Last updated September 2020
Over the last four decades, Thailand has made remarkable progress in social and economic development, moving from a low-income to an upper-income country in less than a generation. As such, Thailand has been a widely cited development success story, with sustained strong growth and impressive poverty reduction. While Thailand has been successful in stemming the tide of COVID-19 (coronavirus) infections over the last few months, the economic impact has been severe and has led already to widespread job losses, affecting middle-class households and the poor alike and threatening hard-won gains in poverty reduction
Economic growth in Thailand is expected to contract in 2020 , which is among the sharpest projected declines in the East Asia and Pacific region, due to a decline in external demand affecting trade and tourism, supply chain disruptions and weakening domestic consumption. The outbreak will likely lead to severe job losses, particularly in tourism, due to transmission control and social distancing measures. The impact on household welfare is also likely to be severe. The number of economically insecure, i.e., those living below $5.5 per day, is projected to double from 4.7 million in Q1 2020 to an estimated 9.7 million in Q2 2020, before recovering slightly to 7.8 million in Q3 2020. The government has quickly responded with a fiscal package (6% of GDP), unprecedented in terms of size and range of instruments, aimed at supporting vulnerable households and firms. The World Bank stands ready to support the government’s COVID-19 recovery program with the full breadth of our instruments.
In recent years, economic growth slowed from 4.2% in 2018 to 2.4% in 2019. The key drivers of slowing growth were weaker demand for exports reflecting the impact of US-China trade tensions, slowing public investments, and a drought, impacting agricultural production. Key development challenges also pose a risk to Thailand’s future growth if it wants to attain high-income status by 2037. These include weakness in education outcomes and skills matching, which risk future productivity and chances of the younger generation, and increasing spatial inequality, with remote areas falling behind in economic and welfare indicators.
Poverty declined substantially over the last 30 years from 65.2% in 1988 to 9.85% in 2018 (based on official national estimates). However, the growth of household incomes and consumption growth both have stalled nationwide in recent years. This resulted in a reversal in the progress of poverty reduction in Thailand with the number of people living in poverty rising. Between 2015 and 2018, the poverty rate in Thailand increased from 7.2% to 9.8%, and the absolute number of people living in poverty rose from 4.85 million to more than 6.7 million. The increase in poverty in 2018 was widespread - occurring in all regions and in 61 out of 77 provinces. In the Central and Northeast, the number of the poor increased by over half a million in each region during the same period. The conflict-affected South became the region with the highest poverty rate for the first time in 2017.
Inequality – as measured by the Gini coefficient – increased between 2015 and 2017. During this period, average household consumption per capita grew, but the household consumption of the bottom 40% of the population shrank.
According to the World Bank Human Capital Index, which measures the productivity level for the next generation of workers relative to their full potential if all education and health outcomes were maximized, uneven education quality is a big challenge for Thailand. A Thai child born today can expect to obtain 12.4 years of schooling before the age of 18. However, once adjusted for quality of learning, that only amounts to 8.6 years of schooling, indicating a gap of 3.8 years.
Thailand’s adult survival rate between ages 15-60 is lower than over half of the countries where such data is available. Over the past 15 years, Thailand’s prevalence of diabetes and hypertension have tripled and quadrupled, respectively, and combined with high rates of road injuries, has negatively affected adult survival rate. Only 85% of 15-year-olds are expected to live past age 60.