Thailand did an early job in containing the coronavirus outbreak and is often cited as an example of how a country can react. However, this came with a cost. Tourism is crucial to the kingdom with the industry accounting for about 20% of the country’s GDP. With the coronavirus pandemic hitting global travel, tourists stayed away, hence hitting the Thai economy. According to the June 2020 World Economic Outlook by the International Monetary Fund (IMF), GDP is forecasted to contract 7.7% this year. 2021 outlook continues to depend heavily on the Covid-19 developments.

Thailand economy: GDP constant prices

Thailand Economy Overview

Coronavirus aside, Thailand has rapidly developed economically over the last few decades, and this nation of 68 million people has become modernised and profitable. Thailand is particularly dependent on exports, which account for over two-thirds of its GDP. Still in the process of industrialising, Thailand has become the eighth largest economy in Asia, according to the World Bank.

The country relies largely on its industrial and service sectors in order to generate wealth, with the former accounting for nearly 40% of its GDP. The 2019 GDP of Thailand is equal to $520 billion, and the state has established itself as the second-largest economy in Southeast Asia, after neighbouring Indonesia.

Such has been the development success of Thailand that the World Bank recognised it as one of the most improving nations in terms of social and development indicators. Thailand is also notable for having one of the lowest unemployment rates in the world, with this figure persistently under 1%. This can perhaps be considered slightly misleading, though, as a large proportion of the population works in subsistence agriculture and other vulnerable employment.

An Aging Society

The population of Thailand is just under 70 million. Most of these people live in rural areas, with agriculture being a dominant sector of the economy. Thailand is one of the world’s largest rice growing nations, although its urban population is also growing. Population growth in the country is slowing, with this figure currently being around not 0.5%.

Life expectancy has risen in recent years, thanks to the implementation of health-conscious policies. Nonetheless, the United Nations classifies Thailand as an ‘ageing society’, and it is projected that one-fifth of the country’s population will be over 60 by 2025.

Currency and Central Bank

The Thai Baht is not a particularly valuable currency on the world stage, with one United States dollar currently being the equivalent of 32.5 baht. Traditionally, this currency was fixed on a silver basis, but began being pegged to the US dollar in 1956. Thailand’s currency has since become independent, and its value has fluctuated quite significantly over the last couple of decades.

However, inflation has stabilised in Thailand. The inflation rate in Thailand is approximately at 1%, although the IMF expects this figure to decrease this year (-1.1%), according to April data.

Thailand economy: Inflation average consumer prices

As in many countries, interest rates have been low in Thailand in recent years, and currently stand at 0.50% (as of June 2020).

The Bank of Thailand assumed all central banking functions thanks to the Bank of Thailand Act, which became operative in April 1942. As Thailand remains a developing economy, its monetary policy committee is very much focused on controlling inflation, and has done a decent job of this in recent years with what has been a measured fiscal policy.

Thailand has a relatively low level of public debt, with its current debts being approximately 42% of GDP. This has assisted its central bank in stabilising monetary policy in recent years.

Industry and Trade

Agriculture is of central importance to Thailand, with this critical industry having evolved thanks to the technological revolution since the 1980s. However, as Thailand has industrialised, its share of the country’s GDP has fallen sharply, despite the nation continuing to employ nearly one-third of the working population. Thailand’s main agricultural output consists of rice, rubber, corn, sugarcane, coconuts, palm oil, pineapple, cassava and fish products.

Thailand also has strong manufacturing and service sectors, but its economy is primarily reliant on exportation. Incredibly, this accounted for 67% of the countries GDP in 2018; a rapid increase from the 16% figure of 1960.

Thailand is an active member of ASEAN, and its main export partners are United States, China, Japan, Vietnam, and Hong Kong, and its main exports are manufactured goods, principally electronics, vehicles, machinery, and food. Thailand exported $245 billion worth of products in 2019. Two-thirds (63.2%) of it by value were delivered to fellow Asian countries, 14.6% went to North America.

As previously mentioned, Thailand economy is also depending on tourism. This industry accounts for about 20 percent of the country’s GDP. According to the recent UN report “COVID-19 and Tourism“, Thailand could suffer a GDP loss of 47 bio. USD due to the losses in this sector this year.

Surveys and Rankings

Thailand finished 40th in the latest Global Competitiveness Report, which can be considered a respectable, if unspectacular, result. In the Ease of Doing Business Report by the World Bank, Thailand moved up six places to 21st out of 190 countries. The kingdom is competitive within its region, but ranked behind Malaysia and Singapore.

Thailand economy: Global Ease of Doing Business Index Comparison ASEAN

Thailand’s economic freedom score is 69.4, making its economy the 43rd freest in the 2020 Index. It experienced improved scores in government integrity and property rights during the most recent reporting period.

Stock Exchanges and Capital Markets

The Stock Exchange of Thailand is the national stock exchange of the nation. Its market capitalisation is approximately equivalent to $600 billion. The stock exchange in Thailand has matured rather quickly, and in 2014 it became the first Southeast Asian country and ASEAN member to join the United Nations Sustainable Stock Exchanges initiative.

The Bangkok SET50 Index is the major stock market index in Thailand, and the index tracks the performance of all common stocks listed on the Stock Exchange of Thailand. It is capitalization-weighted, and has a base value of 100.

Fifteen Thai companies were included in the most recent Forbes Global 2000 list. By far the most successful is PTT Public Company Limited, which specialises in the oil and gas industry. Three of the other four companies in the top five in Thailand are in banking, namely Siam Commercial Bank, Kasikornbank, and Bangkok Bank, with the building materials company Siam Cement Group completing the top five.

Chemicals, food production, and telecommunication are also represented among Thailand’s most successful companies.

Bond Market

The bond market in Thailand has performed surprisingly well since the Asian financial crisis of 1997. Both corporate and government bonds are popular in Thailand, and the country has managed to attract a good raft of foreign investment. The bond market has grown from 12% of GDP in 1997 to 81% of GDP as of June 2019, illustrating its success. Its stock market capitalization has also grown from 24% of GDP to 107% of GDP during the same period.

Capitalisation of the bond market in Thailand is equal to $450 billion. Government bonds are responsible for 37% of this market, with corporate bonds accounting for 29%. Over the past decade, participation in the sovereign bond market in Thailand has increased markedly. However, foreign investors having demonstrated a pattern of selling Thai government bonds recently, and this is likely to continue due to the retraction of the Thailand economy.

Real Estate Market

The property market in Thailand has grown slowly but steadily over the last 10 years, with foreign capital partly responsible for its growth. A better economic outlook, higher take-up, and occupancy rates have also contributed to the real estate market’s successes.

According to the Global Property Guide, house prices from 2008 to 2018 rose by 39.3% and in 2019, house prices rose by 5.3%. However, real estate prices are also expected to drop by the end of this year – before a sharp rise in 2021 again.