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Thailand Country report 20233Q

Country Report Thailand 3Q2023 | SPEEDA

05 February 2024

Thailand Country Report 3Q2023 | SPEEDA

The country report is designed to offer insights into the short- to mid-term macroeconomic and industry developments of each ASEAN 6 country. Our in-house analysts employ a PESTLE analysis to provide a comprehensive overview of the most significant movements in the past quarter, as well as future outlooks of each nation, covering the Economy, Politics, Society, Tech, Environment, Law and Spotlight Industries.

This report will focus on providing a comprehensive overview of the country's current status. Subsequent updates to the country report will primarily cover quarterly and more timely updates.

Outlook of Thailand

Overview and Outlook as of 3Q2023

Thailand, a mid-sized economy, has its GDP heavily influenced by the manufacturing and service sectors. Despite its relatively smaller GDP size, Thailand ranks third in GDP per capita within ASEAN, trailing only Singapore and Malaysia. Geographically strategic, Thailand is located at the heart of the ASEAN region, sharing borders with Myanmar, Laos, Cambodia, and Malaysia.

In the third quarter of 2023, Thailand held the fourth position among ASEAN countries in terms of import and export values. China emerges as Thailand's top export destination, followed by Japan, the USA, the UAE, and Taiwan, while import trends from these nations show varying patterns.

Thailand's economy is significantly export-oriented, with exports contributing to about two-thirds of its GDP. This is supported by the country's role as a manufacturing hub for multiple multinational corporations, combined with its skilled labour force and rich natural resources. Major export items include automobiles, automotive components, computer hard drives, and rubber products.

Thailand is anticipating a 2.5% GDP growth in 2023, primarily fuelled by robust growth in private consumption, the continued recovery of the tourism sector, and increased private and public investments. The country's current account is expected to register a surplus amounting to 1.2% of GDP in 2023.

Fitch Ratings has reaffirmed Thailand’s Long-Term Foreign-Currency Issuer Default Rating at 'BBB+', maintaining a stable outlook.

Key Takeaways on Thailand's 3Q 2023


Mid-sized Economy: Thailand, a mid-sized economy in the ASEAN6, reported a quarterly GDP of USD 70.7 billion in 3Q23. Its GDP underperformed expectations in 3Q23 with shrinking exports, though inflation and unemployment rates decreased.

Fluctuating Trade: Thailand's international trade experienced fluctuations since October 2022, peaking in March 2023 due to strong global demand for its electrical and electronic products.

Slight Fall in FDI: Thailand witnessed a modest decline in Foreign Direct Investment (FDI) and outbound investments, marked by a sharp drop in FDI approvals during the second quarter of 2023.

New Government: The new Prime Minister 'Srettha' is spearheading Thailand's economic recovery by welcoming foreign investments and collaborating with the private sector. The government's strategy includes short-term stimulus measures like reducing living costs and supporting SMEs, along with long-term plans focused on opening new markets, enhancing trade agreements, and promoting new industries like digital and green technologies to boost the economy.

Thailand's Landscape

Mixed Economic Performance in 3Q2023: Growth in Tourism and Domestic Consumption Amidst Challenges in Exports and Investment

In 3Q2023, Thailand's real GDP reached USD 70.7 billion, lagging other ASEAN countries in size. Growth was driven by the accommodation and food service sectors, boosted by increased tourism and domestic consumption. Yet, the quarter underperformed due to reduced exports, government spending, and public investment. October 2023 saw a -0.3% year-over-year inflation, indicating minor deflation. By quarter's end, Thailand had a current account surplus of USD 474.9 million. However, its USD 3.1 billion in FDIs marked a decrease, while Vietnam, Singapore, and Indonesia saw higher FDI inflows.

New PM Srettha's Blueprint for Economic Growth: Focusing on Lower Living Costs and Enhanced Quality of Life in Thailand

The new Prime Minister 'Srettha' has intended to welcome foreign investments, emphasising collaboration with the private sector to accelerate economic recovery. The government's urgent economic stimulus measures focus on reviving the economy and preparing Thailand for long-term success. Key initiatives include reducing living costs, boosting domestic spending, enhancing quality of life, creating opportunities for Thais, and expanding investment and business activities. The 'Quick Wins' policy, featuring energy cost-cutting measures, temporary debt relief for farmers, and ongoing support for SMEs affected by COVID-19, has been implemented.

Thailand's Demographic Dilemma: Urbanisation, Ageing Workforce, and the Quest for Improved Education

Thailand's rapid urbanisation sees over half its population now in urban areas, mainly around Bangkok. The country grapples with an ageing population and a falling birth rate, forecasting a workforce decline by 2040. Educationally, only 11% of Thais held tertiary degrees as of 2016, while initiatives like the Alternative Education Innovation Network target education for disadvantaged children.

Thailand's Startup Scene: Navigating Underperforming Startup Scene and Lack of Tech Talent Challenges to Achieve Growth in a Competitive ASEAN Market

In 2022, Thailand's digital economy trailed most ASEAN countries, despite a growing urban and internet-savvy population. By 2Q23, it had over 1,000 startups, with none reaching unicorn status. Key sectors include fintech, business solutions, and e-commerce. However, Thailand ranked below Singapore, Indonesia, and Malaysia in the Global Startup Ecosystem Index 2023, hindered by limited investors and skilled tech workforce. To support its startup sector, the Digital Economy and Society Association of Thailand and government bodies are advocating for Capital Gains Tax exemptions to boost investment.

Thailand's Sustainable Triumph: Leading ASEAN in SDGs for Four Straight Years

Thailand leads ASEAN in advancing the Sustainable Development Goals (SDGs), maintaining this top position for four consecutive years. In December 2022, Thailand made a significant move towards sustainable finance with the introduction of the initial version of the Thailand Taxonomy.

