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Country Brief
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|  | | | | | Quick Facts | | Figures in italics refer to most recent period other than that specified | | Source: World Development Indicators 2007 | More >> |
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| | | | | A middle-income country in Southeast Asia, Thailand has made important progress in social and economic development, even though it has suffered several years of financial and economic crisis in the late 1990s and has been impacted by political uncertainty over the past year. In fact, the long term trend has been strong. In the decade that ended in 1995, the Thai economy was one of the world’s fastest-growing at an average rate of 8-9 percent a year. After recovering from the “Asian Crisis” of 1997-1998, the Thai economy took off again. From 2002-2006, Thailand’s growth averaged at 5.6 percent. Over the last three decades, the Thai Government has been very successful in reducing poverty and extending coverage of social services. By 2006, the number of poor people in Thailand has dropped to 6.1 million from 18.4 million in 1990. Higher income and greater access to health care have also led to healthier mothers and fewer deaths of children under five. More than 97 percent of the population, both in the urban and rural areas, now have access to clean water and sanitation. In addition, Thailand is recognized internationally for its progressive and effective response against HIV/AIDS, which has helped the government cut down HIV infections dramatically since the mid-1990s. Bangkok, the Thai capital, has become the center of development and consequently the most prosperous part of the country. Economic activities in Bangkok and the metropolitan area account for almost 60 percent of the national gross domestic product, though it has under 20 percent of the nation’s population. Bangkok’s basic infrastructure is impressive compared with neighboring countries. The city is competing closely with Singapore to become a regional hub for air travel within Southeast Asia. Recently, however, Thailand’s economic growth has been slowing down because of weak private consumption and investment demand, following the September 2006 coup and subsequent political uncertainty. The Thai economy is expected to grow 4.3 percent in 2007 compared to 5 percent a year earlier. GDP growth in 2006 and 2007 was driven mostly by relatively strong exports, which were maintained despite continuing appreciation of the baht against the dollar. This suggested that the fundamentals of the Thai productive economy remained strong, even though political and policy uncertainties have weakened private consumption and investment. back to top | |  | | | Click to enlarge image |
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| | | | Political developments: Thailand has returned to democracy with its December 23, 2007 elections. The new six-party coalition government, led by Prime Minister Samak Sundaravej, has commenced its term in February. The next year will be crucial to determine the pace of foreign investment and whether domestic investment will recover from recent declines. Economic and social development: Over the past decade, Thailand has joined many other middle income countries in growing at rates significantly lower than those of both low income and high income countries. The strategies that produced rapid growth as workers transferred from less productive jobs to manufacturing are not sufficient to ensure continued real productivity gains in the now urbanized work force. This is the danger of being caught in the “middle income trap.” To avoid this trap, Thailand needs to improve its infrastructure so that Thai companies can keep up with competitors abroad, and so that foreign companies will want to invest, bringing technology and training necessary to productivity growth. To this end, the business climate and livability of Bangkok, which has been at the heart of Thai growth for the past two decades, will be very important. Through better than other countries in the region, some of Bangkok’s basic services and infrastructure still require some improvement Thai industries will also need to specialize as well as find innovative ways or technology to add value to their goods and services. Moreover, the Thai Government needs to improve the quality of education to help students acquire skills and provide a workforce that meets the market’s requirements. At the same time, the Government must ensure that development does not take place at the expense of the society’s vulnerable groups, the poor, or the environment, so as to ensure the social cohesion necessary for continued growth. Recent World Bank studies also suggest that the Thai Government needs to review public health financing. This is to ensure that it can continue to provide medical benefits for the large portion - 75 percent - of the population covered under government programs. Meanwhile, changes in lifestyle and disease patterns have hampered efforts by the Government to maintain its vigorous HIV/AIDS response that has earned Thailand an international recognition. In addition, urban, industrial as well as tourism development has put Thailand’s marine and coastal resources at great risk. A recent World Bank environmental report pointed out that coastal erosion is a major issue and with the climate change challenge, this issue required urgent attention from government and other stakeholders. On living resources, large areas of mangrove wetlands have been lost; coral reefs are at risk of continued degradation; and the total fish catch is in decline. If left unaddressed, this issue will have significant economic implications on Thailand. back to top
