The Thailand economy is the 26th largest economy globally in terms of nominal gross domestic product (GDP) and is the second-largest economy in Southeast Asia (SEA), behind Indonesia in terms of GDP at PPP. However, it only ranks 85th in the world in GDP per capita and only ranks fourth in the region, behind Singapore, Brunei, and Malaysia.  

Over the last 40 years, Thailand was 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 69 million and a labour force of 39 million. Despite a per capita GDP of just around $7,000, Thailand was able to lower the percentage of people below the poverty line to 8% in 2018 from 65% in 1988. 

Thailand Unemployment Rate (in %)

Despite the effects of the Covid-19 pandemic, Thailand was able to maintain its unemployment rate to just 1% and is projected to do the same in 2021 and 2022. 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 International Monetary Fund (IMF) expects Thailand’s GDP growth to bounce back to 2.6% in 2021 and 5.6% in 2022, depending on global post-pandemic economy recovery.   


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 its 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.  

BOT’s Monetary Policy Committee decided to maintain its key interest rate at a record low of 0.5% following a policy meeting last August and downgraded its GDP growth forecasts for 2021 and 2022. 

The central bank cut its growth forecast for 2021 from 1.8% in June to 0.7% in August while it slightly decreased its 2022 projection from 3.9% to 3.7%. The BOT explained that controlling the new wave of the Covid-19 outbreak and the subsequent relaxing of measures in the fourth quarter will help Thailand avoid contraction. 

The IMF expects headline inflation to average 1.3% this year but to slow down to 1.0% next year. 


Thailand Inflation (in %)

Industry and Trade

The Thailand economy is categorized 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 31.2% 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.  

Meanwhile, the industrial sector comprises 33.4% of the GDP and provides jobs to 22.5% of the total workforce. 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.  

Thailand’s service sector is in the lead, contributing to 58.6% of the GDP and employing 46.3% of the country’s active population. Tourism and financial services are the main service industries in Thailand. In 2019, 35.8 million foreign tourists visited the country, which is currently among the top 10 destinations worldwide. A large number of these tourists come from China.  

The country ranks 23rd 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. 


Thailand Balance of Trade

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. 

Survey and Rankings

Thailand went up from 27th to 21st spot out of 190 countries in the World Bank’s 2020 Ease of Doing Business Index, improving its overall score from 79.5 to 80.1. However, it is still behind its fellow ASEAN countries Malaysia and Singapore.  

Meanwhile, the Thailand economy improved its overall score by 0.3 from 69.4 to 69.7 in the Heritage Foundation’s 2021 Index of Economic Freedom, climbing to 42nd from the 43rd spot. The country remained in the category “Moderately Free,” behind Spain, Bahrain, and Poland.  

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 the strongest in Asia. According to research by Deloitte, $4.5 billion funds were raised in 2020, a 48% increase from 2019 and the largest since 2013. 

The primary stock indexes 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

Thailand’s bond market is divided into government and corporate debt securities. Currently, around 74% of the total market outstanding is comprised of government debt securities, which are categorized into Treasury bills (T-bills), government bonds, Bank of Thailand (BoT) bonds, and State-Owned Enterprise (SOE) bonds.  

Meanwhile, corporate debt securities may come in the form of  Straight, Floating Rate Notes (FRN), Amortizing, and Convertible bonds.  

In August, BOT Governor Suthiwart Narueput assured that bond yields in Thailand are more resilient to any surge in global bond yields due to tapering of monetary stimulus in the US. The governor argued that the country has high foreign reserves and is less reliant on external debt financing sources. 

This was after a US Federal Reserve meeting where it was implied that tapering could begin this year caused several emerging Asia stocks and currencies to weaken, including a more than 1% decline in Singapore and Indonesian stocks, and huge losses for the South Korean won. 

Real Estate Market

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.  

For the first five months of 2021, the average price of single-detached houses in the country went up by 1.2%, far from the 5.9% growth it recorded during the same period in 2020 and the lowest year-on-year increase since August 2017. 

Meanwhile, condominium prices increased by just 0.1% during the period, compared to 7.9% last year. For townhouses, prices slowed down from an increase of 5.5% in 2020 to just 1.4% in 2021. On the other hand, land prices remained strong, with the land price index surging by 8.4% y-o-y during the period, compared to 5.6% last year. 

Thailand Housing Index (in %)

 

Source of charts: tradingeconomics.com