Finance Ministry, BoT forecast GDP growth of only 1.5% this year
Finance Minister Ekniti and BoT Governor Vitai forecast 1.5% GDP growth, citing structural issues, weak exports and a strong baht, and urge investment reforms.
- Thailand's Finance Ministry and the Bank of Thailand (BoT) both forecast a low GDP growth of only 1.5% for the year, citing structural problems and economic pressures.
- Key reasons for the low projection include a decline in the country's growth potential, weak exports, slowing private consumption, and delays in government budget disbursement.
- With limited public sector contribution, the economy will have to rely mainly on the private sector, even as consumer purchasing power weakens amid debt burdens.
- A strong baht, which hurts export competitiveness, is also a major concern, with its volatility partly linked to gold trading transactions that officials are now moving to oversee more closely.
Caretaker Finance Minister Ekniti Nitithanprapas and Bank of Thailand (BoT) Governor Vitai Ratanakorn both forecast GDP growth of just 1.5% this year, citing structural problems and mounting pressures on the economy.
They made the remarks during CEO Day 2025 on January 15, hosted by Krungthep Turakij at Dusit Thani Bangkok, where the organiser presented the CEO Awards 2025 (five awards in total) and held a panel discussion titled “Economic Outlook 2026: Fiscal & Financial Strategies for Economic Revival.”
Ekniti: Thailand’s growth potential has weakened
Ekniti, who is also caretaker deputy prime minister, said Thailand’s growth potential has declined steadily—from around 5% in the period after the 1997 crisis to about 2.7% at present. He added that actual GDP growth this year could be about 1.5%, mainly due to structural issues that require serious reform.
“Thailand’s economy today is like an old engine, an ageing driver, outdated technology and too many regulations—so it feels like being stuck in traffic all the time,” he said.
Investment push: lifting growth back to 4–5%
Ekniti said Thailand would need to raise overall investment to around 40% of GDP, from about 23% today, to push growth back to 4–5%.
He said projects worth about 480 billion baht are awaiting approval through the Board of Investment (BOI). If these can be unlocked through the government’s BOI Fast Track scheme, he said, growth this year could exceed 1.5%.
New S-Curve sectors and the “Skill Bridge” plan
Ekniti said the target “New S-Curve” industries include smart agriculture, electric vehicles (EVs), automation systems, data centres to support AI, and wellness and integrated medical services. He stressed that technology transfer to Thai people and bringing SMEs into supply chains are key conditions.
He also said Thailand must address the challenges of an ageing society through a “Skill Bridge” policy and by attracting foreign talent. The programme, he said, would focus on reskilling and upskilling across all groups, including those aged 60 and above, to match labour skills with business demand.
He added that the government is preparing to use legal mechanisms under Section 17 of the Labour Act to make it easier to bring in highly skilled workers and foreign specialists to help offset a shrinking workforce and boost domestic purchasing power.
Clean-energy infrastructure and regulatory fast-tracking
Ekniti said Thailand must accelerate clean-energy infrastructure, which foreign investors are demanding, and unlock rules to allow direct trading of clean electricity. He proposed using the Thailand Future Fund (TFF) to mobilise funding for transmission lines and modern infrastructure without adding to public debt.
He said a Fast Track approach would be used to remove short-term legal bottlenecks before pursuing permanent amendments to make doing business easier, stressing that rebuilding competitiveness requires close cooperation among the public sector, private sector and the BoT.
Strong baht, gold trades and “grey capital” concerns
Ekniti said the baht has strengthened beyond fundamentals, hurting exports and competitiveness. He said the Finance Ministry and the BoT have taken proactive steps, including legal adjustments targeting volatility linked to gold transactions.
He said he had signed an amendment to a Finance Ministry notification to give the BoT governor authority under exchange control law to order gold shops to report trading transactions to the central bank, aimed at overseeing gold trading via applications that can affect the baht.
He also said he chairs a “Connect the Dots” working group linking data among the BoT, the Securities and Exchange Commission (SEC), the Anti-Money Laundering Office (AMLO) and the Thai Bankers’ Association to close loopholes, monitor digital-asset risks and track suspicious money flows linked to so-called “grey capital.”
BoT: growth will rely mainly on the private sector
Vitai said Thailand’s economy faces pressure from both domestic and external factors, prompting a downward revision in assessments. The BoT forecasts GDP growth of 1.5%, which he said is low compared with the economy’s potential and long-term needs.
He said exports are a key drag, with the impact of a trade war involving the United States becoming more apparent. He also said delays in drafting and disbursing the annual budget due to election management would weigh on growth.
As a result, he said, the economy will rely mainly on the private sector—both consumption and investment—while the public sector’s contribution could be limited and close to zero in terms of economic impact.
Consumption slows; tourism helps but cannot fully offset weaknesses
Vitai said private consumption remains a key support, but growth is slowing—from 4–5% previously to about 3% now. This year, he said, private consumption may expand by only 1.9%, reflecting weaker purchasing power amid debt burdens and uncertainty.
Tourism is expected to improve, with foreign arrivals forecast at 35 million, but he said it would not be enough to offset weakness in other engines, particularly exports and public investment.
Why the baht has been moving sharply
Vitai said drivers of the baht’s appreciation can be grouped into three factors: economic fundamentals, capital flows (including gold-related transactions), and central bank intervention to prevent excessive volatility. He noted intervention is constrained by agreements with more than 20 major trading partners, including the United States.
He cited an example in late December when the baht strengthened from 31.8 per US dollar to 31.4 within three business days, with the BoT finding that 45% of dollar selling during that period came from gold transactions. In some periods, such as August, he said the share rose to 62%, underscoring the gold market’s growing influence on the baht.
BoT–Finance Ministry coordination on tighter oversight
Vitai said the BoT is coordinating with the Finance Ministry to expand authority under exchange control law to oversee gold transactions that use the baht as an intermediary, focusing on transactions that affect foreign exchange to limit volatility driven by speculation.
He also said the BoT found unusually large dollar sales linked to suspicious transactions, with 50% involving USDT and more than 40% of sellers being foreigners, raising questions about sources of funds.
Vitai said the BoT has asked commercial banks to report daily high-value or unusual currency-exchange transactions and noted Thailand’s policy rate remains 1.25%, the world’s third-lowest after Switzerland and Japan.