Thailand's Investment Incentives: Land Ownership and Extended Leases for Foreigners in Key Economic Zone

Foreigners typically cannot own land in Thailand. However, investors in designated areas of the Eastern Economic Corridor can access incentives, including land ownership rights and extended land leases (up to 50 years with a renewal option for an additional 49 years).

Thai labour laws apply universally within Thailand, regardless of a worker's nationality or employment duration. While parties in employment contracts can choose foreign laws, Thai courts may reject these if they conflict with local public order or moral standards.

Industry Spotlights

Leading Sectors in Thailand

Chemicals: ASEAN Leader in Petrochemical and 16th Globally in 2021, Facing New Challenges with Plastic Reduction Policies

In 2021 (latest available), Thailand's petrochemical industry was the largest in the ASEAN region and ranked 16th globally. This sector primarily serves the domestic market. Government initiatives to reduce single-use plastics will significantly impact manufacturers, especially those producing polyethylene (PE), polypropylene (PP), and polyethylene terephthalate (PET).

Electronics: Rising Foreign Investment in 1H23 Highlights Confidence and Strategic Relocation Amid Global Tensions

Thailand is known for its manufacturing of electronic products, including integrated circuits (ICs), printed circuit boards (PCBs), hard disk drives (HDDs), floppy disks, electric motors, and wiring.

According to the BOI, investment applications in 1H23 demonstrate a highly favourable trend, with foreign investment, especially in the electronics and electric vehicle sectors, continuing to rise significantly. The upward trajectory in the electronics sector reflects a persistent trend of electronic component manufacturers relocating to mitigate risks stemming from trade conflicts and geopolitical tensions. Additionally, it underscores investor confidence in Thailand's potential as a secure and reliable production hub.

ICT: Software and Services Sector Thrives with Upcoming Thai LLM from the Government Agency

Over 2019–21, the Thai software and digital services sector had an annual average market value of approximately THB 440 billion. Of this market, digital services accounted for roughly around 60%, followed by software design and services (30%), and digital content (10%). About 95% of the industry players are Thai-based, catering to the domestic market.

In September 2023, the National Science and Technology Development Agency (NSTDA) introduced a project to support research funding for the development of a Thai-language understanding and processing artificial intelligence system called "Open Thai GPT" or LLM (Large Language Model). This system is capable of processing the Thai language up to 10 times faster than ChatGPT, thanks to the development of a Thai language database comprising over 25,000 words.

Construction: A Decade of Strong GDP Contribution with Significant Public and Private Investments

Over the past decade, the construction sector contributed to around 10% of the country’s GDP on average. The sector can be divided into two primary segments: public and private construction. In 2022, public construction investment accounted for almost three-fifths of the total investment value while private construction investment constituted the remainder. In 2Q23, the construction investment in Thailand recorded an impressive increase of 22.1% QoQ.

 Emerging Sectors in Thailand

Electric Vehicles (EVs): Thailand's EV Market Accelerates: Tripled Registrations in 1H23 with Government and Industry Support

In 1H23, Thailand, aiming to become a leading regional EV hub, registered 31,000 EVs – triple the total in 2022. The Board of Investment (BOI) prioritises the EV industry, offering incentives to manufacturers. Major Chinese companies like BYD Auto and Great Wall Motor have invested in Thai EV production. The government targets EVs to be at least 10% of 2023's total car production, promoting EV adoption through subsidies, customs duty and tax exemptions for EV parts, investments, and machinery.

Smart Electronics: Thailand's Smart Electronics Ascent: Government Targets 60% Export Value with Strong Supporting Industries

The government aims to increase the value of product exports in Thailand's smart electronics industry to 60% of the electrical and electronics industry through the Action Plan for the Development of the Smart Electronic Industry. Thailand's strong network of supporting industries, including metal, plastic, and rubber manufacturing, makes it a convenient and cost-efficient source of materials.

Medical Tourism: Competitive Pricing, High-Quality Care

The Thai government has positioned Thailand as a leader in medical tourism due to its competitive pricing and extensive medical facilities. Thailand attracts international patients because of its top-notch medical care, affordable healthcare services, and lower cost of living, making it suitable for extended stays for long-term patients. It boasts the highest number of hospitals meeting the global gold standard for patient safety and healthcare quality set by JCI, surpassing all other Asian nations.

Several cities in Thailand are renowned tourist hotspots, and they also achieve the highest healthcare ratings in SEA according to Numbeo's Health Care Index for 1H22. Chiang Mai claims the top spot, with Bangkok ranking third.

Smart Agriculture: Transforming the Sector's Efficiency and Supporting Agritech Startups in 2023

Agricultural activities collectively contribute to approximately 6.0–7.0% of Thailand's GDP each year, with around 40% of the population employed in agriculture-related occupations. Smart agriculture has the potential to lower production expenses, enhance both the quantity and quality of output and decrease labour requirements.

As of June 2023, there are approximately 80 agritech startups in Thailand, such as East-West Seed, EnerGaia, Rakbankerd, FlyLabFeed, etc.


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Table of Contents

  1. Thailand Overview

  2. Economic Landscape

  3. Political Landscape

  4. Social Landscape

  5. Technological Landscape

  6. Environmental Landscape

  7. Legal Landscape

  8. Industry Spotlight

  9. Thailand Outlook


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Source: Office of the National Economic and Social Development Council, Thailand Board of Investment, Krungsri Research, and other sources

This blog post has been created to provide useful insights into Thailand's current economic and country landscape. Some data may be subject to change, and readers are encouraged to seek additional information where needed.


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