Thailand: Economic and Political Overview
In this page: Economic Outline | Political Outline
Thailand is the second-largest economy in Southeast Asia after Indonesia, and with an upper-middle income status, serves as an economic anchor for its developing neighbour countries. Thailand’s economy continues to recover gradually from the COVID-19 shock: economic activity expanded modestly by 1.9% in 2023 and by an estimated 2.8% last year (IMF). Private consumption, which drives over half of overall growth, slowed in the first three quarters of 2024 due to high household debt, tighter credit, and weak medium-term prospects. Tourism, once contributing 12-17% of GDP before the pandemic, reached only 8.9% of GDP by the end of 2024, with arrivals at 86% of pre-pandemic levels despite a global tourism recovery. Investment has not yet become a key driver of recovery or medium-term growth. Thailand’s growth gap with ASEAN peers remains significant, equivalent to 8-14% of GDP in lost output since recovering to pre-COVID levels. Growth is expected to hold steady at 2.9% in 2025, supported by fiscal stimulus and increased public investment under the FY2025 budget. Private consumption should remain strong, driven by government measures, while private investment is set to rise, boosted by public spending and growing FDI inflows.
According to the World Bank, the FY24 deficit (Oct 2023–Sep 2024) fell to a 5-year low of 2.5% of GDP, driven by improved revenue collection from economic recovery and lower capital spending due to a seven-month budget delay. Investment budget disbursement reached 70%, below the 74% average of the past three years. Public debt hit 63.3% of GDP and is expected to rise further with a widening FY25 deficit, fueled by increased spending, especially on fiscal stimulus and cash handouts. In September, the deficit widened due to accelerated spending, including a THB 10,000 cash handout for 14 million Social Welfare Card holders. Household debt surged from 40% of GDP in 2003 to 90% in 2020, driven by financial liberalization, pro-consumption policies (e.g., first car and home incentives, rice-pledging scheme), and income shocks (2011 floods, 2013-14 protests, pandemic). By Q2 2024, debt declined to 90.7% of GDP from a peak of 95.8% as households deleveraged post-pandemic. However, it remains a key financial sector risk due to both its high level and the large share of uncollateralized consumer loans in bank portfolios. Thailand's average consumer price index (CPI) increased by 0.4% in 2024 year-on-year, the lowest inflation in four years, according to the Commerce Ministry. The IMF sees inflation at 1.2% in 2025, returning to the authorities’ target range (1 to 3%).
The unemployment rate remained very low in 2024 (1.1%) and is projected to stay around 1% over the forecast horizon (IMF). Thailand's official unemployment rate is among the lowest in the world due to the low birth rate, lack of social insurance and informal sector employing the bulk of the workforce (street vendors, motorbike taxis and self-employed). The country’s average GDP per capita (PPP) was estimated at USD 26,416 in 2024 by the IMF. Thailand has made the most progress in ASEAN on eradicating poverty in recent years: poverty is estimated to have fallen to 8.2% in 2024, driven by stronger growth, easing inflation, and a one-time cash transfer to 14.6 million state welfare cardholders under the Digital Wallet program, which likely boosted consumption. Inequality also declined by about 1.5 Gini points (World Bank). However, sustaining progress will require addressing climate-related risks, such as recent flooding, and structural challenges related to demographics and labour incomes.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 514.84 | 528.92 | 545.34 | 569.52 | 596.27 |
| GDP (Constant Prices, Annual % Change) | 1.9 | 2.8 | 2.9 | 2.6 | 2.7 |
| GDP per Capita (USD) | 7,336 | 7,527 | 7,754 | 8,093 | 8,470 |
| General Government Balance (in % of GDP) | -1.0 | -0.9 | -2.6 | -1.7 | -1.4 |
| General Government Gross Debt (in % of GDP) | 62.4 | 65.0 | 66.1 | 66.4 | 66.3 |
| Inflation Rate (%) | 1.2 | 0.5 | 1.2 | 1.5 | 2.0 |
| Unemployment Rate (% of the Labour Force) | 1.0 | 1.1 | 1.0 | 1.0 | 1.0 |
| Current Account (billions USD) | 7.41 | 9.40 | 10.77 | 12.69 | 14.10 |
| Current Account (in % of GDP) | 1.4 | 1.8 | 2.0 | 2.2 | 2.4 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
Thailand has a labour force of 40.2 million people, out of its 71.6 million population. Its economy is heavily based on agriculture, which contributes 8.6% of the GDP and employs 30% of the active population (World Bank, latest data available). The country is the largest producer of natural rubber in the world and one of the leading producers and exporters of rice; it also includes sugar, corn, jute, cotton and tobacco among its major crops. Fishing constitutes an important activity as Thailand is a major exporter of farmed shrimp. Traditional farming methods are prevalent, but there's a growing emphasis on modernizing agriculture through technology adoption, such as precision farming and irrigation systems. Thailand's agricultural and agro-industrial product exports reached USD 52.19 billion in 2024, reflecting a 6% rise from the previous year, according to the Thai Trade Policy and Strategy Office (TPSO).
