Bangkok Post – World Bank upbeat on poverty reduction outlook

The World Bank expects Thailand’s poverty rate to continue declining this year, supported by ongoing economic recovery and the government’s cash transfer programmes.

According to Kiatipong Ariyapruchya, senior economist for the World Bank Thailand, the government’s money transfer programmes, covering the elderly and welfare cardholders, as well as the digital wallet initiative, should continue to reduce poverty this year.

“However, economic and tax reforms are also necessary to strengthen Thailand’s economic potential and ensure poverty reduction in the long term,” said Mr Kiatipong.

According to the bank’s Thailand Economic Monitor for February 2025, poverty declined to 8.2% in 2024, supported by stronger economic growth and easing inflation.

Cash transfer programmes increased household consumption, contributing to a dip of 3 percentage points for poverty at the upper-middle-income international poverty line of US$6.85 per person per day (231 baht).

The first phase of the government’s cash handout scheme, launched in September 2024, had a fiscal cost of 145 billion baht (0.8% of GDP) and helped increase private consumption, while reducing poverty in the fourth quarter of 2024.

This programme increased GDP growth by an estimated 0.3 percentage points in 2024, based on an estimated fiscal multiplier of 0.4.

In 2025, the initiative is expected to expand, reaching a broader population at an additional cost of 305 billion baht (1.6% of GDP).

However, with the remaining budget for this programme at 170 billion baht (0.9% of GDP), securing the additional funding needed may be challenging, according to the report.

In addition, Mr Kiatipong said the government’s increased spending would impact the fiscal budget and public debt. Fiscal policy faces a triple challenge: meeting the growing demand for ageing-related public services, revitalising investment to drive economic growth, and ensuring public debt remains sustainable.

“Public debt is projected to rise to 64.8% of GDP in fiscal 2025 and could approach the 70% ceiling within five years,” he said.

Despite this warning, Mr Kiatipong said Thailand’s public debt remains fiscally sustainable, with low levels of foreign currency-denominated debt, accounting for just 1% of total debt, and a relatively low cost of funding.

However, the pressure for increased social spending and public investments in human capital, driven by an ageing population, is steadily rising, noted the global lender.

To enhance fiscal resilience amidst growing spending needs, the World Bank said it is crucial to focus on targeted social assistance, improve tax revenue mobilisation, and accelerate public investments in infrastructure, technology, and human capital to stimulate private sector growth.

Thailand can enhance its fiscal resilience by improving revenue mobilisation and ensuring that spending is effectively targeted. Expanding the tax base and prioritising pro-growth investments in infrastructure and new technologies will be critical for sustainability, according to the report.

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