Thailand: From ‘Economic Tiger’ to the ‘Sick Man of Asia’
As manufacturing stalls and household debt nears 90% of GDP, Southeast Asia’s second-largest economy faces a structural crisis and political instability
- Thailand's economy is in a structural crisis, transitioning from a high-growth "Economic Tiger" to a stagnant state as its main pillars of consumption, manufacturing, and tourism falter.
- The decline is driven by deep-seated issues, including a shrinking population, Asia's highest household debt ratio at nearly 90% of GDP, and losing its competitive edge to regional rivals.
- The crucial manufacturing sector, especially the automotive industry, is in retreat due to an influx of cheap Chinese goods and fierce competition from countries like Vietnam.
- Economic paralysis is worsened by a struggling tourism sector and persistent political instability, which has stalled critical infrastructure projects and budget allocations.
As manufacturing stalls and household debt nears 90% of GDP, Southeast Asia’s second-largest economy faces a structural crisis and political instability.
The era of Thailand as a high-growth "Economic Tiger" has come to an abrupt halt.
Once the envy of its neighbours, the country is increasingly being referred to as the "Sick Man of Asia," as reported by the Financial Times.
The nation now finds itself grappling with a severe economic paralysis across its three primary pillars: consumption, manufacturing, and tourism.
A Decade of Decay
The transition from a regional powerhouse to a stagnant economy has occurred with alarming speed.
According to Burin Adulwattana, chief economist at Kasikorn Research Centre, the shift took place in just a decade.
Having peaked with 13% growth in 1988, the Thai economy has been trapped at a meagre 2% growth rate for the last five years.
Several structural "anchors" are dragging the nation down:
Demographic Collapse: Thailand’s population has shrunk for four consecutive years, with 2025 birth rates hitting a 75-year low.
Debt Distress: Household debt is now approaching 90% of GDP, the highest ratio in Asia, stifling domestic spending.
Eroding Edge: Thailand is rapidly losing its competitive advantage to more agile regional rivals.
The Automotive Retreat
The manufacturing sector—long the heartbeat of the Thai economy—is under siege from an influx of cheap Chinese goods and fierce competition from Vietnam.
The automotive industry, formerly a crown jewel, is in visible retreat.
Heavyweights including Nissan, Honda, and Suzuki have responded to the downturn by either shuttering factories or significantly reducing production capacity.
The financial markets have reflected this grim reality; in 2025, the Thai stock market was the worst performer in Asia, shedding 10% of its value in local currency terms.
Stuttering Tourism and Political Inertia
Even the tourism sector, traditionally a resilient engine of growth, is misfiring.
Foreign arrivals for 2025 fell to 32.9 million—a 7% year-on-year decline—amid safety concerns and the growing appeal of Japan and Vietnam.
Dr Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Financial Group, warns that the crisis is not merely a temporary dip in demand.
"We have no new growth engines," he noted, stressing that the issues are deeply structural and exacerbated by a fragile political landscape.
Constant leadership changes have delayed critical budget allocations and stalled essential infrastructure projects, leaving the country without a clear path to recovery.
