Recently, Thai former energy executive Pichai Chunhavajira has been appointed as the country’s finance minister, tasked with the responsibility of revitalizing Southeast Asia’s second-largest economy. This decision comes at a crucial time for Thailand, as the economy has been facing numerous challenges, including high household debt, rising borrowing costs, and the impact of China’s economic slowdown.
Despite its potential, the Thai economy has been lagging behind its regional counterparts. The GDP unexpectedly contracted in the final quarter of 2023, with growth for the entire year slowing down to 1.9%. In response to these challenges, the state planning agency has revised its growth forecast for 2024 to a range of 2.2% to 3.2%, signaling a bleak economic outlook for the country.
One of the key policies that Pichai will oversee is the controversial 500 billion baht ($14 billion) handout scheme proposed by Prime Minister Srettha Thavisin. This scheme aims to distribute 10,000 baht ($270) to each of the 50 million Thais to stimulate spending in local communities. However, the implementation of this stimulus package has been delayed due to funding issues and concerns about its impact on the country’s public debt. Many economists and former central bank governors have criticized the scheme as financially irresponsible, urging for more targeted assistance to vulnerable groups instead.
Srettha Thavisin, the former finance minister, had clashed with the Bank of Thailand over the direction of monetary policy, advocating for rate cuts to support the struggling economy. However, the central bank has maintained its key interest rate at 2.5%, the highest in over a decade, amidst concerns about inflation and financial stability. Pichai’s appointment as finance minister is seen as a move to improve coordination between fiscal and monetary policies, as his extensive experience and knowledge in both political and economic matters could aid in bridging the gap between the government and the central bank.
As Pichai steps into his new role as finance minister, he faces a daunting task of steering the Thai economy towards recovery and sustainable growth. With his background in business administration and years of experience in the energy sector, Pichai is expected to bring a fresh perspective to economic policymaking. It remains to be seen how he will address the challenges posed by the current economic conditions and whether he will be able to implement effective measures to revive the economy and restore investor confidence in Thailand.