TDRI warns Thailand risks falling behind ASEAN

• Dr Somkiat, TDRI President, warns Thailand is entering a period of “chronic slow growth”, expanding only 2% and trailing most of Asia, with Vietnam’s GDP per capita expected to surpass Thailand’s by 2073.
• Low growth is hurting households, driving up debt and leaving many workers with inadequate income despite not being unemployed.
• The key solution is to create “Good Jobs” that offer adequate pay, welfare and career progression, which would support social calm and political stability.
• He notes that governments have focused too heavily on stimulus and spending, neglecting the production side, leaving the economy unable to accelerate amid high household debt and difficult export conditions.
• He proposes a four-part production model: (1) transform agriculture into high-value farming; (2) upgrade tourism and food services; (3) promote modern services; and (4) develop Thailand’s film and series production industry into a new growth engine.

Thailand Development Research Institute (TDRI) has warned that Thailand is at risk of being overtaken by its ASEAN neighbours if the country fails to reform its economic model, stressing the need to develop “Good Jobs” and overhaul the nation’s production system to boost competitiveness.

TDRI president Dr Somkiat Tangkitvanich said during the annual seminar, “Reimagining Thailand’s Development Model”, that the Thai economy has entered a prolonged period of “chronic slow growth” lasting more than three decades. Thailand, once capable of expanding 7% per year, is now growing at only about 2%, placing it near the bottom of Asia — ahead of only Japan.

Dr Somkiat warned that the country’s long-term growth potential has been permanently eroded. If current trends continue, Vietnam’s GDP per capita will surpass Thailand’s by 2073. He added that Thailand’s 20-year national strategy, which aims for high-income status by 2036, is “almost impossible to achieve”, given Thailand’s slow income growth compared with advanced economies.

According to TDRI data, Thailand’s per capita growth averaged only 0.1% between 2021 and 2024, far too low for the country to ever catch up without major structural reforms. The impact on living standards is clear:

1. household debt remains above 80% of GDP,
2. banks are reluctant to lend to SMEs due to NPL risks, and
3. the government is forced to provide support to households, farmers and businesses, pushing public debt higher.

Meanwhile, the share of labour compensation in GDP has declined, showing that returns are flowing more to capital than to workers. Thailand is not a country with high unemployment, Dr Somkiat said, but a country where many people “work but still do not earn enough” to maintain a decent standard of living.

He added that Thailand’s economic problems are also intertwined with social and political weaknesses — corruption, lack of transparency, fragile rule of law and the rising risk that Thailand could become a “grey country” if money-laundering and transnational crime networks continue to expand.

Dr Somkiat stressed that the most important solution is to create “Good Jobs” — jobs that provide adequate income, benefits, safety and career advancement. Good Jobs, he said, underpin social stability, political stability and sustainable economic growth.

“Good Jobs can only exist if citizens have higher skills, the production system is strong and businesses can compete globally,” he said.

He likened the economy to an aircraft powered by four spending engines — consumption, private investment, government spending and exports — and four production engines — agriculture, industry, services and public services. Thailand, he argued, has focused too heavily on stimulus and spending, while neglecting production, leaving the country overburdened and unable to accelerate growth amid household debt, weak investment and difficult export conditions.

Thailand’s production sector faces three major structural problems:
• severe labour shortages,
• falling birth rates,
• high numbers of deaths from accidents and pollution each year,
• labour loss from military conscription (70,000 men annually),
• low education quality that fails to raise productivity,
• shrinking public investment due to high fixed expenditure,
• limited FDI that does not sufficiently integrate with the Thai economy, and
• outdated regulations that hinder new investment.

“Thailand still produces low-productivity goods. Agriculture remains a commodity business competing on price. R&D investment is very low, and resources are distorted by poorly targeted policies,” Dr Somkiat said.

He noted that Thailand is being squeezed from all sides:

1. the US has raised tariffs to the highest in decades,
2. Europe has introduced environmental trade measures such as CBAM and EUDR, and
3. China’s overproduction is pushing industrial prices down worldwide.

To survive, Dr Somkiat proposed a new production model with four pillars:

1. Revolutionise Thai agriculture

Thailand should abandon the outdated assumption that 30% of the workforce must remain in agriculture. No high-income country maintains such a large agricultural labour share.
The way forward is high-value agriculture, similar to Japan’s premium melons, Hokkaido snow crabs and Wagyu beef. Thailand already has strong candidates for high-value production — economic bamboo, Nam Wa bananas, mud crabs and biochar. These can create genuine grassroots income.

2. Upgrade tourism and food services

Thailand has one of the world’s densest concentrations of restaurants and ranks high in Michelin Guide’s “good value” category, but still trails Singapore in Michelin stars, reflecting weaker state support.

Thailand should enhance product value, IT systems, business succession, global branding, overseas expansion (similar to Singapore’s push for JUMBO Seafood) and convert more services from non-tradable to tradable, enabling exports of Thai culinary and tourism expertise.

3. Promote modern services

Modern Services include chip design (where India is among the global top five), IT and digital services, professional services and creative industries. These sectors are mobile, carry fewer trade barriers and are well-suited to Thailand’s talent pool.

4. Expand the film and series production industry

This year, more than 451 foreign productions were filmed in Thailand, bringing in 7 billion baht. Major films such as Jurassic Park and Alien Earth have filmed here, generating widespread employment — electricians, camera crews, extras, hotels, transport and backstage workers. With stronger incentives and transparent management, this sector could become a major growth engine.

Dr Somkiat concluded:

“Thailand must build new engines if it does not want to fall behind ASEAN. We must use our labour and capital efficiently, strengthen production across agriculture, industry and services, reduce reliance on spending, increase productivity and adapt to the world’s shift towards deglobalisation. If we do not start now, Thailand risks falling below our neighbours and drifting further behind the global economy.”