Thailand's economy, once a star in Asia, is now facing a convergence of severe headwinds. The Iran war is driving an energy shock that is hammering the kingdom's crucial tourism industry, which is already wounded from the pandemic. A record heatwave is straining power grids, and the baht is tumbling.
Growth is stalling, possibly contracting in the first quarter. The Bank of Thailand, which held rates too high for too long, now has no room to cut as inflation finally climbs to its target-a terrible way to hit that goal. Government debt is high, and the demographic outlook is dire, with one of Asia's lowest birth rates.
One potential bright spot is political stability. The coalition led by Prime Minister Anutin Charnvirakul won a decisive majority in February. Finance Minister Ekniti Nitithanprapas is considering a stimulus package and a higher debt ceiling. However, the temptation to simply muddle through is strong. The nation must do more to secure its long-term future.