Thailand: Economic and Political Overview
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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. The country's economy appears resilient and, according to the IMF, is expected to advance at a moderate pace in a post-COVID-19 context, despite domestic political uncertainty. Public investment is projected to remain a key driver, increasing over the next few years, in line with the government’s infrastructure plans to attract private investment and a continued improvement of the tourism sector. Due to the COVID-19 pandemic, the country registered negative GDP growth for the first time since 1998, going from +2.3% in 2019 to -6.1% in 2020. The GDP growth rate reached +1.5% in 2021 and +2.8% in 2022. According to the IMF's latest forecast, GDP growth is expected to reach 3.7% in 2023 and +3.6% in 2024, subject to the post-pandemic global economy recovery (IMF, October 2022).
Inflation went negative to an estimated -0.8% in 2020 and reached 1.2% in 2021 before jumping to 6.2% in 2022 following the global world trend. It is projected to decrease to 2.8% in 2023 and 1.5% in 2024 (IMF, October 2022). The general government balance fell to -5.3% of GDP in 2021 and -3.8% in 2022. It is projected to be reduced to -0.4% in 2023 and 2024. Due to the impact of the COVID-19 pandemic public debt increased to 58.4% in 2021 and 61.5% in 2022, from 49.6% in 2020. It is estimated to stabilised at 61.4% in 2023 and 61.3% in 2024 (IMF, October 2022).. The National Strategic Plan (2017-2036) places the emphasis on improving the business environment, boosting the country's competitiveness and long-term economic performance through the development of rail, road, airport, and electricity infrastructures.
The unemployment rate remained very low in 2022 (1.5%) and is projected to stay at 1% in 2023 and 2024 (IMF, October 2022). Thailand's official unemployment rate is among the lowest in the world due to low birth rate, lack of social insurance and informal sector employing the bulk of workforce (street vendors, motorbike taxis and self-employed).
In 2023, the country’s most immediate challenge will be to navigate the volatile international context, facing steep challenges against a backdrop of the persistent health and economic overhang of a global pandemic and a war in Europe, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 500.53 | 505.52 | 536.16 | 574.23 | 617.00 |
| GDP (Constant Prices, Annual % Change) | -6.2 | 1.6 | 2.6 | 3.4 | 3.6 |
| GDP per Capita (USD) | 7,171 | 7,227 | 7,651 | 8,182 | 8,781 |
| General Government Balance (in % of GDP) | -2.7 | -5.3 | -3.8 | -0.5 | -0.4 |
| General Government Gross Debt (in % of GDP) | 49.4 | 58.4 | 60.5 | 61.0 | 61.6 |
| Inflation Rate (%) | -0.8 | 1.2 | 6.1 | 2.8 | 2.0 |
| Unemployment Rate (% of the Labour Force) | 2.0 | 1.5 | 1.0 | 1.0 | 1.0 |
| Current Account (billions USD) | 20.93 | -10.65 | -17.48 | 6.65 | 18.63 |
| Current Account (in % of GDP) | 4.2 | -2.1 | -3.3 | 1.2 | 3.0 |
Source: IMF – World Economic Outlook Database, October 2021
Thailand had a labor force of 39 million people in 2020, out of its 69.8 million population. Its economy is heavily based on agriculture, which contributed 8.5% of the GDP and employed 31% of the active population in 2022 (World Bank, 2023). The country is largest producer of natural rubber in the world and one of the leading producers and exporters of rice; it also possesses sugar, corn, jute, cotton and tobacco among its major crops. Fishing constitutes an important activity as Thailand is a major exporter of farmed shrimp. However, agriculture's contribution to the GDP is declining, while the exports of goods and services have increased.
The manufacturing sector accounted for 34.8% of the GDP in 2021 and is well diversified. It employed 22.5% of the active population (World Bank, 2023). The main Thai industries are electronics, steel and automotive. Thailand is an assembly hub for international car brands. Electrical components and appliances, computers, cement production, furniture and plastic products are also important sectors. The textile sector employs less than a quarter of the active population and is no longer as dynamic as tourism, which has become the main source of foreign currency.
The tertiary sector, including financial services, is rising. It contributed to 56.7% of the GDP and employed 46.5% of the active population in 2022 (World Bank, 2023). Tourism played an ever more important role in the Thai economy until 2020 and the country is waiting for the world's borders to open again to international travel. The borders are now open and tourists are slowly making their way to Thailand in 2023.
Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024 (International Monetary Fund - IMF, 2023). The impact of the 2022 world events appears to have affected both sides of most sectors and markets in this country for the third year in a row - demand disruptions having run up against supply problems - making the short-term outlook uncertain for agriculture, industry and service sectors.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 31.4 | 22.8 | 45.7 |
| Value Added (in % of GDP) | 8.5 | 34.8 | 56.7 |
| Value Added (Annual % Change) | 1.0 | 3.3 | 0.6 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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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.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Latest Update: April 2023
