Finance Ministry pegs growth goal at 3.5%

The Finance Ministry has set a lofty economic growth target of 3.5% a year.
In his keynote speech at the CEO Econmass Awards 2024, organised by the Economic Reporters Association on Wednesday, Finance Minister Pichai Chunhavajira said the growth rate next year is expected to be about 10% higher than this year, potentially reaching 3%.
“This 3% rate does not take into account the opportunities or potential Thailand has. Historically, Thailand’s GDP has grown as high as 5-6%,” said Mr Pichai.
“I wish to see Thailand’s current real GDP growth at 3.5%.”
He said an appropriate inflation rate for Thailand should be at least 2%, noting that in some countries with policies promoting high economic growth, inflation of 2.5% is acceptable.
Mr Pichai said over the past decade, Thailand’s economic growth has been relatively low.
From the pandemic years of 2020-2021 until now, average economic growth has been only 0.4%.
Last year growth was 1.9%, and this year it is forecast to be 2.7%.
Over the past 10 years, Thailand’s manufacturing sector, especially small businesses, have dwindled.
During certain periods, the utilisation rate dropped as low as 50%, while the prices of goods have also decreased, he said.
“We have to choose. Do we want lower prices for goods, but not much money to buy things? Or do we want higher prices for goods, but more money in consumers’ pockets?” said Mr Pichai.
He said he prefers economic growth to austerity measures.
To drive economic growth, Mr Pichai said it is essential to promote domestic investment. The country’s liquidity is sufficient to support investment, but investment levels have sagged in recent years, he said.
“We have become a country that is financially stable, but has low investment, resembling a wealthy individual without a future,” said Mr Pichai.
He said the direction of Thailand’s investment should align with global trends, such as digital and the green economy, as well as efforts to develop human skills.
According to Mr Pichai, for 2023 and this year, Board of Investment applications submitted and approved total 2 trillion baht, the highest level in a decade.
One investment promotion policy this government will push is amending the leasehold asset law, extending land lease agreements up to 99 years from the current 30 years, he said.
Mr Pichai said the effort aims to provide foreign investors with confidence in long-term investments that are worthwhile, offering land rights that allow foreigners to sell them or use them as collateral for loans from financial institutions.
If Thai private entities wish to sell land to foreigners, this can be done, but the approach requires the private sector to first transfer land ownership to the state, then the leasehold asset law gives foreigners the right to utilise the land under a 99-year lease agreement, he said.
Mr Pichai insisted investment stimulus requires infrastructure investment, especially in logistics. Logistics costs account for 18% of Thai GDP.
He said an important project is the Land Bridge, which seeks to create a transport hub between two oceans, specifically targeting the shipment of goods to and from China by reducing costs.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), which joined an economic forum at the same event, echoed the ministry’s GDP growth outlook for 2025, believing it will be driven by tourism, government stimulus measures and an improving global economy.
The group expects Thai GDP growth of 3.5-4% next year, with improving trade bolstering Thai exports, a significant contributor to GDP.
“The JSCCIB hopes geopolitical conflicts will not turn more severe, affecting the Thai economy,” said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries.
As tourism continues to recover, foreign tourist arrivals should reach 40 million next year, up from a target of 36 million this year, he said.
Payong Srivanich, chairman of the Thai Bankers’ Association, warned prolonged high levels of household debt threaten to affect the 2025 economy.
“Household debt will weaken people’s purchasing power and economic growth,” he said.
The Thai economy should grow by 3% this year, but severe flooding in the North dealt a blow to the economy, reducing it to a gain of 2.6-2.7%, said Sanan Angubolkul, chairman of the Thai Chamber of Commerce.
He said he supports the government effort to seek membership in BRICS, a grouping comprising Brazil, Russia, India, China and South Africa.
BRICS is working on a new payment system to reduce their reliance on the US dollar.