Thailand’s Stable Economy and Strong Export Base

After Indonesia, Thailand is the second-largest economy in Southeast Asia and the eighth-largest economy in all of Asia. Its currency, the Thai baht (pronounced bought), was #10 on the list of most-used payment currencies as of 2017.

Gross domestic product (GDP) in Thailand has, for the most part, steadily increased over the past several years. The Office of the National Economic and Social Development Council (ONESDC) reported that Thailand’s GDP growth for 2018 was 4.1%. The organization forecast that 2019 GDP growth would range from 3.5-4.5%.

Thailand’s 2018 per-capita GDP of US$7,273.56 is in the middle of its fellow Association of Southeast Asian Nations (ASEAN) members, ranking behind Singapore, Brunei, and Malaysia. However, living in Thailand is relatively inexpensive, and its low-cost, well-educated workforce is attractive to investors.

In most respects, Thailand’s financials are in exceptional order. In July 2018, Thailand held US$237.5 billion in international reserves. That figure was second only to Singapore in Southeast Asia and was tenth in the world. Thailand also ranked second in Southeast Asia in external trade volume—again, after Singapore.

In 2018, Thailand’s private consumption grew at the highest rate in six years, up to 4.6% vs. 2017’s 3.0%. Business investment, however, increased at an even faster clip. Businesses invested most heavily in machinery and equipment, especially types that expanded export production capacity.

Applications for Thailand’s 2018 Board of Investment (BOI) projects were valued at 683.9 billion baht for proposed investments in the Eastern Economic Corridor (EEC) area, an increase of 137.4 percent from 2017. (For reference, the baht currently trades at about 32 baht per dollar.)

Exports

The Thai economy depends on exports, which account for over 66% of the country’s GDP of 16.316 trillion baht (US$505 billion) in 2018. In 2019, Thailand shipped US$245.3 billion worth of goods around the world.  That figure reflects a 16.4% gain since 2015.

According to information from worldstopexport.com, the following types of goods led 2019 Thai exports by dollar value and percentage. Altogether, they accounted for 70.3% of the overall value of Thailand’s exports.

  1. Machinery including computers: US$40.2 billion (16.4% of total exports)
  2. Electrical machinery and equipment: $33.9 billion (13.8%)
  3. Vehicles: $28.9 billion (11.8%)
  4. Gems and precious metals: $15.7 billion (6.4%)
  5. Rubber and rubber articles: $15.3 billion (6.3%)
  6. Plastics and plastic articles: $13.3 billion (5.4%)
  7. Mineral fuels including oil: $8.5 billion (3.5%)
  8. Meat/seafood preparations: $6.7 billion (2.7%)
  9. Optical, technical, and medical apparatus: $5.4 billion (2.2%)
  10. Organic chemicals: $4.6 billion (1.9%)

Propelled by strong demand for Thai gold, the gems and precious metals category skyrocketed by 31.5% since 2018. The only other category that increased revenue was meat and seafood preparations, up 1.4%. On a granular level, however, the demand for rubber tires was up by 14%.

Under the Thailand 4.0 economic model, the country is gradually shifting its focus toward more environmentally favorable goods and services that play to its strengths. It has targeted 13 industries, dubbed the “New Engines of Growth,” which it expects to drive continued prosperity. Here is a listing of the “New Engines of Growth”:

  • Smart electronics
  • Next-generation automotive
  • Agriculture and biotechnology
  • Affluent, medical, and wellness tourism
  • Food for the future
  • Robotics
  • Aviation and logistics
  • Biofuels and biochemicals
  • Medical hub
  • Digital
  • Alternative dispute resolution
  • Human resource development in science and technology
  • Environmental management and renewable energy

 

Conclusion

Thailand’s economy is heavily dependent on exports, which accounted for about two-thirds of its 2018 GDP. Although exports were down slightly in 2019, and will doubtless decline again in the short term due to the Coronavirus pandemic, the Thai economy is well-positioned to expand over the long term.

Thailand’s economic indicators, including a stable unemployment rate of 1.2% and the world’s tenth-largest level of international reserves, are primarily favorable. Gains will be fueled by increased consumer spending, private investment, and tourism.

 

Are you looking to set up your business in Thailand and make your first hire?  You can also check out this article on Navigating Thai Labor Law

Aster Lion is an Employer of Record (EOR /  PEO) & Payroll provider headquartered in Thailand that can assist with visa & work permit application, employee contractor management and payroll solutions.  You can reach out to us for any inquiries on how we can assist you with your staffing & employment requirements in Thailand. 

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