Last updated September 2018
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% in the boom years of 1960 to 1996 and 5% following the Asian Financial Crisis during 1999-2005, 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. After average growth slowed to 3.5% over 2005-2015, with a dip to 2.3 % in 2014-2016, Thailand is now on the path to recovery. Economic growth reached 4.8% in the first quarter of 2018 - the highest pace since 2013.
Poverty declined substantially over the last 30 years from 67% in 1986 to 7.1% in 2015 during periods of high growth and rising agricultural prices. However, poverty and inequality continue to pose significant challenges because of faltering economic growth, falling agricultural prices, and ongoing droughts. As of 2014, over 80% of the country's 7.1 million poor live in rural areas. Moreover, an additional 6.7 million were living within 20% above the national poverty line and remain vulnerable to falling back into poverty. Poverty is expected to decline at a slower rate in rural areas, as agricultural prices are not expected to be high as in recent years. There are risks that growth could become less inclusive as growing disparities in household income and consumption can be seen across the lagging regions of Thailand.
The rate of economic recovery and reigniting growth will depend on how fast Thailand can address structural constraints to growth while promoting inclusion. There are opportunities on the horizon, including improving the business regulatory environment, expanding trade through enhanced integration with the global economy, bolstering growth by implementing transformative public investments to crowd-in private capital, stimulating domestic consumption, and improving the quality of public services across the entire country. This will support a resumption of a higher, more balanced, growth path that eliminates poverty and boosts shared prosperity for all citizens.
Thailand has laid out its long-term economic goals in its 20-Year National Strategy (2017-2036) for attaining developed country status through broad reforms. The reforms address economic stability, human capital, equal economic opportunities, environmental sustainability, competitiveness, and effective government bureaucracies. Recent reforms include the implementation of large multi-year public infrastructure projects related to dual tracking of railways, regulatory reforms aimed at improving ease of doing business, setting up the State Enterprise Policy Committee to improve state-owned enterprise governance, the transfer of supervisory oversight of specialized financial institutions to the Bank of Thailand, the approval of progressive inheritance and property taxes, and the launch of the National Savings Fund, a retirement safety net for informal workers.
Going forward, the sustained pace and quality of reforms, as well as sound implementation, will be crucial for translating the reform effort into the desired economic outcomes. Reversing the relative erosion of competitiveness, improving effectiveness of the public sector, and improving education and skills will be particularly important to take Thailand out from middle to high income status.