Worldbox Business Intelligence Risk Rating – March 2025
THAILAND
NEW – Technology is an increasingly important driver of economic success, and we are now including a separate Technology sector in our quarterly country risk reports and integrating the core into our overall score.
Summary
| Overall Risk Score 26/40 (Stable)
Political risk: Stable 6/10 Economic risk: Negative 6/10 Commercial risk: Stable 7/10 Technology risk: Stable 7/10 The risk assessment of a country is made up of four components, being Political, Economic, Commercial and Technological. Each component is scored out of 10 with 1 being the highest risk and 10 the lowest. |
ESG Risk: 6/10 (Stable)*
*Environmental, social and governance (ESG) issues are becoming increasingly important to companies, investors and consumers in Southeast Asia. That is why we are now preparing a separate ESG score and section with our quarterly country risk reports. We explain how each country rates, looking at the E, S and G individually, and outline recent developments. |
Political Risk – Stable at 6
Thailand is a constitutional monarchy. The legislature is bicameral, consisting of a directly-elected House of Representatives with 500 seats and an upper house, the Senate, all of whose members are appointed by the Royal Thai Military, under the new Constitution adopted in April 2017, to serve five-year terms.
The King is the Chief of State and the Monarchy is hereditary. Traditionally, he has little direct power but has been able to exert considerable influence over political affairs. In the case of the late King Bhumibol Adulyadej, who reigned from 1946 until his death in 2016, that reflected popular respect. Thailand also has one of the harshest lèse-majesté laws in the world, under which people can be charged for posting, sharing or liking social media posts that are deemed offensive to the monarchy.
The royal family and military usually work in tandem, often using the lèse-majesté laws to suppress political dissent. They were used, for example, to justify the arrests of pro-democracy protesters by the government of former prime minister Prayuth Chan-ocha, who led a military coup in 2014 and remained the country’s leader until August 2023. The 2014 power grab marked Thailand’s 13th successful coup since it became a constitutional monarchy in 1932.
The military and the royal family also successfully blocked the reformist-minded Move Forward party from taking power after it far exceeded expectations to win 151 of the 500 seats in the lower house during the May 2023 election. Move Forward had wanted to reform or even abolish the lèse-majesté laws.
Pheu Thai formed a broad coalition without Move Forward and was able to win the support of the Senate to form a government. Pheu Thai reneged on a campaign pledge not to support pro-military parties.
In August 2024, the Constitutional Court ruled Prime Minister Srettha Thavisin had breached a requirement that ministers have “evident integrity” and high ethical standards by appointing a minister with a prison record. He was ousted from his post as Thailand’s 30th prime minister after 11 months and 14 days.
He was replaced by Pheu Thai leader Paetongtarn Shinawatra, who gained overwhelming support from coalition MPs to become only the second woman in Thai history to serve as prime minister. She is the daughter of Thaksin Shinawatra, who is regarded as Pheu Thai’s patriarch and de-facto leader, and who was prime minister from 2001 to 2006.
Thaksin is believed to wield considerable influence over the ruling party and the governing coalition. Paetongtarn, 38, has no political experience, having previously been a senior executive and major shareholder in the Shinawatra family business. In September, she appointed a team of five strategists who worked for her father when he was prime minister.
Economic Risk – Stable at 6
Thailand has been one of Southeast Asia’s most dynamic and successful tiger economies. The World Bank points out that over the past four decades, Thailand has made remarkable progress in social and economic development, moving from a low-income to an upper-middle-income country in less than a generation. The economy grew by an annual average of 7.5% during 1960–96 and by 5% during 1999–2005, following the Asian Financial Crisis.
However, concerns about the economy have grown over the past decade. In its 2023 Article IV Consultation, released in January 2024, the IMF, for example, reiterated its concerns about the Thai economy. It noted that Thailand’s economic recovery had been slower than among Association of Southeast Asian Nations (ASEAN) peers and said the outlook remained uncertain, “with risks tilted to the downside”.
The IMF encouraged the authorities to continue with gradual policy normalization in the near term, while implementing “bold” structural reforms to boost productivity and potential growth and build climate resilience. It highlighted the need to remove excessive regulation, upskill the labour force, and reform the social protection system.
Stagnating productivity is certainly one of the key challenges. Average growth in total factor productivity (TFP) fell from a high of 3.6% per annum during the early 2000s to just 1.3% during 2009–2017. Foreign direct investment (FDI) has fallen as a percentage of GDP since the military took power in 2014. An uncertain legal and political environment, corruption, powerful domestic oligopolies, and restrictions on foreign ownership deter FDI.
