Thailand in Crisis: Population plummets by 500k in 4 Years. Economic growth stagnates as the ageing crisis looms. Social Security fund faces bankruptcy. Urgent government action and reappraisal is needed.
It is officially happening. Thailand’s population looks like it declined by over half a million people in the last four years. After that, things are set to get a whole lot worse. Certainly, this is a real crisis and the key factor behind the country’s lack of economic growth. In addition, it also leaves the government facing a plethora of new challenges. This crisis is not in the future, it is here and now as the kingdom presently loses 100,000 people each year. Shockingly, this figure is destined to balloon in size.
Thailand, known for its vibrant culture and economic dynamism, especially in its service sector, is facing a bleak vista.
The kingdom has now begun a profound demographic shift that threatens its social fabric and economic stability.
The news is confirmed with the latest update on Thailand’s population at the end of 2023. It reveals a worrying trend of a decreasing population. In turn, this has broader implications for the country’s economic prospects.
One of many chronic problems facing the economy but it is by far the greatest challenge. Even with foreigners, the population is now just over 66 million
The issue is one of the many chronic problems presently holding back the ailing Thai economy. It is an economy which has yet to recover fully from the disastrous COVID-19 shutdown. Additionally, it has one of the slowest est growth rates in Southeast Asia.
At the end of 2023, Thailand’s population comprised 65,061,190 Thai nationals. There were an additional 991,425 non-Thai residents. When including foreigners, the total population reached 66,052,615, with a notable gender imbalance.
The kingdom recorded 35.35 million females compared to 31.70 million males. The figures suggest that next year, 2025, we could witness the first year with a population lower than 66 million.
Comparing statistics from the past four years, a significant decline is evident. In 2019, Thailand had a population of 66,558,935, indicating a decrease of 506,320 people.
Country right now losing 100,000 people a year. At the same time, people for the first time in decades are moving out of Bangkok which lost 194,676 people
Alarming is the fact that, on average, 100,000 fewer people are presently born than those who die each year.
Similarly, Bangkok, the capital, reflects the declining trend.
The population of the metropolis has decreased by 194,676 people over the past four years. Certainly, this is indicative of a dispersion of prosperity throughout the country.
Provincial data reveals a noteworthy shift. It challenges the historical concentration of the population in Bangkok and its surrounding areas.
Reports suggest people are leaving Bangkok for other provinces, with Nakhon Ratchasima, Ubon Ratchathani, and Chiang Mai emerging as the second, third, and fourth most populous provinces, respectively.
It is the direct reversal of a decades-old trend.
All provincial populations are similarly in decline
Despite this, almost every province shows a declining population trend. The situation emphasises the urgency of addressing the country’s demographic challenges.
These challenges are quickly starting to materialise. Undoubtedly the lack of economic growth is directly related to it.
However, one issue that may come knocking on the government’s door sooner rather than later. This is the question of social security.
Social security fund faces bankruptcy in a decade if action is not taken due to the Kingdom’s acute ageing crisis
A pro-democracy victory in the Social Security Board (SSB) election on Christmas Eve highlighted the role of the kingdom’s social security fund. This is valued at ฿2.36 trillion.
At the same time, it is teetering on the brink of bankruptcy.
This is projected within a decade due to the country’s acute ageing crisis.
Thai social security fund threatened within the next decade. Elections in 2023 saw representatives elected to its management board, a first in Thailand
Despite the groundbreaking election, concerns loomed large.
Unquestionably, the low voter turnout, with only 5% of workers participating, showed a lack of engagement with the critical issue.
The newly elected board faces the daunting task of navigating rising losses as the working population ages.
Key challenges have been identified by the Thailand Development Research Institute (TDRI). In short, these include addressing medical welfare benefits and ensuring the financial sustainability of the pension fund.
The Minister of Labour announced in September 2023 that Thailand would raise the retirement age. Undoubtedly, this reflects the growing issue of workers opting out of the workforce due to the country’s ageing crisis.
The sustainability of the Social Security Fund is in question. At length, the new board must tackle the financial complexities to secure the future of this critical national asset.
