Thailand to Begin Phase 2 of ‘Digital Wallet’ Stimulus in January

The second phase of Thailand's multibillion-dollar stimulus package handout scheme will be launched in January, officials said in late November, with the distribution of 40 billion baht ($1.16 billion) to around 4 million people.

Under the 450 billion baht ($13.1 billion) “digital wallet” scheme, around 45 million Thais will receive 10,000 baht ($290) payments via a smartphone application, in a bid to boost domestic consumption. The program was launched in September, but the rollout has run into delays, including problems dispatching payments to those without smartphones.

The second tranche of payments, which will be paid in cash, will target people over 60 who are in particular need of support, Finance Minister Pichai Chunhavajira said, according to a Reuters report. The cash will be transferred by late January prior to the Lunar New Year on January 29. “We think this group is in need... and we can do it immediately,” Pichai told reporters.

The finance minister spoke after a meeting at which officials discussed a range of stimulus plans and debt relief measures. These have been a core priority for the Pheu Thai government since it came to office last year with grand promises of reviving the Thai economy, which has grown at a sluggish pace since the COVID-19 pandemic.

Deputy Finance Minister Julapun Amornvivat said in November that his ministry planned to present a “comprehensive economic stimulus package” to a related committee chaired by Prime Minister Paetongtarn Shinawatra for consideration. This would include both the existing “digital wallet” program and additional initiatives, particularly measures to tackle Thailand’s high levels of household debt. Totaling a whopping 89.6 percent of GDP, this is one of the highest in Asia and a significant drag on domestic consumption.

The Finance Ministry recently proposed a suspension of interest and reduced principal payments on some bad debts for three years. The government is also looking to increase people's access to financial assistance through soft loans and interest rate reductions, as well as introducing stimulus measures targeted at particular industries.

Pheu Thai’s single-minded focus on the economy has also courted friction with the Bank of Thailand, which has stubbornly refused to lower interest rates, despite steady pressure from the Pheu Thai government to do so. The controversy flared again last month with the appointment of ex-Finance Minister Kittirat Na Ranong, a loyalist of the ruling Pheu Thai party, as the next chairman of the Bank of Thailand. In October, the central bank unexpectedly announced a cut of 25 basis points, the first since 2020, although it denied this was a result of political pressure.

Thailand’s economy, the second-largest in Southeast Asia, has shown signs of recovery that suggest the stimulus measures and other government efforts to revive the economy are finally beginning to have an impact on the balance sheet. GDP grew by 3 percent in the third quarter from a year earlier, the fastest pace in two years, beating most forecasts. After growing just 1.9 percent in 2023, Thailand’s economy is forecast to grow by 2.6 percent this year and remain strong into 2025.

This has been aided by a steady recovery in the crucial tourism sector of the Thai economy. According to Thai government figures, there have been more than 29 million foreign arrivals so far in 2024, putting Thailand on target to exceed its yearly target of 36.7 million. Thai officials are confident that the country will welcome more than 40 million international visitors in 2025, exceeding the threshold for the first time since 2019. According to the World Bank, goods exports are “expected to grow due to favorable global trade despite the slowing Chinese economy.”