Thailand has made significant economic and social progress over the past two decades. To maintain strong and resilient growth, the country needs to improve productivity, while lowering public debt, addressing population ageing, tackling informality and promoting a green transition, according to a new OECD report.
The latest OECD Economic Survey of Thailand projects GDP to grow by 2.0% this year and 1.5% in 2026. Increasing domestic demand and exports, as the peak impact of higher tariffs passes, will lift output growth to 2.6% in 2027. Inflation will remain low.
“After decades of impressive economic and social development, further reforms are needed for Thailand to maintain strong growth momentum,” OECD Deputy Secretary-General František Ružička said, presenting the Survey in Bangkok alongside Thailand’s Minister attached to the Prime Minister’s Office Supamas Isarabhakdi and Secretary-General of the National Economic and Social Development Council Danucha Pichayanan. “Lowering fiscal deficits and public debt, together with measures to tackle informality and boost productivity – by strengthening competition, reducing restrictions on foreign direct investment and scaling back public ownership – are key for strong, sustainable growth as well as social development.”
With population ageing, public spending is set to rise, driven by increasing expenditure on pensions and healthcare. Raising retirement ages and enhancing the contribution of taxes, for example value-added or personal income taxes, to deficit reduction and quality public services will help ensure sustainable public finances.
Further regulatory reforms, including easing restrictions on foreign direct investment and removing barriers to competition, would boost productivity. Creating a level playing field by reducing the dominant role of state-owned enterprises is also key to strengthening productivity in Thailand.
More efforts are needed to tackle informality, one of the Thai economy’s key challenges. Lowering the cost of formal job creation, including through reforms to social protection systems, can foster the creation of formal jobs. Strengthening human capital through education reforms, such as updating school curricula and enhancing vocational training, can also contribute to the formalisation of employment.
Extreme weather events, such as floods and droughts, cause significant damage to Thailand’s economy and communities. Advancing climate adaptation in agriculture, infrastructure resilience and early warning systems would reduce the cost of climate change, while expanding renewable energy sources is important to meeting the country’s climate change mitigation ambitions.