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Thailand Economy

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Thailand’s economy is the 23rd largest economy globally in terms of Purchasing Power Parity, the 9th largest in Asia-Pacific and the second-largest economy in Southeast Asia (SEA), behind Indonesia.

Over the last 40 years, Thailand has been able to make big strides in its socio-economic development, elevating its status from a low-income country to an upper-middle-income nation in just a single generation. This is why the country has been widely recognised as a development success story, having been able to sustain strong economic growth while dramatically reducing poverty.   

The country has a population of about 70 million and a labour force of over 40 million. Despite a per capita GDP of around $7,000, Thailand has been able to reduce poverty which stood at 58% in 1990 to 6.8% in 2020 owing to structural transformation and rapid growth.

Subsequently, 6.3% of the country’s population lived under the poverty line in 2021. For 2022, he World bank had projected a rise in poverty rate to 6.6%.

Thailand Unemployment Rate (in %)

Despite the effects of the Covid-19 pandemic, Thailand was able to maintain its unemployment rate to just 1% in 2020. The rate increased to 2.25% in 2021 and dropped again in 2022, reaching 1.32% – just slightly higher than the 20-year average of 1.20%. In 2023, the unemployment rate in the country is projected to be 1.20%.

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The low birth rate, lack of social insurance, and the substantial number of people employed in the informal sector contribute to the country’s low unemployment rate.   

The GDP of the 7th largest economy in Asia-Pacific, grew an average of 9.5% per year between 1987 and 1996, while growth slowed to an average of 3.9% during 2000–2014. In 2020, Thailand’s economy registered a massive 6.2% GDP contraction, due to multiple waves of Covid-19.

To boost the economy from the pandemic-led downturn, overall four economic stimulus measures were introduced by the government in 2021. Following the relaxation of containment measures and the reopening of the country, Thailand’s economy expanded 1.6% in 2021 and 2.6% in 2022.

The International Monetary Fund (IMF) in its last revision, expects Thailand’s GDP to grow by 2.7% in 2023 and 3.6% in 2024.


Thailand GDP Annual Growth Rate (in %)

Currency and Central Bank

The baht is Thailand’s official currency and is divided into 100 satangs. In 2018, Bloomberg referred to the Thai baht as the world’s best-performing currency.

The Bank of Thailand (BOT) serves as the country’s central bank and is currently led by  governor Sethaput Suthiwart-Narueput. Its goal is to achieve continuous improvement in the standard of living of the country’s citizens, by providing a stable financial environment for sustainable economic growth.  

In November 2023, the BOT decided to maintain its key rate at 2.50%. This decision followed a series of increases totaling 200 basis points since August of 2022, aimed at controlling inflation. The consensus among most economists is that no changes to the policy will come in early 2024.


Thailand Inflation (in %)

Industry and Trade

The Thailand economy is categorised into three sectors: agriculture, industry, and services. In terms of agriculture, the country is considered the largest producer of natural rubber and ranks among the top rice producers and exporters globally. The agricultural sector employs 49% of the country’s labour force but only contributes 8% of the GDP. With the surge of goods and services exports from Thailand, agriculture’s GDP contribution is on the decline.  

In 2021, approximately 31.59% of the nation’s workforce was engaged in the agricultural sector. Despite this significant labour force participation, the agricultural sector contributed only 8.71% to the GDP in 2021 and constituted 8.82% of the country’s economy in 2022.

Meanwhile, the industrial sector constituted 34.99% of the GDP in both 2021 and 2022. It employed 22.51% of the total workforce in 2021. The top industries in Thailand are electronics, steel and automotive. The country serves as an assembly hub for international car brands and also manufacturers electrical components and appliances, computers, cement, furniture, and plastic products. Meanwhile, the service sector comprises about 56% of GDP. 

Before the beginning of the pandemic, 40 million foreign tourists visited Thailand in 2019, providing 20% of total employment and contributing to 11% of GDP. Chinese tourists accounted for 30% of all Thai tourism spending in 2019. But the pandemic caused tremendous setbacks to the industry, as the country saw only around 430.000 tourists in 2021, a drop from 6.7 million in 2020.

Nevertheless, the gradual reopening has led to a surge in international arrivals in 2022, reaching 11.15 million. Furthermore, in the first 11 months of 2023, the count of foreign tourists visiting Thailand amounted to 24.5 million.

 


Thailand Balance of Trade

Thailand ranks 21th in the world in terms of total exports, with office machine parts, automobiles, integrated circuits, delivery trucks, and gold as its main export products. Its top export partners are the US, China, Japan, Vietnam, and Hong Kong. 

Meanwhile, Thailand ranks 24th globally in total imports and its top import products are crude petroleum, integrated circuits, petroleum gas, vehicle parts, and gold. China, Japan, the US, Malaysia, and Singapore are its main import partners. 

Stock Exchanges and Capital Markets

The Stock Exchange of Thailand or SET is the sole stock exchange in the country and is considered the second-largest stock exchange in ASEAN in terms of market capitalisation. Furthermore, Thailand’s IPO market is one of the strongest in Asia.

The primary stock indices used for SET are the SET50 Index and the SET100 Index, which are calculated based on the prices of the top 50 and top 100 companies on the exchange. Among these listed companies are oil and gas firm PTT, building materials company Siam Cement, and public company Airports of Thailand.  

Bond Market

According to official data, Thailand’s bond market has grown from 12% of GDP in 1997 to 94% of GDP as of September 2021.

Thailand’s bond market is divided into government and corporate debt securities. Currently, around 45% of the total market outstanding is comprised of government debt securities, which are categorised into Treasury bills (T-bills), government bonds, Bank of Thailand (BoT) bonds, and State-Owned Enterprise (SOE) bonds.  

Meanwhile, corporate debt securities accounted for 27%, in the form of  Straight, Floating Rate Notes (FRN), Amortizing, and Convertible bonds.  

During the initial nine months of 2023, Thai bond valuations experienced a significant surge, rising by 5.8% to reach 16.7 tn baht ($482.72 bn). Additionally, the country is reaping the benefits of foreign capital inflows, with global funds investing 11.7 bn baht ($338.20 mn) in Thai bonds by October 19, 2023, as per the Thai Bond Market Association.

Looking ahead, in the fiscal year starting October 1, 2024, the Thai government intends to issue 1.25 tn baht ($36.13 bn) in government bonds, marking an escalation from the 1.09 tn baht ($31.50 bn) issued in the present fiscal year, as per Reuters.

Real Estate Market

Since the end of 2019, house prices have been decreasing in Thailand due to the sluggish economy, a high level of household debt, and pandemic hit consumer purchasing power.

The pandemic caused a slump in Thailand’s property market in 2020, forcing most developers to delay the launch of new projects and to focus on selling existing inventory and offering discounts. 

However, in 2022, developers introduced more development ventures compared to 2021. And in 2023, the Thai local housing market experienced remarkable expansion. In Bangkok, real estate prices achieved an unprecedented increase of 10%, while the renowned tourist island of Phuket saw a rise of 5%

Projections indicate that the value of the real estate market is poised to reach $2.47 tn in 2023. Anticipated to exhibit a CAGR of 1.26% between 2023 and 2028, the market volume is expected to reach $2.63 tn by the end of this period.

Thailand Housing Index (in %)

 

Source of charts: tradingeconomics.com

Key Growth Indicators

2024 Projected real GDP (% Change): 3.2
2024 Projected Consumer Prices (% Change): 1.6
Country Population: 70.183 million
IMF, as of October 2023

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