Population figures are not projections or predictions as we see with climate change but facts with a time lag of twenty years or so. Evidence from Japan strongly suggests that Thailand, in 2012, may have seen its last year of GDP growth in excess of 5% with a working-age population which has only now begun to decline with only 8.41% of the population being teenagers. Like everywhere across the developed world, this has far-reaching consequences not just for the economy but will add to social unease and a more elitist economic environment in a country already challenged by inequality.

Amid a warning from the OECD this week that Southeast Asian economies may see retarded growth and an update from the Bank of Thailand predicting 3.6% growth for 2023, there are real fears that Thailand’s days of GDP growth of over 5% may be behind it despite election pledges from the Pheu Thai Party to pursue an expansionary economic policy if it comes to power. The reason for this is the country’s rapidly ageing population and demographic problem as it is already an aged society and faces becoming a super-aged society by 2029. It is also one of the first countries in the world to experience such a problem without ever having become wealthy.

Kasikorn Research Centre this week issued a report warning that Thailand will become a super-aged population in 2029 having already become an officially aged population in 2021. The fact that the last time GDP growth was in excess of 5%, was in 2012, eleven years ago, may also be very much linked to that decline in the country’s working population with the prospect of even more seismic changes ahead. It would also explain the country’s laggardly growth compared to its regional peers but for all Southeast Asian economies, it appears that it is only a matter of time based on what we have seen happen to the Japanese economy which unlike Thailand was a wealthy country when it began to grow seriously old after 1988 and its economy ran out of steam to grow as it had in the 1970s and 1980s.

Thailand’s General Election, like others the world over, boils down to one key issue, the economy, with the Pheu Thai Party surging in the polls and again proposing to pursue Keynesian economic policies to expand the economy while the government parties point to what they consider prudent economic stewardship of the kingdom’s finances through an economic emergency.

All are agreed, however, that Thailand’s economy needs more economic growth, something that has been absent now for over a decade.

A disturbing prospect for the kingdom and fear that policymakers are nervous to confront or acknowledge but which is frighteningly real and unavoidable

A disturbing prospect, however, haunts policymakers and that is that Thailand’s economic decline since 2012 may be the result of a key factor that is beginning to make its presence felt the world over, the decline in the country’s population or demographics.

It is a factor that is not often alluded to by commentators since, by its very nature, it also questions accepted and indeed UN-sponsored policies the world over, including those on climate change.

In short, it is by its nature and implications, politically incorrect.

Nonetheless, it is a growing and pressing issue, one that is essentially a matter of fact and particularly acute in Thailand.

It is an issue that is beginning to be faced up to also in other countries, the declining birth rate.

Thailand’s new move to boost the birth rate and fight the negative impact of an ageing population

Research published by Thailand’s National Statistics Office for 2021 shows that only 8.41% of the population is aged between 13 and 19 years of age.

The population for the seven-year span known as adolescence is 5.56 million out of a total national population of 66.17 million.

A plethora of research between 2020 and 2022 when Thailand officially became an aged society shows that this problem is just beginning to bite

The figures come amid a plethora of statistics on the kingdom’s population as researchers and the government continuously monitor the country’s population as it increasingly moves towards becoming a super-aged society having crossed the threshold to officially become an aged society in 2021.

Inequality has been rising in Thailand since 2015 as the kingdom becomes officially an aged society in 2021

The effects of this process have only just begun to be felt and for a country where inequality has been widening since 2015, the initial impact of this, arguably the country’s greatest societal and economic challenge, has been to retard economic growth as it tries to compete with competitors in Southeast Asia such as Vietnam and the Philippines who have younger populations.

The Thai government pursued a birth rate policy in 2019 which showed mildly positive results.

Thailand’s current birth rate is 1.46 (2023) compared to 2.78 for the Philippines which is also declining but well above the population replacement rate which is 2.1 per woman, on average, across the world.

A glimmer of hope may be seen in the stabilisation of the birth rate although it still declined from 1.53 in 2016 to 1.46 in 2023.

Government campaign in 2019 may have helped

This coincided with the government’s campaign encouraging young couples to have children by offering benefits and incentives.

This period also saw the pandemic and the economic downturn in 2020 which has been shown worldwide to have been a further negative factor despite initial press speculation suggesting otherwise.

Thailand’s new move to boost the birth rate and fight the negative impact of an ageing population 

The birth rate figure is 1.96 in Vietnam which is below the population replacement rate and 2.19 for Indonesia. Cambodia has a healthier birth rate of 2.38.

The European Union average is 1.53 while in the United States, it is 1.64.

Bank of Thailand predicts economic growth this year of 3.6%, below its peers, but it all appears to depend on China’s economy powering back to life

It comes in a week when the Bank of Thailand, in its latest assessment of the economy for 2023, predicted a growth rate of 3.6% in the face of declining exports and production but with optimism that, this year, the country’s tourism industry will welcome up to 27 million visitors or a 145% increase on the figure for 2022 while exports will rebound in the second half of the year to make up for the fall in the first half, again very much linked with the hope that China’s economy, which has been notably unreliable in recent years, will grow this year after it reopened in recent months.

This can be compared to a projected growth rate of 6.4% for Vietnam, 5.7% for the Philippines and 5.4% for Cambodia.

The latest update came in an interview with CNBC on Monday given by Bank of Thailand Governor Sethaput Suthiwartnarueput who indicated that the bank would continue its ‘normalisation’ of interest rates meaning gradual increases but with a cautious approach.

Central Bank raising benchmark interest rates cautiously in a country where economic recovery is fragile given the damage done by the 2020 shutdown

Interest rates in Thailand are currently much lower than regional peers because of the weakness of the economy, at 1.75% and are expected to rise to 2% in May.

‘The economy is resilient and is able to withstand multiple shocks,’ Mr Sethaput said on Monday. ‘Policy normalisation will continue, but we will be cautious and monitor the situation’.

In Bangkok, the research arm of Kasikorn Bank (KBank), Kasikorn Research Centre, meanwhile published a study warning that Thailand is heading towards becoming a super-aged society by 2029 with over 1 million people alone turning 60 this year with the country on the precipice of a huge transformation as the number of people at work between 15 and 64 years of age has just begun to shrink.

Projected demographic shift to 2040 is now set in stone and unavoidable with seniors on course to become 31.28% of the population of Thailand by then

In 2021, 69% of the population of 66.17 million were in this age group but the projected demographics which are certain because of population trends in the last 20 years, show already, what will occur between 2021 and 2040.

Projections currently show that the country’s population of younger people will shrink by 34% by 2040.

This represents the loss of a key high-spending power market domestically and the ability of the country to achieve higher output.

A possible compensatory factor in Thailand’s particular equation may be, however, that only 45% of the Thai population is urbanised, even in 2023, but this raises key questions concerning education and inequality.

One particularly interesting aspect of the latest population trend is that Thailand’s traditional female surplus in the population has been reversed in the last two or three decades with the trend now being for more boys to be born among the population aged 28 years of age or lower.

This consistent trend is particularly pronounced in the last ten to fifteen years of births.

Reversal of female surplus in Thailand to a male surplus in the last two decades or so on a consistent basis is a noticeable change in the demographics

The country’s large female surplus within the population peaked among people currently aged 52 years of age.

This also has social implications going forward for the nature of Thai society and the economy, given the key role of women particularly with regards to money and household financial management, although the change is marginal but nevertheless significant as it has moved from a pronounced female surplus to a pronounced male one.

By 2020, the number of seniors in the population will increase from 12 million to approximately 20.42 million or 31.28% of the population.

The country’s population will begin to contract from 2028, although Thailand’s national statistics office in recent years has already produced figures showing a smaller population of approximately 66 million people which excludes immigrants and expats living in Thailand which brought the figure to nearer 70 million people.

The population is projected to fall to 37 million people by the end of the century.

Although this may sound alarming, it should be compared to the fact that in 1960, Thailand’s population was only 27.4 million people.

Working population to fall by 15.6% by 2040 with a halving of the ratio of working people to seniors

The key figure that does concern economists and observers however is that the country’s working-age population will decrease from 43.26 million to 36.5 million by 2040.

This is a fall of 15.6%.

It means that the ratio of workers to seniors will have halved by then from 3.6 in 2020 to 1.8 in 2040.

The Kasikorn Research Centre, on Monday, drew attention to the significant changes that this transformation of demographics will bring about in the economy, just as worldwide, people aged 60 years and above have significantly retarded disposable income compared to those under 34.

A significant change in commercial markets with a fall off in teenagers and young people as customers, leading to a more elitist society and environment

The key issue highlighted was a potential dearth of new customers including teenagers and younger adults which has already brought about and will see an even greater shift in marketing and business trends gravitating toward a more elite culture with firms focusing attention on an older demographic targeting a smaller minority of wealthy people, something that can already be seen in marketing and advertising campaigns across the world. 

This has implications for society as well as economics and is a key factor feeding into growing social unease, discontent and a darker outlook.

Thailand, like other countries, now faces challenges posed by economic problems thrown up by the conflict in Ukraine and aggressive climate change policies which are contributing to a continued elevation of inflation rates despite recent falls brought about by tighter monetary policies and more expensive lending which has, in turn, fed into increasing concern about the world’s banking system.