The manufacturing sector accounts for 32.9% of the GDP and is well diversified, employing 22% of the active population (World Bank). The country has established itself as a manufacturing hub in Southeast Asia, attracting foreign investment due to its strategic location, skilled workforce, and robust infrastructure. The Thai industrial sector is diverse and dynamic, encompassing manufacturing, electronics, automotive, and petrochemicals among its key sectors. Emerging sectors within the industrial landscape include renewable energy, biotechnology, and aerospace, reflecting Thailand's efforts to move towards high-value-added industries and technological innovation. Throughout 2024, the manufacturing production index contracted by 1.79% year-on-year, improving from the 3.77% decline recorded the previous year.
The tertiary sector contributes to 58.5% of the GDP and employs 48% of the active population (World Bank). Key sectors include tourism, finance, healthcare, education, and telecommunications. Thailand's tourism industry is a major driver of the tertiary sector, attracting millions of visitors annually: according to official governmental figures, the country welcomed over 35.5 million international visitors in 2024 (+26.2% y-o-y), generating an impressive income of more than USD 48.4 billion (+34% y-o-y). The finance sector, centred in Bangkok, serves as a regional financial hub, offering a wide range of banking, insurance, and investment services. Healthcare and education are also prominent sectors, with Thailand being a destination for medical tourism and home to reputable universities and international schools. Emerging areas within the tertiary sector include digital services, e-commerce, and fintech.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 30.1 | 22.1 | 47.8 |
| Value Added (in % of GDP) | 8.6 | 32.9 | 58.5 |
| Value Added (Annual % Change) | 2.0 | -2.3 | 4.5 |
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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- Pheu Thai Party (PTP); centre-right, it is the current majority ruling party.
- People's Party (PPLE): Centre-left, it is the successor party of the former Move Forward Party, which was dissolved by the Constitutional Court in August 2024.
- Bhumjaithai: Centrist, focusing on rural interests.
- United Thai Nation: Nationalist, advocating for Thai interests.
- Democrat: Center-right.
- Palang Pracharat: Right-wing, supportive of the military establishment.
- Kla Tham: Center-right
- Chart Thai Pattana Party: Regionalist emphasizing agricultural policies.
- Prachachart: Populist focusing on grassroots issues.
- Thai Sang Thai: Nationalist.
Thailand is governed by a constitutional monarchy. The King is the Chief of State, and the monarchy is hereditary. Traditionally, the King has little direct political power but benefits from enormous popular respect and moral authority, which has occasionally been used to resolve political crises and ensure national stability. Official power rests with the government.
The Prime Minister is the Head of Government and holds executive powers, including the implementation of laws and the management of the country's day-to-day affairs. Under the Constitution approved in April 2017, individuals outside of parliament can serve as Prime Minister. The cabinet is appointed by the King on the recommendation of the Prime Minister.
Thailand’s 76 provinces, each administered by an appointed Governor, are divided into districts, sub-districts (tambons), and villages. Bangkok, which is a special administrative area with the status of a province, is governed by an elected Governor.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
Source: World Press Freedom Index, Reporters Without Borders
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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