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15 May 2023

Thai Economy

Short- to medium-term economic challenges await the new government (Business Brief No.4003)


        In the wake of the 2023 election, there are significant short- and medium-term challenges facing the Thai economy going forward. After the new government takes office, the first task may be to consider proceeding with economic policies that were promoted during the election campaigns. Putting these policies into practice would boost GDP growth in the short term, but at the cost of an increased fiscal burden. To implement short-term economic policies, the government may shoulder a larger budget deficit resulting from the increased cost of additional debt incurred, as the Bank of Thailand’s policy rate is expected to reach 2.00 percent. In addition, a significant increase in government borrowing may have a crowding-out effect as the private sector also needs funding during the economic recovery. Thus, the government may have to consider such consequences and consider the appropriate timing of debt creation.

        Moreover, the new government is facing major economic challenges, particularly geopolitical conflicts leading to the decoupling issue, demographic change – as Thailand has become an aged society while also seeing a decline in population – along with other countries’ environmental measures. The new government must address these issues, while also exhibiting appropriate vision and leadership. Note that only the major economic challenges have been presented here; other details are pending the announcement of the new government’s policy statement.

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Thai Economy