Last updated: April 2016
Thailand became an upper-middle income economy in 2011. Over the last four decades, Thailand has made remarkable progress in social and economic development, moving from a low-income country to an upper-income country in less than a generation. As such, Thailand has been one of the widely cited development success stories, with sustained strong growth and impressive poverty reduction, particularly in the 1980s.
Thailand’s economy grew at an average annual rate of 7.5 percent in the late 1980s and early 1990s, creating millions of jobs that helped pull millions of people out of poverty. Gains along multiple dimensions of welfare have been impressive: more children are now getting more years of education, and virtually everyone is now covered by health insurance while other forms of social security have expanded.
Poverty has declined substantially over the last 30 years from 67% in 1986 to 11% in 2014 as incomes have risen. However, poverty and inequality continue to pose significant challenges, with vulnerabilities as a result of faltering economic growth, falling agricultural prices, and ongoing droughts. Poverty in Thailand is primarily a rural phenomenon. As of 2013, over 80 percent of the country's 7.3 million poor live in rural areas. Moreover, an additional 6.7 million were living within 20 percent above the national poverty line and remained vulnerable to falling back into poverty. Although inequality has declined over the past 30 years, the distribution in Thailand remains unequal compared with many countries in East Asia. Significant and growing disparities in household income and consumption can be seen across and within regions of Thailand, with pockets of poverty remaining in the Northeast, North, and Deep South.
The Thai economy faces headwinds, and growth has been modest, at 2.8 percent in 2015 after 0.9 percent in 2014, partly on the basis of government consumption and investment, and partly on declining imports. The outlook for 2016 is 2.5 percent. The rate of economic recovery and reigniting growth, will depend on how fast Thailand can overcome factors constraining growth and promote a more inclusive growth model. There are opportunities in the horizon, including expanding trade through enhanced integration with the global economy, bolstering growth by implementing transformative public investments to crowd-in private capital, stimulate domestic consumption, and improving quality of public services across the entire country. This will support a resumption of higher, more balanced, growth path that eliminates extreme poverty and boosts shared prosperity for all citizens.