Thailand flag Thailand: Economic and Political Overview

The economic context of Thailand

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

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 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. In 2021, the GDP growth rate reached an estimated +1.0%. According to the IMF's latest forecast, GDP growth is expected to reach 4.5% in 2022 subject to the post-pandemic global economy recovery (IMF, October 2021).

Inflation went negative to an estimated  -0.8% in 2020 but reached 0,9% in 2021 and is projected to increase to 1.3% in 2022 and 1.1% in 2023 (IMF, October 2021). The general government balance fell to -4.0% of GDP in 2021 and is projected to come back to -0.4% in 2022. Due to the impact of the COVID-19 pandemic public debt increased to 58% in 2021 from 49.6% in 2020 and is estimated to approach nearly 60% in 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.

In 2022, the country’s most immediate challenge remains related to the economic, social and public health impacts of the COVID-19 pandemic. The unemployment rate remained very low in 2021 (1.5%) and is projected to maintain itself at 1% in the next two years (IMF, October 2021). 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).

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 499.75505.90534.76580.69597.57
GDP (Constant Prices, Annual % Change) -6.21.52.83.73.6
GDP per Capita (USD) 77788
General Government Balance (in % of GDP) -2.7-5.3-3.8-0.4-0.4
General Government Gross Debt (in % of GDP) 49.558.461.561.461.3
Inflation Rate (%) -0.81.26.32.81.5
Unemployment Rate (% of the Labour Force) 2.01.51.01.01.0
Current Account (billions USD) 21.18-11.02-2.5711.2420.68
Current Account (in % of GDP) 4.2-2.2-0.51.93.5

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

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 8.6% of the GDP and employed 31.2% of the active population in 2021 (World Bank, 2022). 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 33.1% of the GDP in 2021 and is well diversified. It employed 22.5% of the active population (World Bank, 2022). 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 58.3% of the GDP and employed 46.3% of the active population in 2021 (World Bank, 2022). 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 COVID-19 pandemic has had a powerful impact on the global economy since 2020. Nevertheless, the global recovery continues, even if the momentum has weakened towards the end of 2021 and uncertainty has increased as the pandemic resurged, leaving lasting imprints on medium-term performance. The surge in global inflation has investors fretting about future growth, but many economists say price surges will subside, making way for 4.7% global GDP growth in 2022 (International Monetary Fund - IMF, 2022 & Morgan Stanley, 2021). The impact of the pandemic appears to have affected both sides of most sectors and markets in Thailand for the second 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) 8.6 33.1 58.3
Value Added (Annual % Change) -3.4 n/a n/a

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:

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:

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

 

Country Risk

See the country risk analysis provided by Coface.
 

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Agriculture and Cooperatives
Ministry of Commerce
Statistical Office
National Statistical Office
Central Bank
Bank of Thailand (BOT)
Stock Exchange
The Stock Exchange of Thailand (SET)
Economic Portals
Thai Chamber of Commerce
 

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Latest Update: November 2022