Thailand, branded the “sick man of Asia”: how much hope can a new government deliver?

Thailand is increasingly being described as the “sick man of Asia”, driven by a sharp slowdown in consumption, manufacturing and tourism—trends that are hitting household livelihoods and raising concerns about the country’s stability.

Thailand is grappling with low economic growth and an economic structure that is no longer keeping pace with today’s development needs. The Ministry of Finance has forecast GDP growth of just 2.2% in 2025 and 2.0% in 2026.

Over the past five years after the Covid-19 crisis, Thailand’s economy has expanded by no more than 2.6%, recorded in 2022. This has left the country lagging behind many regional peers in its post-pandemic recovery. Longstanding structural constraints remain unresolved: the population has fallen for a fourth consecutive year, the 2025 birth rate is at its lowest level in 75 years, household debt is close to 90% of GDP—one of the highest levels in Asia—and competitiveness has weakened.

In the past, Thailand successfully shifted from an agriculture-based economy towards industry, raising the industrial share of GDP and fuelling expectations that the country could become a newly industrialised economy. After the 1997 Asian financial crisis, Thailand recovered on the back of exports, and in 2011 the World Bank classified Thailand as an upper-middle-income country. But that image is fading as long-term problems remain unaddressed.

During the election campaign, several parties set out growth targets to be achieved during the new government’s term in 2026–2029. Bhumjaithai proposed annual growth of 3%, the People’s Party 3.5%, and Pheu Thai 5%. These targets stand in contrast to the Ministry of Finance’s projection of below 3% growth in 2026. The Pheu Thai-led government in 2023 also set a 5% annual growth target, but the outcome fell short of expectations.

The current situation has intensified calls for the incoming government to place greater emphasis on economic restructuring, after years in which Thailand’s economy has expanded below its potential. With traditional growth engines—exports and tourism—showing signs of weakening, the government now in the process of formation faces mounting pressure to tackle the deeper structural issues behind Thailand’s “sick man of Asia” label, rather than relying mainly on short-term stimulus.