The economic context of Thailand

Economic Indicators

Thailand is the second-largest economy in Southeast Asia after Indonesia, and with an upper-middle income status, serves as an economic anchor for its developing neighbour countries. Thailand’s economy continues to recover gradually from the COVID-19 shock: economic activity expanded modestly by 1.9% in 2023 and by an estimated 2.8% last year (IMF). Private consumption, which drives over half of overall growth, slowed in the first three quarters of 2024 due to high household debt, tighter credit, and weak medium-term prospects. Tourism, once contributing 12-17% of GDP before the pandemic, reached only 8.9% of GDP by the end of 2024, with arrivals at 86% of pre-pandemic levels despite a global tourism recovery. Investment has not yet become a key driver of recovery or medium-term growth. Thailand’s growth gap with ASEAN peers remains significant, equivalent to 8-14% of GDP in lost output since recovering to pre-COVID levels. Growth is expected to hold steady at 2.9% in 2025, supported by fiscal stimulus and increased public investment under the FY2025 budget. Private consumption should remain strong, driven by government measures, while private investment is set to rise, boosted by public spending and growing FDI inflows.

According to the World Bank, the FY24 deficit (Oct 2023–Sep 2024) fell to a 5-year low of 2.5% of GDP, driven by improved revenue collection from economic recovery and lower capital spending due to a seven-month budget delay. Investment budget disbursement reached 70%, below the 74% average of the past three years. Public debt hit 63.3% of GDP and is expected to rise further with a widening FY25 deficit, fueled by increased spending, especially on fiscal stimulus and cash handouts. In September, the deficit widened due to accelerated spending, including a THB 10,000 cash handout for 14 million Social Welfare Card holders. Household debt surged from 40% of GDP in 2003 to 90% in 2020, driven by financial liberalization, pro-consumption policies (e.g., first car and home incentives, rice-pledging scheme), and income shocks (2011 floods, 2013-14 protests, pandemic). By Q2 2024, debt declined to 90.7% of GDP from a peak of 95.8% as households deleveraged post-pandemic. However, it remains a key financial sector risk due to both its high level and the large share of uncollateralized consumer loans in bank portfolios. Thailand's average consumer price index (CPI) increased by 0.4% in 2024 year-on-year, the lowest inflation in four years, according to the Commerce Ministry. The IMF sees inflation at 1.2% in 2025, returning to the authorities’ target range (1 to 3%).

The unemployment rate remained very low in 2024 (1.1%) and is projected to stay around 1% over the forecast horizon (IMF). Thailand's official unemployment rate is among the lowest in the world due to the low birth rate, lack of social insurance and informal sector employing the bulk of the workforce (street vendors, motorbike taxis and self-employed). The country’s average GDP per capita (PPP) was estimated at USD 26,416 in 2024 by the IMF. Thailand has made the most progress in ASEAN on eradicating poverty in recent years: poverty is estimated to have fallen to 8.2% in 2024, driven by stronger growth, easing inflation, and a one-time cash transfer to 14.6 million state welfare cardholders under the Digital Wallet program, which likely boosted consumption. Inequality also declined by about 1.5 Gini points (World Bank). However, sustaining progress will require addressing climate-related risks, such as recent flooding, and structural challenges related to demographics and labour incomes.

Main Sectors of Industry

Thailand has a labour force of 40.2 million people, out of its 71.6 million population. Its economy is heavily based on agriculture, which contributes 8.6% of the GDP and employs 30% of the active population (World Bank, latest data available). The country is the largest producer of natural rubber in the world and one of the leading producers and exporters of rice; it also includes sugar, corn, jute, cotton and tobacco among its major crops. Fishing constitutes an important activity as Thailand is a major exporter of farmed shrimp. Traditional farming methods are prevalent, but there's a growing emphasis on modernizing agriculture through technology adoption, such as precision farming and irrigation systems. Thailand's agricultural and agro-industrial product exports reached USD 52.19 billion in 2024, reflecting a 6% rise from the previous year, according to the Thai Trade Policy and Strategy Office (TPSO).

The manufacturing sector accounts for 32.9% of the GDP and is well diversified, employing 22% of the active population (World Bank). The country has established itself as a manufacturing hub in Southeast Asia, attracting foreign investment due to its strategic location, skilled workforce, and robust infrastructure. The Thai industrial sector is diverse and dynamic, encompassing manufacturing, electronics, automotive, and petrochemicals among its key sectors. Emerging sectors within the industrial landscape include renewable energy, biotechnology, and aerospace, reflecting Thailand's efforts to move towards high-value-added industries and technological innovation. Throughout 2024, the manufacturing production index contracted by 1.79% year-on-year, improving from the 3.77% decline recorded the previous year.

The tertiary sector contributes to 58.5% of the GDP and employs 48% of the active population (World Bank). Key sectors include tourism, finance, healthcare, education, and telecommunications. Thailand's tourism industry is a major driver of the tertiary sector, attracting millions of visitors annually: according to official governmental figures, the country welcomed over 35.5 million international visitors in 2024 (+26.2% y-o-y), generating an impressive income of more than USD 48.4 billion (+34% y-o-y). The finance sector, centred in Bangkok, serves as a regional financial hub, offering a wide range of banking, insurance, and investment services. Healthcare and education are also prominent sectors, with Thailand being a destination for medical tourism and home to reputable universities and international schools. Emerging areas within the tertiary sector include digital services, e-commerce, and fintech.

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	30.1	22.1	47.8
Value Added (in % of GDP)	8.6	32.9	58.5
Value Added (Annual % Change)	2.0	-2.3	4.5

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:

69,7/100

World Rank:

42

Regional Rank:

9

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:

6.59/10

World Rank:

38/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Sources of General Economic Information

Ministries

Ministry of Economy, Trade and Industry
Ministry of Commerce

Statistical Office

National Statistical Office of Thailand

Central Bank

Bank of Thailand (BOT)

Stock Exchange

The Stock Exchange of Thailand (SET)

Economic Portals

Thai Chamber of Commerce