Thailand must overhaul its economic playbook if it wants to become a high-income country by 2037, according to a new World Bank report released on Monday.
The report, titled ‘Building Thailand’s Future Today’, says the country has made striking progress over the past 35 years. Since 1991, Thailand has added roughly 10.7 million formal jobs, more than doubled its income per person and has all but wiped out poverty at the World Bank’s lower-middle-income line.
Bangkok has grown from a city of 5 million people to a megacity of nearly 18 million.
That progress has, however, slowed sharply. Annual economic growth averaged 8% in the early 1990s. It has averaged just 2.2% since the COVID-19 pandemic, with little job growth to show for it, according to the report.
To turn things around, the World Bank says Thailand needs to grow its economy by an average of 5.4% a year over the next decade, more than double its recent pace.
The report identifies two problems holding Thailand back. The first is what it calls the “upgrading” problem. Thailand built its economy on cheap labour, manufacturing exports and tourism. Wages have risen, though, so the country can no longer compete on cost alone.
It now needs to compete on skills, innovation and quality, and these are areas in which the report says Thailand has struggled to keep up.
The second is a “dynamism” problem. Thailand’s biggest companies, best schools and richest cities perform about as well as those in wealthy nations, but that success doesn’t reach most of the country. Smaller businesses struggle to grow, schools outside the top tier deliver weaker results and most provinces lag far behind Bangkok economically.
The report also singles out five industries that it says could drive Thailand’s next stage of growth:
a) advanced manufacturing, including electric vehicles and electronics
b) digital services, such as fintech and startups
c) sustainable and wellness tourism
d) trifold, covering farming and food production
e) creative industries
For each, the report lays out specific policy steps, such as speeding up Thailand’s semiconductor strategy, easing restrictions on foreign investment in digital services and expanding infrastructure for tourism outside the main hubs.
The report also calls for changes to Thailand’s schools and labour market. Thailand’s scores on international math and science tests have declined over the past decade and now rank near the bottom of the region.
At the same time, Thailand’s population is aging quickly and its birth rate has fallen to 1.2 children per woman. This is one of the lowest in the world.
The World Bank recommends boosting technical and vocational training, helping more women to stay in the workforce through better childcare access and addressing the large number of Thai workers in informal jobs, which are not taxed or covered by labour protections.
On cities, the report argues that Thailand relies too heavily on Bangkok. It recommends investing in secondary cities to spread job growth more evenly, while also making Bangkok itself denser, greener and less congested.
The report also cautions that carrying out these reforms would require Thailand to raise more government revenue, improve transparency and manage competing priorities carefully given the country’s limited fiscal space.
The World Bank based its findings on consultations with Thai business leaders, government officials, academics and civil society groups, along with new economic modelling and survey data.
