Thailand’s ageing society threatens fiscal collapse and drags down economy

Thailand is undergoing the most profound demographic transformation in a hundred years, a change that is already straining its economy and society, while shaking the foundation of its sustainable development path. The warning signs are evident in a sharp drop in the birth rate. In 2024, only about 460,000 babies were born, the lowest figure in more than 70 years. By comparison, between 1963 and 1983, Thailand recorded over one million births annually, peaking at 1.2 million in 1971.

This decline reflects a shift in attitudes among younger generations, who are delaying or opting out of parenthood due to a combination of factors, including the rising cost of living, growing workplace competition, and economic uncertainty.

Varawut Silpa-archa, former Minister of Social Development and Human Security, described the situation as a “crisis within a crisis,” stressing that Thailand’s demographic crisis is the most pressing and dangerous challenge facing the nation. “This is not just about ageing. It is also about the unprecedented decline in new births, which is happening rapidly and worsening by the year,” he said.

By 2033, the proportion of elderly people is expected to surge to 28%, placing Thailand firmly in the category of a “super-aged society.” Alarmingly, 2024 marked the first year that the country recorded fewer than half a million new births, with the figure barely reaching the high 400,000s. Without urgent intervention, Varawut warned, the consequences will be far more severe than anticipated.

Impact on economy and security

Varawut highlighted five key threats posed by the demographic shift:

• Labour shortages – shrinking workforce as population declines.
• Welfare burden – fewer working-age people must shoulder the rising costs of elderly care.
• Economic stagnation – reduced demand and supply will hinder growth, trapping Thailand in the middle-income bracket.
• Fiscal vulnerability – fewer workers means less tax revenue, weakening public finances.
• Social fragility – families will become more vulnerable, the welfare system will be overstretched, and society will face instability, heightening the risk of population collapse.

“While the full effects are not yet being felt, they will soon become clear, from the labour market to the nation’s overall income,” the minister cautioned.

Anukul Peedkaew, Permanent Secretary of the Ministry of Social Development and Human Security, said Thailand officially became a “fully aged society” in 2024, with elderly citizens accounting for 20.69% of the total population. This places Thailand 17th globally among countries with the highest proportion of older people.

“The current figures show that in 2024, three working-age people must support one elderly person. Long-term projections indicate that by 2044, the ratio will worsen, with only two working-age individuals supporting one elderly person. This is extremely concerning,” he said.

The demographic shift is creating multiple challenges: increased state budget burdens for elderly care, growing pressure on families as more seniors live alone or in “skipped-generation” households, and changes in human trafficking patterns, which are increasingly exploiting online technologies.

Thailand’s dependency ratio

According to the World Bank, Thailand’s total dependency ratio in 2024 stood at 43.09%, up from 42.47% in 2023, compared with the global average of 58.13% across 196 countries. Historically, Thailand’s dependency ratio between 1960 and 2024 averaged 59.69%, with the lowest level of 39.49% recorded in 2013 and the highest of 93.01% in 1966.

A rising dependency ratio means fewer working-age people are available to support dependents, placing greater strain on the workforce and the economy.

Economists and financial executives have raised concerns that Thailand’s worsening demographic imbalance could drag down economic growth, erode competitiveness and place mounting pressure on public finances, potentially even leading to insolvency if reforms are not enacted urgently.

Chayawadee Chai-Anant, Assistant Governor for Corporate Relations and spokesperson for the Bank of Thailand, said the rapid rise in the elderly population is deeply worrying, with early signs that it is already having wide-ranging impacts.

“As more people enter old age, their lower levels of consumption inevitably weigh on the economy. The real issue is not simply that the elderly population is growing; that is natural, but whether the working-age population is large enough to compensate for and support them. In Thailand, the workforce may not be sufficient to shoulder this burden,” she explained.

Chayawadee warned that if large numbers of people retire without enough younger workers replacing them, the consequences will be far-reaching: labour shortages, declining incomes, and reduced tax revenues for the government. This, she stressed, translates into a heavier “burden on the working population,” who will have to shoulder the cost of supporting more elderly dependants with fewer resources.

“This is a structural problem. If left unresolved, it will drag down national growth. The economy will not achieve its true potential. It is like being weighed down, having to expend far more effort to move forward. The result will be weaker competitiveness and slower progress, even though Thailand has the potential to do much better,” she said.

Although other countries have faced or are approaching similar challenges, Chayawadee cautioned that failing to address the issue will only amplify its impact on Thailand’s economy.

She described it as one of the country’s most urgent national challenges, adding that the key lies in boosting incomes. Some measures may involve raising the retirement age or encouraging older people to remain in the workforce, since many still have the capacity to contribute.

Income generation also ties into the pressing issue of household debt among working-age Thais, she added, noting that these challenges are interconnected and must be tackled together.

