Nearly 30 years after IMF rescue, Thailand faces new economic test

BANGKOK: Ekniti Nitithanprapas was a young graduate student in the United States when Thailand devalued the baht in 1997, setting off the Asian financial crisis.

A loan from the International Monetary Fund and a raft of recovery measures helped Thailand find a way out of the economic morass.

Almost 30 years on, Bangkok will next week host the annual meetings of the IMF and World Bank and Ekniti, now Thailand’s finance minister, is looking to steer the economy through a new challenge: how to escape years of sluggish growth. “After the financial crisis, our investment-to-GDP has declined to around 22 percent to 23 percent at the moment. So that’s why our growth momentum has been so slow,” Ekniti told Reuters in an interview. “After I took the position as finance minister, I put it at the top of my agenda to push investment-led growth policies.” Ahead of the Bangkok meetings, IMF Managing Director Kristalina Georgieva warned the global economy was under threat from persistently high energy prices, record public debt and risks from the AI investment boom — all factors for Thailand, where the public debt-to-GDP ratio is nearing the official ceiling of 70 percent.

‘HOLDING UP BETTER’

Thailand, Southeast Asia’s second-largest economy, has grown by an average of only 2.34 percent a year over the last five years, lagging regional peers that have recovered more swiftly from the pandemic. Ekniti last month outlined a plan to hit 3 percent growth within three years by drawing foreign investment into key sectors such as semiconductors, data centres and advanced manufacturing, including electric vehicles.

A net energy importer, the country is also investing in renewables as it seeks to develop such resource-hungry industries. Thailand’s central bank, however, has a more conservative view, putting the economy’s potential growth rate at 2.7 percent, a level it says could take at least four years to reach.

Despite headwinds, including a thorny household debt problem, sliding tourism arrivals and an unresolved trade deal with Washington, the Thai economy is showing resilience — a far cry from its situation in 1997.

“Thailand’s economy is holding up better than expected in the face of the global energy shock, deflationary pressures have receded, and policy predictability has improved following general elections in February 2026,” Fitch Ratings said last month, revising Thailand’s outlook to “stable” from “negative”.