BANGKOK, March 25, 2024 - The World Bank has launched the Systemic Country Diagnostic (SCD) Update for Thailand. Shifting Gears: Toward Sustainable Growth and Inclusive Prosperity provides a comprehensive analysis of development challenges and opportunities for accelerating progress in poverty reduction and shared prosperity in a sustainable way. The update highlights five priorities:
- Building strong human capital
- Creating a competitive and innovative economy
- Unlocking growth in secondary cities
- Ensuring sustainable and climate-resilient development
- Strengthening fiscal institutions and public finance
The COVID-19 pandemic, rising geopolitical tensions, rapid technological advancements, and climate change have exerted substantial pressure on Thailand's economy, environment, and population. Although growth gained momentum in 2022 and 2023, recovery trails behind peers in ASEAN, primarily because of Thailand's significant exposure to global tourism and trade. Reduced investment, decelerating productivity growth, and an aging population are additional factors contributing to the slowdown in growth.
"Thailand has had several decades of impressive growth and poverty reduction, which significantly improved the living standards of its citizens," said Fabrizio Zarcone, World Bank Country Manager for Thailand. "The pace of growth has now entered a pronounced and enduring downturn. Stepping up the reforms identified in the SCD Update can help drive Thailand's inclusive and sustainable growth. These reforms are pivotal for Thailand to ascend to the status of an advanced economy in the foreseeable future, characterized by greater societal equity and a more sustainable, climate resilient economy."
The report highlights that to become a more innovative and inclusive economy, Thailand must improve learning outcomes and close skills gaps by increasing education spending, optimizing resource allocation, and aligning education with labor market needs. Thailand must also enhance tech competitiveness, strengthen competition regulations, attract skilled professionals, and empower small and medium-sized enterprises through increased access to finance for innovation.
To attain economic prosperity while upholding environmental integrity, Thailand also needs to promote sustainable agricultural practices and responsible tourism. It would also include addressing the challenges posed by climate change, including preventing and mitigating floods and droughts, improving the management of water resources, and prioritizing sustainable energy transition.
Achieving these priorities would require strong institutions, which would allow Thailand to effectively address its socio-economic challenges. Increasing accountability and transparency in its public services and putting in place a well-functioning system of central-local government relations can help address regional disparities.
"The five priorities integrate human capital development with economic revitalization through innovation, productivity, and entrepreneurship. Sustainable area-based development unlocks growth potential by attracting investment, aligning with environmental goals, and ensuring stability in human capital," says Ekaterine Vashakmadze, Senior Economist and lead author of the report.
The SCD Update was prepared following consultations with government officials and representatives of the private sector, development partners, civil society organizations, and academia. Getting Back on Track: Reviving Growth and Securing Prosperity for All, the previous SCD, published in 2016, laid the foundation for understanding Thailand's economic growth and inclusion challenges. The 2024 SCD Update builds on this foundation and addresses the rapidly changing global trends that require sharper focus on resilience. It will inform the new priority areas for development between Thailand and the World Bank Group Country Partnership Framework for fiscal years 2025-29.