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| | | | | | | | Thailand’s rapid growth has enabled it to graduate from a borrowing client to a partner that relies instead on the Bank for development expertise and assistance in prioritizing strategies. From roughly US$300 million each year in the five years before the 1997 Asian Crisis erupted, World Bank lending commitment to Thailand has been reduced to a single project totaling US$84 million. Thai government agencies, however, continued to seek World Bank advices on key development issues, including how to improve the quality of education and public health, as well as on marshalling public experience and expertise to achieve economic benefits, a concept also known as “knowledge economy.” Accordingly, for the past several years, the World Bank has been working closely with Thai public and private institutions through the Country Development Partnership (CDP) framework. This framework provides for Bank support in areas selected by the Thai Government. The Bank’s engagement takes the form of analytical and advisory activities, technical advice, donor coordination, and investment, if appropriate The overall CDP framework now defines the Bank’s engagement in Thailand and allows both sides to continue working vigorously together. And successive Thai governments have shown a keen appetite for Bank advice and technical assistance. Since 2002, there have been eight CDPs for Thailand which have helped the Government address a range of important developmental challenges. These included support for the Thai Government’s efforts to improve air and water quality, social protection, poverty analysis monitoring, financial and corporate competitiveness, governance and public sector reform, infrastructure development, education, and public health. After the first CDP for the environment (CDP-E) wound up in 2007, the Thai Government has requested that the partnership be renewed resulting in the second CDP-E II provides for World Bank technical support to inter-related environmental issues under the unifying theme of climate change. back to top | | 
| | | | Partnership is helping secondary students improve their learning, as teachers develop better science and mathematics teaching skills. Read more | |
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| | | In-depth analysis of antiretroviral treatment costs gained Thailand international recognition. Read more | |
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| | | | | | | The Bank has been actively supporting Thailand’s drive to foster a knowledge-based economy. In FY07, the World Bank office in Bangkok organized a series of seminars for public and private institutions on improving productivity and efficiency through knowledge management. Two recent World Bank studies, “Thailand Investment Climate, Firm Competitiveness and Growth” and “Toward a Knowledge Economy in Thailand,” conducted jointly with the National Economic and Social Development Board, examined the country’s investment climate, as well as the performance of key Thai industries, providing policy recommendations on how to strengthen Thailand’s competitiveness. The Thai Government has incorporated findings of the Investment Climate Assessment into its National Economic and Social Development Plan (for 2007-2010) and the National Productivity Master Plan. The Bank has also extended its reach to the local government. Toward the end of the FY07, the Bank agreed with the Bangkok Metropolitan Administration to form a new development partnership for development strategies in the capital. Recently, the Bank has been approached by the National Counter-Corruption Commission to assist with ongoing efforts to improve its capacity as the anti-corruption watchdog of Thailand. The Bank has also been supporting Thailand’s emerging role as a development assistance donor and an advocate for strengthening regional cooperation. Technical advice has been given to help the Neighboring Countries Economic Development Agency (NEDA), which provides parts of Thailand’s overseas development aid, strengthen its capacity. The Bank also supports the Lao-Thai Partnership in Sustainable Hydropower Development to ensure that future hydropower projects in Lao PDR will be friendlier to the environment and the people affected by them. It also works with the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy Business Council to promote investments and strengthen private sector cooperation within the Greater Mekong Sub-region. As in other middle-income countries, the role of the World Bank in Thailand will continue to evolve as the country transforms socially and economically. Over the last few years, the Bank remained an important policy partner of Thailand, providing collaborative advice and development expertise to the Thai Government. In recent surveys, many government officials have indicated their strong preference that the Bank continue playing its knowledge-sharing role, reaffirming the Bank’s current strategy for contributing to Thailand’s development.
For more information about World Bank studies and reports on Thailand, click here.
For more information on the World Bank’s work in Thailand, visit: www.worldbank.org/th back to top February 2008
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