Thailand Can Capture Major Growth Gains by Scaling Up Green Manufacturing, World Bank Says

 

 

Advanced green manufacturing in EVs, solar panels, and energy-efficient appliances offers Thailand a pathway to unlock new growth engines and overcome structural constraints.

 

 

Thailand has significant untapped potential to develop advanced green manufacturing as a new engine of growth, with electric vehicles, solar photovoltaic components, and energy-efficient cooling technologies offering opportunities to raise GDP by an additional 2.9 percent by 2035, according to the World Bank's latest Thailand Economic Monitor released on Wednesday.

 

The report, titled "Advanced Green Manufacturing for Growth," examines how Thailand can reposition its well-established manufacturing base toward higher value-added green products, leveraging existing strengths in automotive, electronics, and electrical appliances to capture expanding global markets.

 

"Thailand could build on its existing strengths to reposition toward more advanced and green manufacturing and develop these as industries of the future and new engines of growth," said World Bank senior economist Kiatipong Ariyapruchya and lead author of the report.

 

 

 

 

Strong Foundation for Green Transition

Green products already account for close to 10 percent of Thailand's total exports, valued at approximately USD 10 billion in 2024. The country ranks as the world's third-largest exporter of energy-efficient air conditioners with around 10 percent of global market share and is rapidly expanding solar PV manufacturing.

 

Thailand's Green Complexity Index of 0.7 remains well below its Green Complexity Potential of 1.4, suggesting strong latent capabilities to expand into more complex green value chains.
 

 

 

 

"Our analysis shows Thailand has considerable untapped green complexity potential," said Kiatipong during the official report launch. "The difference between Thailand's current Green Complexity Index and its potential indicates strong latent capabilities in green value chains, particularly in complex, higher-value-added green products."

 

 

 

 

Electric Vehicles: Building on Automotive Strengths

The automotive sector, accounting for 3.1 percent of GDP and employing more than 570,000 workers, offers significant opportunities for building competitiveness in electric vehicles.

 

"Our firm-level analysis indicates that more than 80 percent of auto parts sales in Thailand could continue to be used in EVs, with 58 percent of sales being unaffected and 19 percent requiring only limited modification," Kiatipong said. "This suggests considerable potential to preserve domestic employment while upgrading production."
 

 

Under an ambitious scenario, EV exports could reach USD 14.9 billion by 2035, equivalent to 678,116 vehicles, compared to negligible export volumes today.

 

"The EV transition represents both a challenge and an opportunity for Thailand's automotive sector," said Benjarong Suwankiri, Director of the Macroeconomics, Trade and Investment Global Practice for Southeast Asia at the World Bank. "While some internal combustion engine parts will become obsolete, the majority of Thailand's automotive capabilities can be adapted for electric vehicles with relatively minor adjustments."
 

 

 

 

 

 

Solar Power and Energy-Efficient Cooling

Thailand's solar PV exports have accelerated rapidly, rising from 0.5 percent of total exports in 2018 to 1.9 percent in 2023. Under the ambitious scenario, Thailand's solar PV export share could rise to 7.5 percent by 2030, with exports reaching USD 45.3 billion by 2035.
 

In energy-efficient cooling, Thailand has emerged as a global hub for air conditioners using R-32 refrigerant, which offers 65 percent lower global warming potential than conventional alternatives. All 12 Thai-owned air-conditioner manufacturers have converted to R-32 refrigerants.

 

"The air conditioning sector demonstrates what Thailand can achieve when regulatory commitments align with coordinated public-private action and technology transfers," Benjarong said. "This model of collaboration can be replicated in other green manufacturing sectors."
 

 

 

 

 

 

 

Employment and Growth Impacts

Model-based simulations indicate that expansion in green manufacturing could boost real GDP growth by an average of 0.3 percentage points above the baseline during 2026–2035. Employment is estimated to be around 0.6 percent higher by 2035, equivalent to approximately 203,000 additional jobs.

 

"Our simulations show that green manufacturing expansion creates quality jobs beyond direct manufacturing employment," Kiatipong noted. "The shift toward higher-skilled occupations and complementary services reflects the knowledge-intensive nature of these industries."
 

 

 

 

Policy Reforms to Unlock Potential

Realising these gains will require comprehensive policy reforms, according to Melinda Good, World Bank Country Manager for Thailand.

 

"Strengthening Thailand's foundations for growth and jobs will require reforms focused on competition, skills, and fiscal rebalancing," Good said.
 

 

Key reform priorities include creating clear market signals by pricing carbon and reforming energy subsidies, building high-tech capabilities through strengthened education and training, and aligning investment incentives to promote local supplier integration and technology transfer.

 

"Clear price signals are fundamental to driving the green transition," Benjarong emphasised. "Without effective carbon pricing and reformed energy markets, Thailand's green manufacturers will struggle to compete globally."

 

The report notes that over 85 percent of low-carbon technology job openings require high-level skills, with Science and Engineering Professionals being the most common occupation.

 

"Government-supported training and certification programmes, particularly for technicians such as EV mechanics and solar panel installers, will be essential," Kiatipong said.

 

 

 

 

Climate Trade Risks and Opportunities

The shift toward green manufacturing also helps Thailand mitigate rising risks from climate-related trade measures, including the EU Carbon Border Adjustment Mechanism (CBAM).

 

An estimated 78 percent of multinational firms planned to exclude high-carbon suppliers by 2025.

 

"Thailand's net-zero and high-income ambitions provide businesses with confidence that there will be future demand for green products," Kiatipong said. "However, realising these gains will require clear price and market signals to support decarbonisation."
 

 

 

 

Looking Ahead

While the report projects Thailand's growth to slow to 1.6 percent in 2026, growth is expected to strengthen to 2.2 percent in 2027 as major FDI projects in green industries begin converting into actual production and employment gains.

 

Achieving Thailand's high-income ambitions by 2037 would require growth of around 5 percent per year and new sources of growth beyond traditional manufacturing and tourism.

 

"Thailand stands at a critical juncture," Good concluded. "The convergence of global demand for green technologies, Thailand's existing manufacturing capabilities, and the country's climate commitments creates a unique opportunity to develop advanced green manufacturing as a new growth engine."