The ageing population is another challenge. Thailand is among the fastest-ageing countries in the world, according to the World Health Organization (WHO). Of its 67 million population, 12 million Thais are elderly, according to the latest national statistics. Since 2005, the country has been classified as an “aged society” as people aged 60 years and above account for more than 10% of the population.
Ageing will directly lead to increased spending needs, through rising public pension and healthcare costs. The combined fiscal costs of the Civil Servant Pension, the Social Security Fund and the Old Age Allowance are expected to rise from 1.4% of GDP in 2017 to 5.6% in 2060. Long-term care and healthcare costs for the aged are also expected to rise. The WHO projects that public expenditure on healthcare will increase from 2.9% of GDP in 2017 to 4.9% of GDP in 2060.
Inadequate education and skills are another cause for concern. Critics say that Thailand’s military leaders have neglected to fund an education system capable of producing a workforce suited to the digital era. According to a recent World Bank report, two-thirds of Thai youth and adults are “below the threshold levels of foundational reading literacy”, while three-quarters have poor digital literacy skills. Meanwhile, Thailand’s English-language proficiency ranks among the lowest in ASEAN.
The country’s dependence on tourism is yet another challenge. This is one of Thailand’s biggest industries, accounting for around 20% of GDP in 2019, prior to the Covid-19 pandemic. However, the country has yet to fully recover from the devastation wrought by pandemic-related lockdowns, mainly because of a slowdown in Chinese visitors. In 2019, when a record 39 million tourists visited Thailand, Chinese visitors numbered over 11 million. In 2023, just 3.5 million Chinese arrived, largely due to economic problems in China.
However, tourism recovered strongly in 2024, with Thailand surpassing its target of 35 million visitors a few days ahead of the year’s end. The tourism authorities are targeting between 36 and 39 million international arrivals and 1.98 to 2.23 trillion baht in tourism revenue in 2025.
Very high levels of debt are also weighing on household consumption, another engine of growth. Household debt stood at 89.6% of GDP at the end of June 2024, among the highest levels in Asia. In December, the government announced several approved debt-support measures, including interest suspensions and reduced principal payments, to help tackle household debt.
Commercial Risk – Stable at 7
Thailand ranked 108th out of 180 countries in Transparency International’s 2023 Corruption Perceptions Index, moving down seven places from 2022. Regionally, it lies behind Vietnam (in 83rd place), Malaysia (ranked 57th) and Singapore (5th).
Thailand is making efforts to combat corruption. The country has a legal framework and a range of institutions to counter the problem. The Organic Law to Counter Corruption criminalizes corrupt practices of public officials and corporations, including active and passive bribery of public officials. The anti-corruption laws extend to family members of officials and to political parties.
In April 2024, the government issued formal guidelines to both local and international investors regarding the practice of preventing and suppressing corruption in business and among government officials, with the aim of reducing corruption in Thailand. The move was designed to increase foreign investors’ confidence, so that they will continue to invest in the country.
Thailand ranks 87th in terms of economic freedom, according to the Heritage Foundation’s 2024 index, down from 42nd in 2021. However, its economic freedom score is higher than the world and regional averages. Economic fundamentals remain relatively solid, but Thailand’s economic freedom still faces challenges, which include the need to advance institutional reform, says the Heritage Foundation. It adds that the process for starting a business has been made easier, while labour regulations are relatively flexible.
The US State Department’s 2024 Investment Climate Statement reported that US businesses had repeatedly expressed concerns about Thailand’s customs regime. The report added that complaints centred on lack of transparency, the significant discretionary authority exercised by Customs Department officials, and a system of giving rewards to officials and non-officials for seized goods based on a percentage of the value of the goods.
NEW
Technology Risk – Stable at 7
The Global Innovation Index (GII), from the World Intellectual Property Organization, is an important index used by countries and multinational companies to assess innovation ecosystems and aid in policymaking and investment decisions.
Thailand ranked 41st out of 133 countries in the 2024 GII – its highest place in a decade and moving up from 44th place in 2020.
Government policies
Thailand’s digital economy is the second largest in Southeast Asia. It accounted for 6% of the country’s GDP (US$36 billion) in 2023, with projections indicating growth to 11% by 2027. Accelerated technology adoption, supportive government policies, and the success of sectors such as ICT and e-commerce are driving this growth.
