Overview

Last update:  April 2015

Thailand became an upper-middle income economy in 2011. Notwithstanding political uncertainty and volatility since 1970, Thailand has made remarkable progress in social and economic issues, 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 high economic growth at 8-9 percent per year during the late 1980s and early 1990s was interrupted by the "Asian Crisis" of 1997-1998.  Since then, economic growth has been moderate, with period of robust growth, such as at around 5 percent from 2002 to 2007, followed by the fall-out from the global financial crisis of 2008-2009, the flood in 2011, and the impact of political tensions and uncertainty in 2010 and again in 2013-2015. As a result, economic growth in Thailand has lagged that in both low and middle income East Asian neighboring countries in recent years.  In addition, such comparatively slower growth reflects the decline in global demand for Thailand’s key exports such as hard drive disks and partly because of domestic factors including slowdown in government spending and withdrawal of consumption stimulus measures.  Growth was 0.7 percent in 2014 and is projected to rebound to 3.5 percent in 2015.

Thailand is likely to meet most of the Millennium Development Goals (MDGs) on an aggregate basis. Maternal mortality and under-five mortality rates have been greatly reduced and more than 97 percent of the population, both in the urban and rural areas, now have access to clean water and sanitation. At the same time, there are concerns about environmental sustainability.

Poverty in Thailand is primarily a rural phenomenon, with over 80 percent of the country's 7.3 million poor living in rural areas (as of 2013). Some regions—particularly the North and Northeast—and some ethnic groups lag greatly behind others, and the benefits of economic success have not been shared equally, especially between Bangkok, Thailand’s largest urban area, and the rest of the country. Income inequality and lack of equal opportunities have persisted. Income inequality, as measured by the Gini coefficient, has fallen in recent years, but stays consistently high above 0.45.

Last update: April 2015

The relationship between Thailand and the World Bank Group has changed from borrower-lender to knowledge partners, and from a mostly public sector focus to incorporate a growing private sector focus. The partnership has included and includes work on a range of issues:

  • Fiscal, tax and public financial management, effective decentralization, and governance and accountability;
  • Education and skills;
  • Competitiveness, SMEs and private sector development, financial sector;
  • Service delivery and social protection;
  • Transport and other infrastructure;
  • Environment and climate change.

Broadly, the World Bank Group seeks to address Thailand’s main development challenges by combining knowledge and analysis, and investment and advisory services: (i) to broaden Thailand’s economic competitiveness and global integration by supporting Thailand’s skilled labor industries and supporting the development of a broad-based and efficient physical and financial infrastructure; and (ii) to promote inclusive economic growth and in particular growth and access to opportunity in the rural areas through investments in microfinance platforms.

The WBG’s private sector arm, the International Financial Corporation (IFC) supports investments in renewable energy and in south-south development projects. Given Thailand’s strong manufacturing base and export oriented economic growth model, IFC continues to support supply chain manufacturing in Thailand through investments in Thai operations of foreign manufacturing conglomerates.

Last update: April 2015

Thailand has made an impressive transition from a low income country in the 1980s to an upper-middle income country by 2011. Poverty in Thailand has fallen steadily since the late 1980s. Over the last decade, poverty has been reduced from its recent peak of 42.6 percent (2000) to about 13.2 percent (2011). In the poorest rural northeast region of Thailand, the number of impoverished households dropped from 3.4 percent (1996) to less than 1.3 percent (2006-2009).

World Bank Group analytical work (investment climate surveys, Doing Business reports, the quarterly Thailand Economic Monitor and a range of health and education policy reports) have supported Thailand’s evidence-based, growth-promoting policies.

Thailand introduced its Universal Health Coverage Scheme in 2001 and has largely achieved its goal of providing access to affordable health care for all. Thailand’s poorest families have benefited from a declining trend in the incidence of ‘catastrophic health expenditures’ or out-of-pocket payments exceeding 10 percent of total household consumption expenditures. The incidence dropped from 6.8 percent (1996) to 2.8 percent (2010) among the poorest people in the program.

The World Bank Group works with the Government and the Ministry of Health in delivering analytic and advisory work identifying key challenges to the continuing sustainability of universal healthcare coverage and how to address these challenges, which include inequality and rising cost pressures. The World Bank also supports the government to step up effective and cost-effective HIV prevention interventions targeting key affected populations in Thailand.

Following the successful implementation of the World Bank Group’s $300 million flood relief program for Thailand in 2012, the IFC is continuing discussions with local banks to structure and offer climate change mitigation facilities and also potentially structured short term finance products. In November 2014, Thailand signed a grant agreement with the World Bank Group to assist 12 local air-conditioner manufacturers and 131 foam manufacturers to convert their production process to ozone-friendly and low global warming potential (GWP) alternative.

Among the Southeast Asian countries, Thailand has implemented renewable energy tariffs, strengthening the renewable energy market (pdf) and allowing wind and solar investments to well exceed original targets. Thailand has also been making efforts to promote renewable energy in the heating, power, and transport sectors to diversify its fuel sources and enhance energy security. To identify opportunities for energy efficiency improvement, legislation in Thailand goes further than in neighboring countries in requiring large energy users to undertake energy audits and to submit energy efficiency action plans. The World Bank Group sees the energy intensity of the economy as one of the key challenges in the country, underscoring the importance of WBG support for investments in renewable energy across Thailand. IFC Advisory Services have also supported the Ministry of Energy in promoting renewable energy from the solar and wind sector.


LENDING

Thailand: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments