Thailand Economy

Thailand Economy

Subchapters:

  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax system

Basic data

The Thai economy is one of the strongest in the region and to some extent represents a stabilizing factor and a source of investment for neighboring countries. The country’s economy can be called post-industrial – services make up 56% of GDP, industry 36% and agriculture 8%.

It experienced rapid economic growth in the 1980s and 1990s, and today it is among the newly industrialized countries. The economy is based mainly on manufacturing foreign investment (assembly plants), tourism and exports – the country is the world’s leading exporter of rice, seafood, cars, computers and consumer electronics.

According to cheeroutdoor.com, Thai’s export the most to China and the USA. Imports are highest from China and Japan.

The official unemployment rate is very low – this is due, among other things, to the large number of people living on self-sufficient family farms without the right to a wage. Around 2 million legal and illegal migrants (often working in construction, agriculture or processing fish products) live in the country at the same time.

Household indebtedness is relatively high – at the level of 80% of GDP.

The national debt has been relatively low for a long time – about 40% of GDP, but as a result of the government’s covid support for the population and companies, it has been increasing significantly in recent years.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 2.4 -6.1 1.6 3.2 4.6
GDP/population (USD/PPP) 19,285.9 18,210.0 19,000.0 20,320.0 21,750.0
Inflation (%) 0.7 -0.8 1.2 2.8 1.2
Unemployment (%) 1.0 1.7 1.8 1.4 1.3
Export of goods (billion USD) 244.8 217.9 269.9 312.7 341.2
Import of goods (billion USD) 239.9 199.1 229.9 307.0 329.3
Trade Balance (Billion USD) 26.7 40.9 40.2 4.4 10.7
Industrial production (% change) -3.6 -8.8 5.8 6.6 6.8
Population (millions) 69.6 69.8 70.0 70.1 70.2
Competitiveness 25/63 29/63 28/64 ON ON
OECD export risk 03.VII 03.VII 03.VII ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -5.5
Public debt (% of GDP) 59.6
Current account balance (billion USD) -10.6
Taxes 2022
AFTER 20%
F.O 0-35%
VAT 7 / 10%

The significant focus of the economy abroad (both in the area of ​​production of goods and provision of services) makes Thailand relatively vulnerable, especially in the case of fluctuations in the prices of raw materials/commodities on world markets. There are also certain risks in the area of ​​investments, on the inflow of which Thailand is also heavily dependent.

Thailand tries to prevent fluctuations and actively participates in global and regional economic groupings (WTO, IMF, WB, APEC, ADB, ASEAN, RCEP), at the same time builds and maintains a stock of foreign exchange reserves and is conservative in the area of ​​monetary policy. As a result of the global recession due to the COVID-19 pandemic (reduced demand and disruption of supply-customer chains), the country experienced a strong economic downturn in the period 2020-2021.

The Thai fiscal year begins on October 1 and ends on September 30 of the following year.

Banking system

The monetary policy of Thailand is controlled by the central bank (Bank of Thailand).

Thailand’s financial sector is relatively large and stable, the banking sector consists of 35 licensed banks.

The largest domestic banks play a pivotal role in the banking market: 1. Bangkok Bank, 2. Siam Commercial Bank (SCB), 3. Krung Thai Bank, 4. Kasikornbank, 5. Bank of Ayudhya and 6. Thanachart Bank.

Banking services are provided at the standard level of developed countries with a high share of electronic and non-cash payments (internet banking, payment cards, QR codes).

Tax system

Thai tax legislation is very complicated (a number of exemptions, rates, bands) and generally distinguishes the following main types of taxes:

– corporate income tax (Corporate Income Tax) 20%

– personal income tax (Personal Income Tax) 0 – 35%

– value added tax – VAT (Value Added Tax) 7% / 10%

– consumption tax (Excise Tax)

– property tax (Property Tax)

In the interests of tax optimization, it is often necessary to use legal/tax advice from proven local or multinational consulting firms.

Thailand Economy