Following the Covid-19 pandemic, Thailand swiftly adopted digital technologies in both the public and private sectors. This shift has been encouraged by government support aiming to establish Thailand as a regional ICT hub. The US International Trade Commission (ITC) says the digital landscape is competitive, with both local and international players like Huawei, ZTE, Intel, Ericsson, Cisco, Samsung and HPE vying for market share.
The National Digital Economy and Society Commission has set a target of increasing the digital sector’s contribution to 30% of GDP by 2027, with a focus on enhancing cloud infrastructure and attracting foreign investment.
Meanwhile, the ITC says that under Thailand’s national ICT strategy, known as Thailand 4.0, the Thai government envisions Thailand becoming an ASEAN digital hub. According to the Office of the National Broadcasting and Telecommunications Commission, wider adoption of applications using 5G could contribute US$9.3 billion, or 10% of GDP, to the Thai economy by 2035. With the support of the Thai government, the plan encourages digital creativity and innovation, the development of new technology, and the move towards a digitally driven economy.
Infrastructure
The 5G mobile network currently covers more than 95% of the population. Thailand ambitious Thailand 4.0 programme promotes industrial-scale digital transformation while establishing an economic corridor in eastern Thailand.
Thailand 4.0 is part of Thailand’s more extensive digital transformation policy, “A National Digital Blueprint”, which targets the development of Thailand’s digital economy over the next 20 years. The Thai government has set a target for Thailand to become a developed country in 2037.
Education and skilled staff
The government says that “the most important element in the development of Thailand 4.0 is the Thai people”. It has a goal of transforming Thais into “more competent human beings” by reforming the education system, as well as changing curricula and teaching methods to foster a better learning ecosystem. Thailand currently ranks poorly in education. PISA, the OECD’s Programme for International Student Assessment, which measures 15-year-olds’ ability to use their reading, mathematics and science knowledge and skills to meet real-life challenges, ranks Thailand 47th among the 76 countries surveyed.
According to PISA, only one in five boys and one in seven girls in Thailand who excel in maths and science plan to pursue careers in engineering or science by age 30. The government is seeking to address the lack of STEM graduates. In December 2024, it launched a Thai–US Joint-Degree Sandbox for STEM Teacher Education to addresses critical shortcomings in teacher education, aiming to equip Thai teachers with internationally competitive skills.
The initiative, launched in collaboration with leading US universities, aims to overhaul undergraduate and graduate teacher training in science, mathematics and technology. It focuses on modernising curricula, integrating English as a medium of instruction, and ensuring that educators are equipped to meet global standards.
March Bulletin
Political Risk – Stable at 6
The final four months of 2024 proved relatively calm, after the political turbulence seen earlier in the year. The coalition has held together, while the popularity of Prime Minister Paetongtarn Shinawatra has steadily increased, according to opinion polls. Factors boosting her appeal include the government’s policy of distributing 10,000 baht (US$293) in cash to 14 million vulnerable and disabled citizens.
The first phase of the stimulus scheme got underway in October, following up on a major campaign promise from the Pheu Thai party ahead of Thailand’s general elections in 2023. Former Thai Prime Minister Srettha Thavisin promoted the scheme during his 11 months in office, maintaining that providing consumers with money would help grow Thailand’s GDP.
However, political opponents continue to challenge the government through the courts, often targeting Paetongtarn’s father Thaksin in an attempt to destabilize the government. In November, for example, the Constitutional Court rejected a petition seeking to block Thaksin from interfering in the ruling Pheu Thai Party and colluding with it to overthrow the constitutional monarchy. The court also rejected a claim that Thaksin was benefiting Cambodia through a plan to jointly utilize gas and other resources in the disputed maritime area between the two countries.
Economic Risk – Stable at 6
In November, the National Economic and Social Development Council of Thailand (NESDC) the national economic planning agency, said it expected the economy to grow by between 2.3% and 3.3% in 2025. Key drivers include increased government consumption and investment, robust domestic private demand, a continued recovery in the tourism sector, and sustainable expansion in exports.
The economy registered growth of 1.9% in 2023, and is expected to grow by just 2.7% in 2024, so maintaining the country’s poor recent growth record, particularly in relation to neighbouring countries. Indonesia’s GDP, for example, has been growing consistently at around 5%, while the Philippines and Vietnam are both expanding by more than 5% this year.
The structure of Thailand’s economy is the main reason for this underperformance. The country exports more services than most of its neighbours, mainly in the form of tourism, and specializes in the export of manufactured goods, such as auto and auto parts.
The Diplomat argues that “for this model of economic development to work, Thailand needs a stable and preferably under-valued currency, and it needs global demand for its goods and services to be high. It is no coincidence that when the Thai economy was growing at 4.2% in 2017, it was also running a surplus in its current account of US$44 billion.” The publication points out that global demand for Thai goods and services is currently weak.
