Thailand: Economic and Political Overview

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

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. The country's economy appears resilient and, according to the IMF, is expected to advance at a moderate pace in a post-COVID-19 context, despite domestic political uncertainty. Public investment is projected to remain a key driver, increasing over the next few years, in line with the government’s infrastructure plans to attract private investment and a continued improvement of the tourism sector. Due to the COVID-19 pandemic, the country registered negative GDP growth for the first time since 1998, going from +2.3% in 2019 to -6.1% in 2020. The GDP growth rate reached +1.5% in 2021 and +2.8% in 2022. According to the IMF's latest forecast, GDP growth is expected to reach 3.7% in 2023 and +3.6% in 2024, subject to the post-pandemic global economy recovery (IMF, October 2022).

Inflation went negative to an estimated  -0.8% in 2020 and reached 1.2% in 2021 before jumping to 6.2% in 2022 following the global world trend. It is projected to decrease to 2.8% in 2023 and 1.5% in 2024 (IMF, October 2022). The general government balance fell to -5.3% of GDP in 2021 and -3.8% in 2022. It is projected to be reduced to  -0.4% in 2023 and 2024. Due to the impact of the COVID-19 pandemic public debt increased to 58.4% in 2021 and 61.5% in 2022, from 49.6% in 2020. It is estimated to stabilised at  61.4% in 2023 and 61.3% in 2024 (IMF, October 2022).. The National Strategic Plan (2017-2036) places the emphasis on improving the business environment, boosting the country's competitiveness and long-term economic performance through the development of rail, road, airport, and electricity infrastructures.

The unemployment rate remained very low in 2022 (1.5%) and is projected to stay at 1% in 2023 and 2024 (IMF, October 2022). Thailand's official unemployment rate is among the lowest in the world due to low birth rate, lack of social insurance and informal sector employing the bulk of workforce (street vendors, motorbike taxis and self-employed).

In 2023, the country’s most immediate challenge will be to navigate the volatile international context, facing steep challenges against a backdrop of the persistent health and economic overhang of a global pandemic and a war in Europe, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.

Main Sectors of Industry

Thailand had a labor force of 39 million people in 2020, out of its 69.8 million population. Its economy is heavily based on agriculture, which contributed 8.5% of the GDP and employed 31% of the active population in 2022 (World Bank, 2023). The country is largest producer of natural rubber in the world and one of the leading producers and exporters of rice; it also possesses sugar, corn, jute, cotton and tobacco among its major crops. Fishing constitutes an important activity as Thailand is a major exporter of farmed shrimp. However, agriculture's contribution to the GDP is declining, while the exports of goods and services have increased.

The manufacturing sector accounted for 34.8% of the GDP in 2021 and is well diversified. It employed 22.5% of the active population (World Bank, 2023). The main Thai industries are electronics, steel and automotive. Thailand is an assembly hub for international car brands. Electrical components and appliances, computers, cement production, furniture and plastic products are also important sectors. The textile sector employs less than a quarter of the active population and is no longer as dynamic as tourism, which has become the main source of foreign currency.

The tertiary sector, including financial services, is rising. It contributed to 56.7% of the GDP and employed 46.5% of the active population in 2022 (World Bank, 2023). Tourism played an ever more important role in the Thai economy until 2020 and the country is waiting for the world's borders to open again to international travel. The borders are now open and tourists are slowly making their way to Thailand in 2023.

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook.  Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024 (International Monetary Fund - IMF, 2023). The impact of the 2022 world events appears to have affected both sides of most sectors and markets in this country for the third year in a row - demand disruptions having run up against supply problems - making the short-term outlook uncertain for agriculture, industry and service sectors.

Source: World Bank, Latest data available.

Indicator of Economic Freedom

Score:

69,7/100

World Rank:

42

Regional Rank:

9

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

Business environment ranking

Score:

6.59/10

World Rank:

38/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

Sources of General Economic Information

Ministries

Ministry of Finance
Ministry of Economy, Trade and Industry
Ministry of Agriculture and Cooperatives
Ministry of Commerce

Statistical Office

National Statistical Office

Central Bank

Bank of Thailand (BOT)

Stock Exchange

The Stock Exchange of Thailand (SET)

Other Useful Resources

Thailand Development Research Institute (TIDRI)
Office of the National Economic and Social Development Council
The World Bank on Thailand

