Thailand’s economic crisis: An ageing population

Thailand is facing a looming economic crisis as demographic shifts threaten to cripple its domestic consumption, the Kasikorn Research Centre (KRC) warns. With an increasingly elderly population and declining birth rate, the nation’s key driver of economic growth is at risk.

In 2022, domestic consumption accounted for 58% of Thailand’s economic growth, up from 53% a decade ago. This reliance stands in stark contrast to neighbouring countries, where domestic consumption plays a smaller role.

For instance, Singapore, now a super-aged society, has seen its domestic consumption drop from 37% to 31% of economic growth. Similar trends are occurring in Indonesia and Vietnam.

The KRC study highlights several factors behind Thailand’s declining consumption: a sluggish economy, high living costs, and significant household debt. The situation is exacerbated by an ageing population; around 34% of older Thais live below the poverty line, and of the 5.1 million elderly people, 3.7 million (59%) still work in the low-income farming sector, where average monthly earnings are just 6,975 baht.

Agriculture’s low productivity further diminishes these workers’ purchasing power, posing a serious challenge to sustaining economic growth through domestic consumption. The KRC stresses the urgency for the Thai government to adapt its economic model to increase incomes and improve quality of life, thereby slowing consumption contraction.

Small and medium-sized enterprises (SMEs) play a crucial role in Thailand’s economy, accounting for 71% of employment but only contributing 35% to the GDP. The KRC recommends government support for SMEs to navigate economic changes and suggests incentives for the private sector to employ older workers.

Additionally, attracting high-purchasing power or skilled foreigners could provide a much-needed economic boost, reported Thai PBS World.

The KRC’s findings highlight an urgent need for strategic economic adjustments to address Thailand’s demographic challenges and ensure sustainable growth.

In related news, Thailand’s population secrets are out in the open, and the numbers are staggering.

According to National Statistical Office (NSO) Deputy Director Suwannee Wangkan, a whopping 9.25 million people unofficially inhabit the Land of Smiles, with the vast majority flocking to Bangkok for work and study, shining a harsh spotlight on the nation’s deepening wealth gap.