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Overview

Last updated May 2021

Over the last four decades, Thailand has made remarkable progress in social and economic development, moving from a low-income to an upper middle-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. Thailand’s economy grew at an average annual rate of 7.5% in the boom years of 1960-1996 and 5% during 1999-2005 following the Asian Financial Crisis. This growth created millions of jobs that helped pull millions of people out of poverty. Gains along multiple dimensions of welfare have been impressive: more children are getting more years of education, and virtually everyone is now covered by health insurance while other forms of social security have expanded.

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.

While Thailand has been successful in stemming the tide of COVID-19 (coronavirus) infections for most of 2020, the economic impact has been severe and has led to widespread job losses, affecting middle-class households and the poor alike and threatening hard-won gains in poverty reduction.

Economic growth in Thailand contracted to 6.1% in 2020 due to a decline in external demand affecting trade and tourism, supply chain disruptions, and weakening domestic consumption. The COVID-19 outbreak has created several additional challenges in the labor market. The primary impact has been a spike in unemployment rate, which doubled from 1% in the first quarter of 2019 to 2% in the second quarter of 2020.

Thailand’s policy response has acted to bolster economic activity and support the livelihoods of the most vulnerable, which has centered on a 1 trillion baht package to fund cash transfers, the medical response, and economic and social rehabilitation. New large-scale cash transfer programs have been established to support vulnerable groups who would not otherwise have been covered by existing social assistance mechanisms.

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. However, from 2018 to 2019, the poverty rate dropped to 6.2% and increased to 8.8% in 2020, due to the adverse effects of the COVID-19 pandemic crisis. 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 12.7 years of schooling before the age of 18. However, once adjusted for quality of learning, that only amounts to 8.7 years of schooling, indicating a gap of 3 years.

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 87% of 15-year-olds are expected to live past age 60.

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Total economic damages and losses, as of December 1, 2011, based on initial findings of a rapid needs and impacts assessment of the Thailand floods.

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

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*Amounts include IBRD and IDA commitments
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Bangkok
30th Floor, Siam Piwat Tower, 989 Rama 1 Road, Pathumwan, Bangkok 10330
Tel: +662-686-8300
Fax: +662-686-8301
Washington DC
1818 H Street, NW, Washington DC 20433
Tel: +1-202-473-4709