Thailand

The World Bank has upgraded Thailand’s income categorization from a lower-middle income economy to an upper-middle income economy in July 2011. This is due to Thailand’s progress in social and economic development, despite facing a number of political challenges. As such, Thailand has been one of the great development success stories, with sustained strong growth and impressive poverty reduction.

In the decade that ended in 1995, the Thai economy was one of the world's fastest growing at an average rate of 8-9 percent per year. After recovering from the "Asian Crisis" of 1997-1998, the Thai economy took off again. From 2002-2007, Thailand's growth averaged at around 5 percent.

Thailand's economic growth slowed because of global economic conditions and political uncertainty in 2009 and again, in 2011, from the devastating floods. However, Thailand's economic activity is gradually returning to normal, with quarterly economic growth rates now closer to the levels often seen before the global financial crisis began in 2008. The GDP rebounded from the floods at 6.4 percent in 2012 and is forecasted to continue growing at 5.0 percent in 2013.

Primarily due to the high rates of economic growth, poverty has been falling steadily since the late 1980s. Over the last decade, poverty has been reduced from its recent peak of 42.6 percent in 2000 (a result of the 1997 crisis) to about 13.2 percent in 2011. Poverty in Thailand is primarily a rural phenomenon, with 88 percent of the country's 5.4 million poor living in rural areas.

However, benefits of Thailand's economic success have not been shared equally, with some regions—particularly, the North and Northeast—lagging behind the rest of the country in terms of poverty reduction.  Inequalities in terms of incomes and opportunities have been persistent. The GINI coefficient, a measurement of income inequality in Thailand, has been persistent at around 0.45 for the last two decades.  Much of the inequalities are inter-regional with the North and the Northeast lagging behind other regions of the country.

As a result of sensible economic policies, Thailand continues to make progress towards meeting the Millennium Development Goals (MDGs) and is likely to meet most of the MDGs on an aggregate basis. The 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. Nevertheless, there continues to be spatial variations with some regions and ethnic groups lagging behind, and there are some concerns about the environmental sustainability goal.

Over the past decade, the relationship between Thailand and the World Bank Group has changed from borrower-lender to primarily knowledge partners. The most recent strategy for Thailand—expressed in an Interim Strategy Note (ISN) FY11- FY12- focused on supporting Thailand’s recovery from the global economic recession and promoting green, inclusive growth. With the impacts of the 2008-9 political crisis largely fading away, the World Bank is in the process of consulting with the government on how it can support Thailand’s transition to upper income economy status.

The current strategy for Thailand—expressed in an Interim Strategy Note (ISN)—was discussed by the Bank's Board of Directors in November 2010.

The first prong of the interim strategy is supported by a combination of analytical work in the area of Public Financial management, including a recent Public Financial Management Report that focused on central-local fiscal relations and will assist the authorities to improve service delivery and the effectiveness of decentralization as well as a US$1 billion Public Sector Reform Policy Loan, which is assisting Thailand in its recovery from the global financial crisis, as well as supporting institutional development in the public sector by: (i) improving the effectiveness of the public financial management framework through better governance and accountability; (ii) enhancing the skills and performance of the civil service; and (iii) improving the quality and timing of service delivery. The second prong of the strategy focuses on (i) Service Delivery and Social Protection; (ii) Governance and Public Sector Reform; and (iii) Infrastructure and Climate Change.

During the ISN period, the World Bank provided a limited amount of financial support to Thailand with currently only one IBRD investment project—the Highways Management Project—under implementation. Originally approved in 2003 for US$82.4 million, additional financing (US$79.3 million) was approved for this project in 2010 to support Thailand's continuing efforts to expand highway maintenance and upgrading activities.

The World Bank's core work in Thailand will continue to primarily consist of knowledge products and advisory services. The program will focus on two flagship reports that will tackle cross-cutting issues of strategic importance, specifically:

The Public Financial Management Report, which will focus on central-local fiscal relations and will assist the authorities to improve service delivery and the effectiveness of decentralization; and

The Country Economic Memorandum which will help to assess potential different growth strategies for Thailand.

When appropriate, the World Bank will provide financing in various forms, but it is envisaged that Thailand's demand for financial assistance will be modest.

The Bank's technical support and analytical work on the public financial management framework—such as budget formulation, budget execution and revenue management—and service delivery and public sector administration has helped shape Thailand's public sector reform program. It also aided in developing one of the strongest budget systems in the region. The World Bank is also working with the National Anti-Corruption Commission to help strengthen their operational effectiveness.

World Bank supported the National Telecommunications Commission in its move to issue new international internet licenses. This greatly helped increase market competition and reduce user costs.

Grant funding and other technical assistance support was provided to help Thailand in the process of phasing out of Ozone Depletion Substances (ODS) as well as replacing chloroflourocarbons chillers, helping to mitigate not only ozone depletion but also greenhouse gas (GHG) emissions.In education, the Bank is provided analysis to address a number of priorities in the sector, including to better understand the stagnation and decline in test scores in Thailand, and to improve the quality and relevance of higher education.

In the health sector, the World Bank has provided assistance to the authorities in various areas, including in improving the effectiveness of public expenditures, and helping to revitalize the HIV/AIDS prevention efforts.

A State and Peace Building Fund (SPF)-financed project is piloting culturally appropriate and socially-inclusive local development approaches in the conflict affected areas in Thailand’s three southernmost provinces.

Numerous Bank studies had impacts on policy, and have been incorporated into various strategic plans documents, like the National Economic and Social Development Plan. Two examples—"Thailand Investment Climate, Firm Competitiveness and Growth" and "Toward a Knowledge Economy in Thailand"—conducted jointly with the National Economic and Social Development Board, examined the country's investment climate, as well as the performance of key Thai industries, providing policy recommendations on how to strengthen Thailand's competitiveness.