Thailand’s government has initiated the first phase of its ambitious 450 billion baht ($14 billion) digital wallet stimulus scheme, aiming to boost economic growth in Southeast Asia’s second-largest economy. Prime Minister Paetongtarn Shinawatra, daughter of former premier Thaksin Shinawatra, launched the programme, describing it as a catalyst for a “tornado of spending”.
The initial phase targets 14.5 million welfare cardholders and disabled individuals, who will each receive 10,000 baht ($300) in cash by the end of the month, reports the Bangkok Post. This marks a departure from the original plan, which proposed distributing funds through a smartphone application to be spent within local communities over six months.
‘Tornado of spending’
“Cash will be put into the hands of Thais and create a tornado of spending,” Prime Minister Shinawatra stated at the launch event. She also hinted at future economic measures, adding, “There will be more stimulus measures, and we will move forward with the digital wallet policy.”
The scheme, a centrepiece of the Pheu Thai Party’s economic stimulus policy, initially aimed to distribute 10,000 baht to 45 million recipients. However, it has faced criticism from economists, including two former Bank of Thailand governors, who view it as fiscally irresponsible. The government has rejected these claims but has struggled to secure funding sources.
The Office of Industrial Economics (OIE) projects that the scheme will boost Thailand’s industrial sector by 0.1% and the overall economy by 0.3%, reports the Nation. OIE director-general Warawan Chitaroon expressed optimism about the immediate benefits for consumer product manufacturers.
Economic challenges
However, the Thai economy faces several challenges. The Manufacturing Production Index (MPI) is under pressure, with the OIE revising its forecast to a 1% contraction. High household and business debts, along with tightening loan approvals, are contributing to economic headwinds.
Economists warn that while the stimulus may provide a short-term boost, it may not address Thailand’s deeper structural issues, reports the Financial Times. Luca Castoldi, senior portfolio manager at Reyl Intesa Sanpaolo, cautioned, “Without accompanying structural reforms, this could simply be a temporary boost, rather than a long-term solution to the country’s deeper economic issues.”
The implementation of the full programme remains uncertain, given the Shinawatra family’s history of clashing with the military-royalist establishment and past challenges to populist policies. The central bank has expressed scepticism about the programme’s benefits, describing it as fiscally reckless.
As Thailand grapples with high household debt, weak exports, and a tourism sector still recovering from the pandemic, the government hopes this stimulus will jumpstart economic activity. However, questions remain about its long-term efficacy in addressing the structural challenges facing the Thai economy.