OECD’s Insight: A Snapshot of Thailand’s Economic Landscape
HLB Thailand
On 7 December 2023, the OECD unveiled its Economic Survey of Thailand.
Thailand has witnessed substantial economic and social advancements in recent decades. Post-COVID-19, the economy has rebounded, particularly in the tourism sector, necessitating robust reforms for a more resilient and inclusive recovery, as emphasized in the OECD report.
The survey underscores that effective fiscal support prevented a severe economic downturn during the pandemic. However, public debt has surged, warranting a gradual continuation of fiscal consolidation. Sustaining fiscal consolidation would enhance debt sustainability and complement the ongoing tight monetary policy to alleviate inflationary pressures. While emergency support to households during the pandemic is recommended to phase out, ongoing aid to the most vulnerable through regular social protection remains crucial.
Projections indicate a gradual economic recovery for Thailand, anticipating a 3.6% real GDP growth in 2024. Despite the gradual withdrawal of government relief and high household debt levels, private consumption is expected to remain robust. The labor market is on a positive trajectory, although the youth population hasn't fully reaped the benefits. Global demand challenges have impacted exports, but an upturn is anticipated with increasing tourist arrivals.
Addressing key structural challenges such as population aging, digital transition, global value chain adjustments, and environmental sustainability is imperative. Policy initiatives to boost productivity, improve the business climate, embrace digital technologies, and foster competition, particularly by easing market entry and foreign investment restrictions, are essential. Ongoing efforts to prevent corruption are crucial.
Recent events underscore the need for Thailand to establish a comprehensive social safety net. While income inequality has decreased since the 1990s, achieving more inclusive growth is vital, especially for the informal sector workforce lacking formal social security coverage.
Bold policy actions are indispensable for achieving current net-zero emission commitments. This involves a comprehensive strategy encompassing carbon pricing, stringent regulations, and targeted support for vulnerable groups impacted by the transition. Simultaneously, phasing out other government interventions in energy prices is recommended. Stronger incentives for domestic and foreign investments in energy efficiency, renewables, and green innovation are imperative for a sustainable future.
