After distributing 185 billion baht (around $5.7 billion) in two phases, the government of Thailand has now officially shelved its digital wallet scheme. The program, a signature promise of the governing coalition that took office in 2023, sought to give most Thai citizens a one-time cash payment of 10,000 baht, or around $300.
The scheme was initially budgeted at 500 billion baht ($15 billion) before being scaled back to 450 billion, and was intended to stimulate Thailand’s sluggish economy. But the plan, which was controversial from the start, has not produced the expected spike in consumer spending and the government is now planning to halt further payments and shift 157 billion baht ($4.8 billion) toward other stimulus measures.
This isn’t that surprising. There was never a consensus that one-off cash payments were the right antidote for Thailand’s economic woes. In fact, quite a few economists cautioned against it. The government was apparently disappointed when the cash infusion didn’t raise consumer spending by very much, and that’s why they have decided to alter their approach.
Why hasn’t the digital wallet been more effective? For one, it was a short-term solution for what is really a long-term challenge in the Thai economy. Thailand is heavily dependent on exports, of both goods and services like tourism. Consequently, Thailand is vulnerable to disruptions in external demand, such as the COVID-19 pandemic, the Trump tariffs, or the general increase in trade tensions and barriers.
In a run of bad luck over the last several years, we have seen a number of crises and developments that have created particularly unfriendly conditions for net exporters like Thailand. The economy grew 2.6 percent in 2024, and is expected to slow further to just 1.8 percent in 2025. Other countries in the region like Indonesia and the Philippines, are experiencing their own economic headwinds but growth rates are higher.
Thai policymakers need to figure out how to get growth going again in the absence of strong export demand. A cash handout like the digital wallet scheme helps Thai consumers to spend more, but only temporarily. Long-term structural reforms that reduce consumer debt, raise wages, and help to cushion cost of living increases would be even better.
The government has been moving to tackle some of these issues, but they are complex problems that cannot be fixed quickly. There does appear to be a belated realization that if they are going to muster $15 billion for economic stimulus, it might be more effective to use it for debt relief and lowering energy bills, rather than one-time cash payments.
Of course, mustering these funds in the first place presents its own set of challenges, as Thailand is not in the greatest fiscal position right now. Like most countries, it had to run big deficits during the pandemic to offset the economic contraction. But while other countries, like Malaysia, are back to trimming their deficits, Thailand has been going in the opposite direction.
Because growth has recovered slowly in the post-pandemic period and because the government undertook expensive populist measures like cash handouts, Thailand has continued to run sizable deficits. To ease some of this fiscal pressure, there was initially a plan to fund the digital wallet with unorthodox schemes, such as borrowing from a state-owned rural development bank. But eventually, they went with the more conventional method of simply drawing the money from the state budget, spreading it out over two fiscal periods and borrowing more to do so.
Taken together, this means that a time of slowing growth and rising global risk and uncertainty, when the economy could use more stimulus, Thailand finds itself with shrinking fiscal policy space. The traditional engines of growth, exports and trade, are not likely to come to the rescue any time soon either. With the digital wallet providing only a temporary and limited boost, the government is pivoting. Unfortunately, most of the things that will lead to stronger economic growth (revival of exports, consumer debt relief) are not going to be easy fixes, and Thailand may be in for a bit of a rough economic ride over the near term.