Inputs decline while the fund’s obligations rise quickly. Annual losses are already ฿28 to ฿30 billion. This figure will surge with the ageing workforce
Examining the financial health of the Social Security Fund reveals a concerning trend. While the fund’s reported value is ฿2.36 trillion, net assets after accounting for obligations were significantly less. This amounted to only ฿498,369 billion.
The fund experienced consecutive years of losses – ฿6.443 billion in 2020, ฿28.872 billion in 2021, and ฿26.892 billion in 2022. Rising costs, especially in compensating insured persons for illness and old-age benefits, pose a significant challenge to the fund’s stability.
The structural change in the population, characterised by its ageing society, contributes to the fund’s financial strain.
The decreasing number of workers entering the social security system coupled with a growing number of individuals eligible for benefits creates a challenging financial landscape.
Projections suggest annual losses of at least ฿28-฿30 billion, threatening the fund’s depletion within a decade.
The economic challenges extend beyond the Social Security Fund.
Thailand is facing an array of issues that will demand radical and strong leadership.
Ageing population is directly retarding growth
The country is experiencing a faltering economy despite strong financial fundamentals. A lack of inward investment and enhanced competition in world trade markets are causes of concern.
However, the deeper, underlying problem lies in Thailand’s rapidly ageing population.
This is impacting both output due to a falling workforce and consumption simultaneously.
The kingdom is on the cusp of a demographic crisis that is already significantly impacting its economic landscape.
The ageing workforce and population pose challenges to economic growth. Since 2019, projections indicate a loss of 11% of the workforce.
Outlook for the Thai economy is bleak and will get bleaker due to its rapidly ageing population – biggest issue
The population aged 65 and over is expected to rise to 25% by 2043. This presents a stark contrast to the 7% figure over a decade ago.
Younger generations not having families while the country’s manufacturing base is being decimated by a lack of investment in the face of stiff competition
The declining birth rate is a critical factor contributing to this crisis. Generation Y, born between 1990 and 2005, exhibits concerning trends.
In short, high levels of debt, reluctance to purchase homes, and a focus on luxury items. The implications are far-reaching. It is a recipe for economic catastrophe if not addressed promptly.
Thailand stands at a crossroads. It is now confronting the reality of a rapidly declining population. On the one hand, the country still retains a relatively lucrative tourist industry.
Elephant pants should be a Thai success story. Instead, it is a story of economic policy failure as manufacturing slips
On the other hand, its manufacturing economy is being decimated. This is happening through a lack of demand for increasingly outdated products. Thailand suddenly finds itself in a more competitive marketplace, especially from China.
Time to face up to the hard reality. Thailand has failed to progress to a high-income economy and must instead pursue a policy based on its core strengths
In addition, the manpower needed to maintain its strong agricultural base may also be challenged.
In the plus column, decades of prudent management have left it with a strong financial and banking sector. Moreover, the country’s cohesive society and close-knit familial bonds may also assist in the road ahead.
Failure to tackle the challenge may result in a perilous future.
Pope Francis in November 2019 visited Thailand. He called on the people to cherish their traditional values and confront the pressing issues that lie ahead.
The kingdom needs a complete review of government policy to address the reality it finds itself in.
Thailand has failed to progress to a high-income economy. It must address this fact and deal with circumstances as they are. Not as the government wishes them to be nor the hypotheses of international bodies.
This is the new economic reality facing not just Thailand but nearly all countries outside sub-Saharan Africa at this time.
The world’s ageing crisis may pose different challenges, however, for wealthier countries. Nonetheless, the cost of a remedy for these economies may be even higher in the longer term.
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Further reading:
Thailand’s days of GDP growth in excess of 5% may be a thing of the past as it has grown too old
Cabinet in pension move as the number of working Thais to over 60s is set to half in 20 years
Thailand’s new move to boost the birth rate and fight the negative impact of an ageing population
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
BCG economic and social blueprint over the next 5 years unveiled, promises more money for less
Noble spirit of Thailand’s elderly helps country deal with demographic problem
