may be hindered substantially, leading to less favorable economic outcomes. They anticipate that, despite the government’s fiscal stimulus efforts, including the distribution of digital wallets to approximately 2.7 million youth, the intended economic boosts might be limited.
“The effectiveness of our measures must be continually assessed. We might allocate budgets efficiently, but the push for consumption must see substantial and widespread growth,” Dr. Amrathhep detailed, criticizing the current slow rates of economic turnover, particularly in rural and lower-income populations.
The current fiscal measures include significant commitments aimed at combating inflation and fostering job creation, particularly within infrastructure sectors. However, experts emphasize that without a robust strategy for engaging various economic sectors, these measures may fall short.
To address the decreased competitiveness affecting diverse industries, particularly manufacturing, Dr. Amrathhep posits that leveraging past crisis lesson, especially through the government guarantees experienced during the 1997 crisis, could be instrumental in transforming the current economy.
As figures suggest weak performance across the board, many are looking ahead to the months where Thailand will face challenges relating to both domestic and international factors. KKP Research’s forecast predicts that without swift and effective policy changes, growth projections may decline further nearing 2.0% by 2035.
In summary, while the Thai economy grapples with evident stagnation and increasing uncertainties, experts call for immediate actions that encompass all sectors of the economy, accompanied by strategies that should reduce systemic risks and change how debt and credit policies are approached. The call for revitalization hinges not merely on temporary measures but rather on sustainable growth drivers aiming for equitable sharing of economic opportunities.
