The Thai Bankers' Association (TBA) is urging the government to bring the informal economy into the economic system to promote transparency and support the country's digital economy.
Thailand's post-pandemic GDP recovery index was 110 in 2023, weaker than the global average of 80, noted the association. A higher value on the index means it takes longer to recover.
The Thai recovery has been slower than its regional peers and the economic outlook remains highly uncertain, said the TBA.
The gradual economic recovery is partly due to the informal economy, which represents a significant proportion of the country's GDP, Payong Srivanich, chairman of the TBA and president of Krungthai Bank (KTB), said during a seminar last week.
The size of Thailand's informal economy is estimated to be 48.4% of GDP, the highest proportion compared with other regional peers like the Philippines at 39.8%, Malaysia at 30.5%, South Korea at 26%, Singapore at 17.9%, and Vietnam at 14.4%.
Thais in the tax system total 10-11 million, of which around 4 million pay tax. The country's population is roughly 66 million.
Informal labour accounts for 51% of total labour, while informal debt is estimated to be quite large, noted the TBA.
According to the National Economic and Social Development Council, Thailand's informal debt was around 1.35 trillion baht in 2023.
However, the Thai Chamber of Commerce reported that informal debt amounted to 3.97 trillion baht last year, Mr Payong said.
"Thailand also faces swelling household debt, while both the informal economy and informal debt would escalate the problem," he said.
According to data from the Bank of Thailand, Thailand's ratio of household debt to GDP tallied 90.9% in the third quarter of 2023.
If informal debt is included in the country's household debt, total household debt is likely to be higher than the existing level.
Mr Payong said Thailand's small and medium-sized enterprises in the corporate tax system represent 26% of total registered companies.
Thailand should encourage a data-driven economy in order to improve transparency, productivity, and the potential of the economy.
Moreover, higher economic potential would continue to replace the informal economy, and sustain the country's economic growth in the long term.
Regarding the uneven recovery of the economy, the rich are getting richer and the poor are getting poorer, leading to increasing social disparity and a wider wealth gap.
As a result, the government has emphasised the need to boost the economy, which has not fully recovered, through additional stimulus to increase growth, alleviate household debt, and improve livelihoods.
Existing loan interest rates are likely to be high for vulnerable segments.
"Banks are ready to take care of the vulnerable segments under targeted measures, while interest rates should be in line with market mechanisms," Mr Payong said.