Thailand's Economic Crisis: Experts Call for Urgent Reform as Growth Stalls
Leading economists warn country faces sharp deceleration, calling for fundamental policy shifts and strong leadership
- Thailand's economy is facing a severe crisis, with GDP growth projected to plummet from 2.8% to just 0.3% by year-end, following a decade of stagnation that has seen it fall behind regional competitors.
- Experts attribute the slowdown to long-term structural issues, including an ageing society, a middle-income trap based on outdated manufacturing, over 100,000 outdated laws, and an education system misaligned with industry needs.
- Urgent reforms have been proposed, focusing on shifting from external dependence to domestic resources, decentralizing government, overhauling laws and education, and digitally transforming industries to be innovation-driven.
- The primary obstacle to implementing these solutions is identified not as a lack of knowledge, but a critical lack of political leadership and the commitment to execute necessary changes.
Thailand's economy is heading for a dramatic slowdown, with GDP growth projected to plummet from 2.8% in Q2 to just 0.3% by year-end, experts warned at Krungthep Turakij's "Thailand Economic Outlook 2026: Out of the Trap" seminar on Thursday.
Dr Somprawin Manprasert, Chief Economist and Chief Strategy Officer of the Economic Intelligence Center (EIC) of Siam Commercial Bank (SCB) and Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), delivered a stark assessment: a decade of 2% average growth has left Thailand ranked sixth in ASEAN, down from its former position as a regional frontrunner.
"Our car [economy] has had symptoms for 10 years," Kriengkrai said, noting Thailand's 2.8% Q2 growth pales against Vietnam's 8%.
"We are actually using an old strategy on a new landscape," Dr Somprawin explained. Thailand's approach remains rooted in the post-WWII era of expanding populations and multilateral cooperation, whilst today's world is defined by demographic decline, bilateral agreements, and nations prioritising self-reliance over collaboration.
Kriengkrai outlined critical structural traps: an ageing society with 21% of the population over 60 and birth rates now below death rates; the middle-income trap driven by low-value OEM manufacturing, where agriculture employs one-third of workers but generates only 7-8% of national income; over 100,000 outdated laws fostering corruption; and an education system failing to meet future industrial needs.
Immediate pressures compound these issues. The strong baht has cost an estimated 1.1 trillion baht in lost tourism revenue whilst crushing export competitiveness. Household debt has reached 104% when informal borrowing is included. Chinese goods diverted from the US market have forced many Thai SMEs to close.
Reform Proposals
Dr Somprawin called for three strategic shifts: moving from external dependence to leveraging domestic resources ("outside-in to inside-out"), decentralising decision-making ("top-down to bottom-up"), and ensuring system-wide participation rather than relying on a few large players.
He identified reforming public resource allocation as the immediate priority, noting government efficiency has become the most critical factor in Thailand's declining competitiveness ranking.
The FTI outlined its "4 GOs" strategy: digitally transforming 8,000 of its 16,000 member companies within five years; shifting to innovation-driven production; diversifying exports beyond the US market (currently 18.4% of total exports); and accelerating the Net Zero target from 2065 to 2050 to meet EU and US requirements.
The federation proposed six government actions: establishing clear industrial vision, comprehensive legal reform, promoting "Made in Thailand" in government procurement worth trillions of baht annually, strengthening trade agreements, addressing infrastructure issues like water management, and reforming education with targeted reskilling programmes.
Leadership: The Missing Ingredient
Both panelists agreed that whilst the necessary reforms are well understood, Thailand's critical deficiency lies in execution rather than knowledge.
"If you read history or academic economic data, they clearly state that the most important thing for successful reform is leadership commitment," Dr Somprawin emphasised.
Successful reform, he argued, requires depoliticised mechanisms, genuine public participation as a collective endeavour, and effective management of stakeholders adversely affected by changes.
The experts' message was unequivocal: Thailand stands at a crossroads. Without strong leadership commitment, clear policy direction, and unified national purpose, the country risks continued stagnation whilst its neighbours surge ahead. The tools for revival exist; what remains is the political will to deploy them.
