Thailand recently appointed former energy executive, Pichai Chunhavajira, as the country’s new finance minister, tasked with the challenging job of revitalizing Southeast Asia’s second-largest economy. The 75-year-old, who previously served as an adviser to Prime Minister Srettha Thavisin, now steps into the role of finance minister and deputy prime minister, as announced by the official Royal Gazette. With a background as the chair of the board of Bangchak Corp and experience on the boards of the Stock Exchange of Thailand and the central bank, Pichai brings a wealth of knowledge and expertise to the table.
As Pichai takes the helm in the finance ministry, he faces a series of economic hurdles that have been dragging down Thailand’s growth prospects. The country lags behind its regional peers, grappling with issues such as high household debt, rising borrowing costs, and the impact of China’s economic slowdown. The latest data shows that Thailand’s GDP unexpectedly contracted in the final quarter of 2023, while overall growth for the year dipped to 1.9%, down from 2.5% in the previous year. The state planning agency has revised its 2024 growth forecast downwards to a range of 2.2% to 3.2%, highlighting the need for urgent intervention to kickstart the economy.
One of the key initiatives that Pichai will be overseeing is Srettha’s 500 billion baht ($14 billion) handout scheme, aimed at injecting cash into the economy by providing 10,000 baht ($270) to each of 50 million Thai citizens to spend within their communities. However, this stimulus package has faced criticism for its impact on public debt and lack of targeted support for vulnerable groups. Despite objections from economists and former central bank governors, the government remains committed to pushing through with the scheme, underscoring the challenges of balancing short-term economic relief with long-term fiscal responsibility.
With diverging views on monetary policy between the finance ministry and the central bank, Pichai will need to navigate the complexities of coordinating economic policies to drive growth. Srettha’s calls for interest rate cuts to stimulate the economy have been met with resistance from the Bank of Thailand, which has kept its key rate steady at 2.5%, the highest in over a decade. As Pichai steps into his new role, analysts believe that his seniority and expertise in both political and economic matters will be crucial in fostering greater collaboration and alignment between the government and the central bank.
Thailand’s new finance minister faces a daunting task as he grapples with a sluggish economy and a complex web of economic challenges. Pichai’s leadership will be put to the test as he seeks to implement policy measures to jumpstart growth, address structural issues, and navigate the delicate balance between short-term stimulus and long-term sustainability. With his extensive experience and background in the corporate and financial sectors, Pichai brings a unique perspective to the role, but the road ahead is likely to be filled with obstacles and uncertainties that will require deft navigation and strategic decision-making.