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Thailand’s economy is the 21st largest economy globally in terms of Purchasing Power Parity, the 7th largest in Asia-Pacific and the second-largest economy in Southeast Asia (SEA), behind Indonesia.
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 about 70 million and a labour force of 33 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.
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, standing at 1.32% – just slightly higher than the 20-year average of 1.20%.
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 3.7% in 2023.
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.
Since August 2022, the BOT has raised its key interest rate by a total of 75 basis points in three meetings (as of December 2022). The central bank stated that it will continue to raise rates until the economy reaches its full potential and inflation returns to its target of 1% to 3%.
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 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.
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. Meanwhile, the service sector comprises 58% 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. However, the gradual reopening has resulted in an increase in international arrivals in 2022, which reached 4.4 million at the end of August.
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 categorized 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.
Thailand is also benefitting from current foreign money inflows. According to data from bond market associations, Thai bonds received an inflow of $1.6 bn in November 2022.
For fiscal year 2023, that started in October, Thailand plans issuing medium-term bonds of 10-20 years because they were in demand and the yield on the long-term debt increased.
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 have introduced more development ventures compared to 2021, with over 14,000 units becoming available in Q1 2022, in contrast to just over 4,000 units in Q1 2021.
Thailand Housing Index (in %)
Source of charts: tradingeconomics.com