Darkening global trade situation with a world banking system that is more highly stressed due to rising interest rates and more hostile conditions

This is true both in Western countries and in China which was already experiencing a regional banking crisis linked with a property collapse in key regions and a sharp withdrawal of inward investment.

Property market collapse in China and a Chinese economic recession is the key threat to Thailand
China could be an economic time bomb sitting on Thailand’s doorstep as Evergrande collapse nears

This week, the Organisation for Economic Co-operation and Development (OECD) warned that trade in the Southeast Asian region would be down significantly in 2023. This is not news to Thai exporters who are already reporting hampered conditions.

Kensuke Molnar-Tanaka, the Head of the Asia Desk at the world body pointed to a global slowdown and continued supply chain issues.

‘Trade is projected to weaken this year, hampered by the global economic slowdown,’ he pointed out. ‘Supply-side bottlenecks are also hindering global trade. However, this is expected to be offset by China’s reopening. Cross-border flows from China will be an important source in the region.’

The Organisation for Economic Co-operation and Development (OECD), however, continues to predict that China’s economy will expand by 5% in 2023, a figure supported by UBS Bank in Switzerland and US merchant bank Morgan Stanley which notes that it could be as high as 5.7%.

Thai firms have yet to see tangible signs of China’s reopening according to export chief Chaichan Chareonsuk last week while tourism is still recovering

However, last week, Chaichan Chareonsuk, the Chairman of the Thai National Shippers’ Council pointed out that Thai factories had yet to see any significant impact from the reported reopening of China on orders or manufacturing activity.

The reopening of China and the recovery of its economy this year is also key to Thailand’s hopes of economic growth centred on its tourism industry in a country where the tourism sector is still feeling the effects of the pandemic shutdown from 2020 and is not predicted to fully recover until 2025.

Bank of Thailand assistant governor Alisara Mahasandana referred to this during the week when he said that the Chinese market would drive Thailand’s economic recovery this year.

‘Thailand’s recovery has gained firmer ground mainly because of the return of Chinese tourists. We were hit harder by the pandemic than other countries in the region because the Thai economy highly depends on tourism. When the tourism sector recovers, improvement in income and employment will lead to increased private consumption and domestic demand.’

Thailand now comes nowhere near the growth rates seen by its regional peers with younger populations with the last year of high growth seen in 2012 

However, the prospect of Thailand achieving anywhere near the growth rates achieved by regional peers has receded over the last decade and a key reason for this may be its ageing demographic problem.

Thailand is one of the first countries in the world to experience an ageing population that has not yet become wealthy.

The falloff in growth rates in the last decade or so supports this analysis although it may also be due to the country’s politics and the economic policies being pursued by the government.

The last time Thailand saw growth above 5% was eleven years ago in 2012 under the Pheu Thai government of Yingluck Shinawatra which pursued an expansionary economic policy just like that being proposed by the party ahead of the May 14th General Election and its attempt to return to power this year.

That year, the economy grew by 7.2%.

Pheu Thai’s ฿10k digital economic stimulus for all under fire as Election Commission opens probe

Growth in 2012 was 7.2% followed by 2.7% in 2013, 1% in 2014, 3.1% in 2015, 3.4% in 2016, 4.2% in 2017, 4.2% in 2018, 2.2% in 2019, a contraction of 6.2% in 2020, 1.5% in 2021 and 2.6% in 2022.

Japan may be a sign of Thailand’s future

Will Thailand ever return to high growth rates?

The evidence suggests that it may not.

Japan, a highly developed and wealthy economy has not seen GDP growth rates above 5% since 1988 when it recorded a growth rate of 6.6% and no one is in any doubt as to what the problem is.

In 1968 and 1969 it achieved growth rates of 12.88% and 12.48% respectively.

Population birth rates are recorded and predict any country’s economic activity with a time lag of fifteen to twenty years. 

Indeed for all other Southeast Asian economies, it may also be only a matter of time.

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Further reading:

Recession fears rise as growth projections are cut and export output continues to decline in 2023

Cabinet in pension move as the number of working Thais to over 60s is set to half in 20 years

Thailand- the first large country with a fertility problem yet without wealth to easily fund healthcare for the old

Inequality has been rising in Thailand since 2015 as the kingdom becomes officially an aged society in 2021

Outlook for the Thai economy is bleak and will get bleaker due to its rapidly ageing population – biggest issue

Thailand’s new move to boost the birth rate and fight the negative impact of an ageing population

Prime Minister welcomes news that Thai economy is the world’s happiest in Bloomberg index for a second year

Denmark and Thailand seek economic partnership and face the same challenge – demographics

Thailand’s new move to boost the birth rate and fight the negative impact of an ageing population

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Noble spirit of Thailand’s elderly helps country deal with demographic problem