Thailand has entered a low-growth phase as the divergence of the global economic recovery dents exports and ballooning household debt drags down domestic consumption, says Finance Minister Sommai Phasee.
He said based on an International Monetary Fund (IMF) report that the global economy and trade declined significantly from 2008-14 compared with 2001-07, this indicated that high growth was over.
Even China, which used to expand by 9-10% annually, now finds it difficult to maintain 7% growth, while frontier markets such as Myanmar, Laos, and Cambodia manage only 5-7%, Mr Sommai said.
"We saw our economic growth expand by 7-8% in the past, but a growth rate of 3-4% seems high now," he said.
Thailand's family debt now stands at 80% of GDP, one of the highest in the world, while its disposable income exceeds the IMF's benchmark at 60% of GDP.
Mr Sommai agreed with Bangkok Bank executive chairman Kosit Panpiemras' recent remarks that Thais needed to save more and that adopting a consumption-driven approach to stimulate economic growth was not the right pill.
The government can offset other weak economic drivers by raising public spending to create jobs and generate revenue, he said.
"Encouraging people to consume by running up debt is out of date. We need to shift to use public investment to create jobs, which will boost consumption," Mr Sommai said.
"The public sector must expand, as we cannot rely on the export sector, which was the major engine in the past."
Relying more on public spending means the government must collect more tax revenue.
Krisada Chinavicharana, director-general of the Fiscal Policy Office, said exports and private consumption remained lacklustre last month but tourism and manufacturing showed signs of improvement.
Sethaput Suthiwart-Narueput, a member of the Bank of Thailand's Monetary Policy Committee, said the government should offer tax incentives to encourage investment by the private sector.
Prof Somprawin Manprasert, deputy dean of Chulalongkorn University's economics faculty, said Thailand had low immunity because several engines were not functional.