Nowadays, governments around the world sound like movie production houses. They always come up with catchy slogans for their policies, like Donald Trump’s Big Beautiful Bill.
The bill is essentially a tax cut, one which would result in US$3.3 trillion (107.4 trillion baht) of budget deficits over the next 10 years. To pay for his bill, he taxes the whole world with reciprocal tariffs. The trade war, which most people believed was already over, has now returned with a 100% extra tariff on Chinese products.
Our four-month government also came up with a catchy slogan — “Quick Big Win”. The slogan does not mean much to me because in the realm of economics, nothing can be done quickly.
Most importantly, this government’s hands are tied with the 2026 budget, which has already become law. The government is not allowed to use budget allocated from a specific programme to fund other ones, even if it does not agree with the allocated budget.
For instance, the previous government allocated 4 billion baht for realising its soft power policy and related action plans. If this government feels that soft power programmes are not effective, the budget will be left wasted and unspent.
Furthermore, the fiscal budget is approved for use over 12 months. If the budget use is front-loaded like the implementation of the “Khon La Khrueng Plus” or Half-Half Plus Co-payment scheme, there will be fewer tools left to stimulate the economy for the remaining part of the 2026 fiscal year.
Most people, including some economists, feel the Half-Half Plus scheme will be an effective tool to stimulate the economy because the scheme favours small businesses. A study authored by a Chulalongkorn economics associate professor proves otherwise.
The study focused on the economic impact of Prayut Chan-o-cha’s half-half co-payment scheme. It concluded that (1) the scheme did not lead to increased overall spending and (2) the multiplier of the scheme was only 0.4 times.
The sales of participating businesses increased by 60%, while the sales of non-participating businesses were lower. It was simply a shift in spending locations to take advantage of the government’s co-payment support. Therefore, overall spending growth was flat.
The effectiveness of the scheme was no better than any income transfer programme like Pheu Thai’s 10,000 baht cash handout. That is, with every 100 baht disbursed from the government, the Thai economy would benefit by only 40 baht.
That is why it was calculated that a 44 billion baht budget for the scheme would raise quarterly GDP growth by only 0.4%. Not a significant impact if you ask me.
What about the remaining 60 baht? It goes to importers, as Thailand imports goods and services amounting to over 60% of GDP. Consumption-driven schemes are never very wise programmes, as 60% of our tax money goes abroad.
The prime minster hinted that there could be more of this type of scheme next year. That does not excite me either. Government spending is capped by the 2026 fiscal budget. Spending more on one scheme means spending less on others. It is indeed a zero-sum game.
Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas argued that the stimulation policy is necessary because GDP growth for Q4/2025 could be as low as 0.3%. The 66 billion baht stimulus (22 billion baht to welfare card holders and 44 billion baht for the Half-Half Plus scheme) would lift final quarter GDP growth by 0.6%.
Is this move really worth it? If the minister spends 66 billion baht in Q4, does he have no concern about Q1/2026? With Mr Trump’s renewed trade war with China, things are bound to get worse. The Thai economy will still need support after Q4/2025. The Bank of Thailand estimates that Thai GDP growth for 2026 will only be 1.6%, a significant drop from 2.2% in 2025.
These are my words of caution. Actual revenue collection for the 2025 fiscal year is already 37 billion baht short of estimates. With 1.6% projected growth for next year, there is a good chance that revenue collection could be 100 billion baht below estimates.
The government is strongly advised to be conservative. Nobody has (or dares to) estimate the economic damage of the current floods. Heavy government support for flood relief might be needed.
Due to budget constraints, the government cannot use the term “BIG”. The term “QUICK” is also not appropriate, as nothing quick can be done in Thailand. That is because the country’s problems are structural ones. Handing out money would only give very short-term relief. The 210 billion baht cash handout by the Pheu Thai government proves that.
Mr Ekniti said the Thai economy faces four traps that hinder our development. They are (1) an investment trap, (2) a population ageing trap, (3) a technology trap, and (4) a debt trap. He could not be more right. Unfortunately, none of these traps can be resolved quickly. One of the traps causing Thailand’s economic growth to be the lowest in Asean, excluding Myanmar, is inadequate investment.
Mr Ekniti pointed out that Thai investment to GDP is only 20% of GDP, a sharp drop from the high of 40% of GDP. I do not want to argue, but to say that the normal investment to GDP for Thailand is around 25% of GDP. Those high 40% of GDP numbers were before the Tom Yum Kung Economic Crisis in 1997, when the economy had excessive investment in real estate. But it is undeniable that our investment is way too low.
Thailand needs to have an investment of around 30% of GDP, like Vietnam, in order to turn our economy around and pull the economy out of the investment trap.
But where does the necessary funding for investment come from? Economists start talking about the Sovereign Wealth Fund (SWF). Our foreign reserves are almost 9 trillion baht, which is the 4th strongest in the world. It is suggested that instead of investing in foreign bonds, about one-third, or 3 trillion baht, should be invested in Thai development projects to eliminate the investment trap, technology trap, and debt trap. One stone could kill three birds — investment, debt and technology traps. Sorry, there’s no solution to the population ageing trap. Maybe Estee Lauder can help.
I am 100% against the SWF set-up from the foreign reserve and will write an article about it.
Thailand does not need to win quick. We need SLOW, SMALL, LONG-TERM WINs. We need to win for a long-long time. Not just for one quarter before the next election.