Is 2025 growth proof that Thai economy is out of ICU?

Thailand’s 2.5 per cent economic expansion in the fourth quarter of 2025 was proof that the country had exited the ICU, Finance Minister Ekniti Nitithanprapas said recently. He was alluding to many observers labeling Thailand the “sick man of Asia” due to its economic growth lagging behind regional peers for the past several years.

The stirrings of growth in the economy has excited many, especially policymakers like Ekniti, who oversaw the Finance Ministry for less than three months in the Anutin Charnvirakul government before the dissolution of the House of Representatives in early December.

Ekniti claimed that “the short-term consumption stimulus package [of the Anutin government] had contributed to the growth exceeding expectations”.

The overall economy grew 2.4 per cent last year, surpassing forecasts by multiple agencies and reflecting the impact of the “Quick Big Win” measures, he said.

Ekniti was referring to the co-payment scheme (“Khon La Khrueng Plus”), under which the government offered a 50 per cent subsidy for the purchase of necessities, limited to 2,400 baht to each of some 20 million eligible persons, as well as tourism tax breaks and increased cash handouts to the poor holding state welfare cards.

Partly due to those schemes, household consumption grew by 3.3 per cent in the fourth quarter last year, compared with the 2.5 per cent growth in the previous quarter.

Once labelled one of Asia’s “tiger economies”, Thailand’s GDP growth has struggled to average around 3 per cent in the last few decades.

Consumption and investment boost growth

The secretary-general of state think tank National Economic and Social Development Council (NESDC), Danucha Pichayanan, clarified at a recent press conference on the quarterly economic report that the 2025 GDP growth of 2.4 per cent was a result of year-round economic expansion: 3.1 per cent in the first quarter, 2.3 per cent in Q2, slowing to 1.2 per cent in Q3. The full-year growth of 2.4 per cent was mainly achieved due to the 2.5 per cent surge in Q4.

Government measures such as the “Khon La Khrueng Plus” project helped stimulate spending, especially among individuals, resulting in consumption growing by 3.3 per cent, up from 2.5 per cent in previous quarters, according to Danucha.

He said the main factors behind Thailand’s better-than-expected economic expansion were investments from both the private and public sectors, especially ongoing construction projects.

State enterprise budget disbursements injected over 92 billion baht into the economy, and efforts to facilitate private sector investment further propelled economic growth in both Q4 and the entire year.

“Thailand’s economy in Q4/2025 performed very well—I admit I was surprised by how much it exceeded expectations,” Danucha said. “For 2026, growth is projected at around 2 per cent, but several risks and uncertainties remain.

Much will depend on the management and upcoming government policies to drive the Thai economy forward,” he added.

Renewed interest in Thai stocks

The Thai stock market has seen a rapid rise since the February election, suggesting increased investor confidence in the Thai economy. On Friday (February 20), the SET closed at 1,479.71 points, up 17.47 per cent year to date. But the big question is about the sustainability of this optimism.

“The rise of the stock market index recently is largely due to high expectations of more political stability following the election,” says Paiboon Nalinthrangkurn, CEO of TISCO Securities.

The unofficial result of the February 8 general election shows the Bhumjaithai Party emerging as a clear winner with 193 parliamentary seats in the 500-member lower house and well poised to form the next coalition government.

Paiboon explains that foreign investors were buying Thai shares, as they expect the next government may be able to complete its full four-year term. The next movements in the market would depend on the qualifications of Cabinet members, sound policies and their actual actions, says Paiboon.

However, reports of irregularities have cast a shadow over the election outcome, with some observers even suspecting the election was rigged, raising the potential danger of the election being invalidated.

“Should that happen, the stock market index would fall,” Paiboon warns.

Challenges ahead

Strengthening the Thai economy will require more than just the easy tool of government stimulus.

“Consumers rushing to buy electric vehicles before the tax break expires and the government injecting more cash into the pockets of vulnerable groups have partly contributed to the rise in consumption,” says Pipat Luengnaruemitchai, managing director and chief economist at Kiatnakin Phatra Financial Group.

The government acceleration of budget disbursement has boosted the construction sector, which expanded by 11.2 per cent, helping to drive the economy from a standstill, he says.

The overall economic growth at 2.4 per cent last year was higher than the estimated growth rate of 2 to 2.2 per cent, according to Pipat.

“It may be true, as the finance minister said, that Thailand is out of the ICU, but I think we’re definitely not out of the hospital,” says Pipat. “We need to undergo physiotherapy to gain our full strength and go back to our potential.”

Meanwhile, during this period Singapore’s economy grew by 6.9 per cent, Vietnam by 8 per cent and Malaysia by 6.3 per cent.

Thailand has to depend very much on public sector spending to achieve over 2 per cent growth, reflecting a problem of decline in competitiveness.

The government can no longer use massive fiscal expansion without risking fiscal discipline, according to Pipat.

“The government may prevent our economy from falling into the abyss, but the big challenge is finding ways to catch up with our neighbors. We need a new engine of growth,” he adds.