Transcription
When I think of Thailand, I think of a place where modernity exists alongside tradition. But behind that postcard image of a paradise is another reality. Instability, volatility, uncertainty. And in recent years, economic lethargy.
There’s not a lot of innovation in the economy. Thailand’s GDP growth has been about 2% for a while now, while neighbouring countries or peer economies are growing rapidly. Foreign investors have taken note. Or, more specifically, they’ve taken their money. Thailand looking to cut rates as growth falters. No catalysts for a reversal of Thailand’s fortunes. That word, “fortunes,” isn't relatable to almost anyone outside Thailand’s entrenched elite. According to the World Bank, Thailand has the highest level of income inequality among Asia-Pacific countries. What’s at stake is Thailand risks getting left behind in one of the world’s fastest-growing regions. So we’re asking: What went wrong? And can anything be done to turn things around?
HBO’s The White Lotus offered a high-profile glimpse of the experiences that make Thailand a draw for travellers. Tourism accounts for about a fifth of its economy. Thailand is quite reliant on tourism, more so than its peers in the region. Like those peers, the country’s also a hub for manufacturing across multiple sectors. Automobiles, agricultural products, food and electronics. And it connects supply chains between China and the rest of Southeast Asia. Those two economic engines – tourism and exports – drove Thailand’s $570 billion economy in 2025, ranking it third in Southeast Asia. But those same engines are showing signs of strain. And The White Lotus, sadly, did not include a single chart about this.
Before Covid, Thailand was on track to reach 40 million foreign visitors a year. Then Covid hit, and tourism arrivals have never really gotten back to the numbers that we’ve seen before. On the manufacturing side, geopolitics has also been a drag. In 2025, the US government imposed a raft of tariffs around the world. So, this is upending trade. This is upending investment. That’s what you’re seeing here, a measure of money flowing in and out of Thailand. Since 2023, investors have been mostly pulling money away. And by late 2025, the outflow reached a record high.
Here’s the thing though: Covid and tariffs affected everyone. To understand what’s uniquely throttling Thailand’s growth in an otherwise flourishing region, we have to look back even further. Thailand saw rapid growth and industrialization in the 1960s, and it transformed from an agrarian low-income country to a manufacturing powerhouse. The 1990s was the golden era of the Thai economy. Thailand was on track to escape poverty and become a rich country. The economy was expanding at such a rapid pace, 8% to 9% a year. People were spending, banks were lending, companies were hiring. But financial institutions took on excessive risks, bad loans, and a great current account deficit. And then in 1997… When the Asian Financial Crisis hit, speculators started attacking the baht, and the currency lost more than half of its value. Banks failed, businesses went bankrupt almost overnight, millions lost jobs. In the early 90s, Thailand’s gross domestic product was growing at a healthy clip, around here. But the financial crisis left a deep scar, and growth has never returned to the same level. So, why not?
In the wake of the 1997 financial crisis, Thailand elected Thaksin Shinawatra as its prime minister. Thaksin’s political rise is inseparable from his business success. As the founder of Thailand’s largest mobile operator, he gained the wealth, visibility, and public profile that helped him connect with voters. He became the country’s most popular and also most polarizing politician in decades. Growth of the Thai economy picked up under Thaksin’s administration. But economic and political success made Thaksin powerful in the eyes of Thailand’s old guard. The establishment that’s made up of senior bureaucrats, business elites, judges has controlled the country’s most powerful institutions since the country became a constitutional monarchy in 1932. They did not want a strong elected government that would clash with its interests. And that came to a boiling point in 2006. Thaksin was toppled in a military coup that has led to a decades-long rivalry between Thaksin and the old guards.
Years of protests and leadership changes followed, and this consistent political upheaval is the first major contributor to Thailand’s unique economic problem. Thailand has raced through prime ministers over the last twenty years. Five of them from Thaksin’s camp, who came to power through elections, have been ousted by court or by coup. This is a tug of war between the establishment and the civilian government. They take turns governing the country, but at the same time, none of them stay long enough to really introduce any meaningful changes. For decades, this has broadly been defined by a power struggle between pro-democracy advocates and the elite. Since Thailand became a democracy, it already had 13 successful coups and about 20 versions of the constitution. From an investor point of view, they want to have some certainty that the policies that are in place today will be surviving over the course of an investment. But when you have a revolving door of governments, you don’t have that certainty.
Thailand’s concentration of wealth at the top has created another unique bottleneck for the country: one of the world’s highest income inequalities. In fact, its richest 10% controls nearly 70% of the nation’s wealth. That’s higher than any other country in the region, such as Indonesia, Malaysia, and Vietnam. Bangkok and other economic corridors were booming while the rest of the country was engaged in low-productivity agricultural practices. The majority of corporate wealth in Thailand are in the hands of just a few hundred people. Rich billionaire families in Thailand control large conglomerates that dominate key sectors across the economy. In Thailand, political access protects business interests while wealth gives you more political bargaining power. Often, when economic power and political authorities sit within a small group of people, they resist changes to reduce monopoly, increase competition, and redistribute wealth. And increasingly, this is being passed onto ordinary families already burdened by long-standing debt.
This is the legacy of the post-1997 crisis where credit was used to revive growth. But when wages stagnate and consumption is expected to rise, households borrow, and sometimes more than they can pay back. At roughly 90% of GDP, Thai household debt is now among the highest in Asia, only scarcely below South Korea and Hong Kong. Now, when a huge chunk of a family’s income goes toward interest payments, it’s harder for them to spend on anything else. And that includes further education, bringing us neatly to the last stop on our tour of Thailand’s unique economic bottlenecks: talent.
Thailand produces relatively fewer engineers, data scientists, and those high-skilled jobs than the rest of the Southeast Asian countries. And it also doesn’t have the same level of English proficiency as other countries either. This is holding Thailand back while countries in Southeast Asia are racing to attract AI and semiconductor investment. Thailand is sort of stuck in old technologies that is slowly losing momentum without having any new products to offer to sell the world. And it’s facing another issue with its workforce. Thailand is ageing faster than it is getting richer. So about the middle of the 2010s, Thailand’s working-age population, the growth in that cohort started to slow dramatically. And then from about 2019, actually the workforce started to shrink. And looking ahead, this decline is projected to keep accelerating for decades to come. If nothing changes, by the 2030s and 2040s, the workforce could contract by about 1% each year.
So today, Thailand is battling a perfect storm: stagnant growth, soaring debt, and a shrinking workforce, all against a backdrop of political instability and deep inequality. Its leaders are faced with solving a puzzle of debt and demographics in a world that won’t wait for it to catch up. Policymakers say they’re aware of the most urgent issues. “We have plan on upgrading productivity in Thailand, especially reskill and upskill of Thai people, promoting investment.” Yet, no matter who’s in power, they’ll have to contend with the same problem that’s held the country back for decades. There’s not a lot of focus in building industries that could power the economy into the future. Political instability is a root cause for that, and unless there’s a meaningful reform in the political system, in the power structure, Thailand is never really going anywhere.