Main Online Newspapers

Bangkok Post
Business Day
Thansettakij Newspaper (in Thai)
The Nation
The Thaiger

Economic Portals

Thai Chamber of Commerce

Political Outline

Current Political Leaders

King: Maha Vajiralongkorn, Rama X (since 13 December 2016) – hereditary
Prime Minister: Prayut Chan-o-cha (since 25 August 2014, acting since 22 May 2014)

Next Election Dates

Senate: 2024
House of Representatives: 7 May, 2023

Current Political Context

On March 2019 a general election was held in Thailand for first time since the 2014 coup d’état, under a complex new system that empowered small parties and the military. In July 2019 the junta chief Prayuth Chan-o-choa ordered an end to the military rule but kept the power as Prime Minister. The new civil government focused on addressing the slow economic growth and an ageing workforce. The new government enjoys the support of the royalist-military alliance. A series of protests began in 2020 in response to the Constitutional Court's decision to dissolve the New Future Party which had 81 seats in the lower house. This decision enabled the government to strengthen its majority in this chamber (270 of the 500 seats). In 2021, the demonstrators mainly demanded the reform of the monarchy, in particular of the statute of the sovereign, as well as the rewriting of the constitution of 2017, which gives broad power to the 250 senators, chosen by the army. They are still calling for the dissolution of parliament and the resignation of the prime minister. The authorities refuse to make concessions.
While Thailand has been successful in stemming the tide of COVID-19 infections, the economic impact has been severe since 2020 and has led to widespread job losses.

The general election scheduled to be held by May 2023 will see a dilution in power of the current pro-establishment ruling bloc, with opposition parties expected to perform strongly. However, the new prime minister will still need to be endorsed by the royal-military alliance, which will remain a powerful force under the current constitution. The political outlook in advance of the elections suggests that the political stability needed to undergird any effort at structural economic reform will remain elusive.

Nevertheless, Thailand’s long-serving leader Prayut Chan-o-cha, who has been in power since leading a coup in 2014, officially broke with the country’s military-backed ruling party in January 2023 and joined the newly formed United Thai Nation Party (UTNP), expressing his willingness to remain prime minister after this year’s election.

Main Political Parties

Thailand maintains a multi-party system, but traditional political parties have seen their role reduced in the parliament since the military-led coup in 2014. Currently, the parliament is dominated by the military. The main political parties are:

Pheu Thai Party (PTP); centre-right
Palang Pracharath Party: right-wing, conservatist
Future Forward Party: centre-left
Democrat Party: centre-right
Bhumjaithai Party: centre, populist
Thai Liberal Party: centre-left
Chartthaipattana Part: right-wing, conservatist

Type of State

Thailand is a Kingdom. It is a constitutional monarchy based on parliamentary democracy.

Executive Power

Thailand is governed by a constitutional monarchy. The King is the Chief of State and the Monarchy is hereditary. Traditionally, he has little direct power, but benefits from enormous popular respect and moral authority, which has been used on occasion to resolve political crisis and ensure national stability. Official power rests with the government. The Prime Minister is the Head of Government and holds all the executive powers including implementation of the law in the country and running the day-to-day affairs. Under the new Constitution approved in April 2017, individuals outside of parliament can serve as Prime Minister. The cabinet is appointed by the King on recommendation of the Prime Minister.
Thailand’s 77 provinces each administered by an appointed Governor are divided into districts, sub-districts (tambons) and villages.

Legislative Power

The legislature in Thailand is bicameral. The parliament of the country is the National Assembly. Its consists of the Senate (the upper house) with 250 seats, all its members appointed by the Royal Thai Military, under the new Constitution adopted in April 2017, to serve five-year terms; and the House of Representatives (the lower house) with 500 seats, its members elected by popular vote to serve four-year terms (375 directly elected through single constituency elections and 125 elected through party-list proportional representation). The executive branch of government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. The Government cannot veto the acts passed by the parliament.

Indicator of Freedom of the Press

World Rank:

137/180

Source: World Press Freedom Index, Reporters Without Borders

Indicator of Political Freedom

Ranking:

Not Free

Political Freedom:

7/7

Civil Liberties:

5/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

COVID-19 Country Response

Travel restrictions

Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.

Import & export restrictions

A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Thailand please consult the country's dedicated section in the IMF’s Policy Tracker platform.

Support plan for businesses

For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.