Thailand has achieved remarkable economic and social progress in recent decades. The economy has picked up since the pandemic, buoyed by a strong rebound in tourism.
Bold reforms are now needed to make the recovery more solid and inclusive, according to a new report by the Organisation for Co-operation and Development (OECD).
The second OECD Economic Survey of Thailand found strong fiscal support has helped to avoid a sharp economic contraction during the pandemic, but public debt has increased rapidly in recent years and fiscal consolidation should continue at a gradual pace.
Continued fiscal consolidation would strengthen debt sustainability and support the efforts of monetary policy, which should remain tight to reduce inflation pressures.
Emergency support for households that was implemented during the pandemic should be phased out, while continuing to support those most in need through regular social protection.
The Thai economy is projected to continue its gradual recovery, with real GDP expected to grow by 3.6% in 2024.
Private consumption is projected to remain strong, despite the gradual phase-out of government relief measures and high levels of household debt.
The labour market is recovering, but young people have not fully benefited from the recovery. Weaker global demand has weighed on exports, but this is set to change amid rising tourist arrivals.
The country needs to address a number of key structural challenges, including an ageing demographic, the digital transition, possible reconfigurations of global value chains and the green transition.
Further policy action to raise productivity will be key to support convergence towards higher income levels amid a declining working-age population.
Stronger efforts to improve the business climate, adopt digital technologies and foster competition will be important, including by relaxing remaining restrictions to market entry and foreign direct investment, especially in the services sector, and expanding trade agreements to benefit from changing patterns of global trade. Initiatives to prevent and fight corruption should be continued.
Recent developments have high- lighted the need for Thailand to build a more comprehensive social safety net to support vulnerable households. Income inequality has significantly declined since the 1990s, but further efforts will be needed to achieve more inclusive growth, as more than 50% of workers are in the informal sector and remain outside the reach of the formal social security system.
Achieving net zero emission pledges will require bold policy action, including a comprehensive strategy for carbon pricing in combination with tighter regulations and targeted support for vulnerable social groups adversely affected by the transition, while phasing out other government interventions in energy prices.
Stronger incentives are needed for both domestic and foreign investment in higher energy efficiency, renewables and green innovation.
To download the OECD Economic Survey of Thailand, visit http://tinyurl.com/uv9vu