That problem has been compounded by weak domestic demand caused by very high levels of debt among consumers and elevated interest rates. However, the government’s digital-wallet stimulus package may provide some relief, while interest rates are also finally on a downward path. In October, the Bank of Thailand lowered its policy interest rate by 25 basis points, to 2.25%, the first rate cut since May 2020. Rates could be cut by a further 25 basis points by mid-2025.
In December, Finance Minister Pichai Chunhavajira and Bank of Thailand Governor Sethaput Suthiwartnarueput agreed on an inflation target of between 1% and 3% in 2025. Inflation remained below the target for a sixth consecutive month in November, at 0.95%.
Commercial Risk – Stable at 7
In December 2024, S&P Global maintained Thailand’s Sovereign Credit Rating at BBB+, with a stable outlook. The agency expects the government to continue prioritizing investments that align with national strategies.
These include the development of the Eastern Economic Corridor and large-scale transportation infrastructure projects. Investments by state enterprises and public-private partnerships are expected to drive these initiatives forward.
The agency also noted the importance of domestic political stability, explaining that consistent economic policies and stable political conditions could pave the way for an upgrade in Thailand’s credit rating to A-, as they would enable more effective economic policymaking.
Technology Risk – Stable at 7
In December, the government announced a plan to train 280,000 specialists within five years as part of its strategy for the development of artificial intelligence (AI), as well as the production of electric vehicles and semiconductors.
Environmental, Social and Governance (ESG) – Stable at 6
The United Nations’ Sustainable Development Goals (SDGs) are recognized as a beneficial framework for responsible investment. The Sustainable Development Report from Cambridge University Press assesses the progress of all UN Member States on the SDGs. It provides a useful means of ranking Southeast Asian countries on their ESG progress.
Thailand is ranked 45 out of 166 in the 2024 report, with a score of 74.7.
The US State Department’s 2024 Investment Climate Statement says that Thailand is among the top countries in the world for environmental, social and governance disclosures, with both the Securities Exchange Commission (SEC) and the Bank of Thailand focused on this issue. New SEC regulations on Sustainable and Responsible Investing fund disclosure requirements came into effect in April 2022, and the SEC, as the stock-exchange regulator, mandates ESG reporting for listed companies in the 56-1 One Report annual public filing.
Environment: Thailand faces some severe environmental issues. Air pollution is among the most serious: more than 10 million Thais sought treatment for illnesses linked to air pollution in 2023, according to official figures. Cases included those with chronic conditions such as lung cancer, bronchitis, asthma, and heart diseases. Widespread farm burning and forest fires, mainly in the country’s north and neighbouring regions of Myanmar, often create a noxious smog at the beginning of the year.
The issue of deforestation is more severe in Thailand than in many other Southeast Asian countries, primarily due to the rapid clearance of forests to accommodate agricultural expansion necessitated by population growth and the country’s focus on exporting agricultural products. The government is seeking to curb deforestation, but challenges persist, with incidences of illicit tree cutting and conversion of forested land into agricultural use continuing to pose threats to conservation efforts.
Social: The law provides for the right of workers in certain private-sector and state-owned enterprises to form and join independent trade unions, while Thais also enjoy the right to universal healthcare and a pension. There is a minimum wage law, although it does not cover some areas, such as government officers, state enterprise employees, domestic workers, maritime workers and agricultural workers.
Governance: Thailand ranked ninth on the Asian Corporate Governance Association’s recent report card on 12 Asia-Pacific markets in 2023, down from eighth place in 2020. Thailand’s fall was due in particular to lower scores for listed companies, investor participation and public governance. In 2024, the SEC and Stock Exchange of Thailand introduced new rules to flag or suspend the stock of troubled companies and escalate investigations.
March Bulletin
Environmental, Social and Governance (ESG) – Stable at 6
In November, Thailand issued Asia’s first sovereign sustainability-linked bond (SLB), raising 30 billion baht (US$880 million). The bond, backed by the Asian Development Bank, aims to cut greenhouse gas emissions by 30% by 2030 and increase zero-emission vehicles to 440,000 passenger cars and pickup trucks by 2030.
Latest economic data
f forecasts
* Worldbox Business Intelligence
Source: IMF January 2024, World Bank except where stated
Useful links
https://www.transparency.org/en/cpi/2021
https://www.imf.org/en/Countries/THA
https://www.adb.org/countries/thailand/main
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