Thailand’s ageing crisis at ‘critical’ level, risks triggering fiscal collapse

Kobsak Pootrakool, Executive Vice President of Bangkok Bank (BBL), has warned that Thailand’s ageing society has reached a “critical” level and cannot be resolved easily. The elderly now account for around 20% of the population, yet the current social and financial systems are ill-equipped to cope without sweeping reforms.

He cautioned that inadequate savings will force the government to shoulder a rising welfare burden that it cannot sustain. “Without comprehensive reform, expanding welfare programmes will ultimately push Thailand towards fiscal collapse. This is the beginning of insolvency,” Kobsak said.

He stressed that the state should limit its support to essential needs only. “If the government continues providing welfare at today’s level without reform, it will eventually run out of money. When that happens, citizens will be abandoned. Even companies that care for their employees must close if revenues dry up. Likewise, people should not expect the government to provide everything indefinitely,” he warned.

The deeper challenge, he added, is to rethink and restructure the system to address the demographic shift. Without reforms, the rapid rise in the elderly population, coupled with weak job security for many workers, will intensify the crisis. “This is one of the most significant structural reforms Thailand must undertake,” Kobsak emphasised.

Economist warns Thailand risks losing regional competitiveness, widening inequality

Phiphat Luengnaruemitchai, Chief Economist of Kiatnakin Phatra Financial Group (KKP), warned that the shrinking working-age population is the most pressing concern for Thailand’s economy, slowing growth across multiple dimensions.

Shrinking markets – As the number of working-age people declines, the overall market for goods and services contracts. In the past, businesses could easily grow because a rising population meant a steady increase in consumers. Now, with population growth having peaked and set to decline, market size will stagnate, intensifying competition. With smaller markets and weak demand, businesses also lose their pricing power, unable to pass on costs or raise prices.

Falling productivity – Economically, Thailand resembles a machine that requires labour, investment and technology. In the future, with fewer workers entering the system, GDP growth will inevitably slow if productivity gains or investment are not achieved. Growth that once averaged 7% has fallen to 5–3% and most recently to just 2%. “It is no surprise Thailand can no longer return to 5% growth,” he noted.

This demographic shift will also weaken Thailand’s appeal for foreign direct investment (FDI). In the past, investors were drawn by Thailand’s large market and abundant labour, but today it offers neither. Without change, Thailand risks losing relevance on the global stage, as slower growth diminishes international interest.

Regional disadvantage – Thailand now faces the worst of both worlds: wealthier neighbours like Singapore and Malaysia are growing faster, while less affluent rivals like Vietnam are catching up quickly. “We cannot catch up with richer countries, and poorer ones are overtaking us,” Phiphat said.

Rising inequality – Domestically, slow growth will deepen inequality. During the boom years of 7–10% growth, social and economic mobility was easier. But with sluggish growth, the poor will find it harder to climb into the middle class, while the middle class struggles to become wealthier. Rising living costs without rising incomes are also pushing households deeper into debt.

“Thailand’s economy will cease to be one of hope or opportunity. Upward mobility will diminish, and the middle class will gradually be squeezed,” Phiphat warned.

Urgent reforms needed

He called for urgent measures, including attracting skilled foreign workers to stimulate new investment and employment, reforming education to raise labour quality, and boosting productivity as the workforce shrinks.

At the same time, Thailand must accelerate new investment. “If we fail to invest, the country will be like a house left to decay, losing the advantages of past achievements,” he said. The focus should be on high-tech industries, automation, structural reforms and upgrading value creation across all sectors to reduce costs, improve competitiveness and sustain growth.

Thailand risks following Japan’s path as ageing slows growth

Amonthep Chawla, Executive Vice President and Head of Research at CIMB Thai Bank, has warned that Thailand faces the same challenges Japan once did, slowing economic growth and declining potential driven by an ageing population.

He explained that the key factor behind weaker growth is the shrinking share of working-age people. “As the proportion of workers falls, economic growth rates inevitably decline. This trend is clearly visible in other ageing societies, such as Japan,” Amonthep said.

If the situation continues, with households saving too little while relying heavily on state welfare, Thailand’s long-term growth potential will keep deteriorating. GDP, currently forecast at 2–2.5%, may eventually fall below 2%.

While state support remains necessary for vulnerable groups, Amonthep cautioned against overdependence on government transfers or pensions. “That model risks overburdening taxpayers at a time when fewer people are contributing taxes. The imbalance will ultimately shrink the economy further,” he noted.

He argued that individuals must take greater responsibility for their own retirement, stressing that self-reliance is central to a sustainable solution. Private savings and capital accumulation, not just government transfers, should form the backbone of future security.

Amonthep urged working-age Thais to increase their savings, channel funds into capital markets to foster long-term growth, and enhance productivity through better job opportunities and investment. Stronger capital accumulation, he said, would support both efficiency and job creation, helping the economy expand beyond today’s modest expectations.

“Even if GDP growth slows, it does not mean income per capita must stagnate. With the right policies and structural reforms, Thailand can still raise living standards despite a smaller population,” Amonthep concluded.

Vitchulada Pakdeesuwan

Wiratsanan Thuengthin