Economic Survey of Thailand 2023-Presentation

OECD ECONOMIC SURVEY OF

THAILAND

Pursuing a strong and inclusive green recovery Bangkok 7 December 2023 oe.cd/thailand @OECDeconomy @OECD

Convergence with higher-income countries needs to resume OECD = 100 70

GDP per capita relative to the OECD average in 2017 PPP USD Thailand

Malaysia

Indonesia

Philippines

China

60 50 40 30 20

Note: Calculations based on output-side real GDP at chained PPPs. Source: Penn World Tables; and OECD calculations.

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

0

1970

10

The recovery has been slower than in peer economies Real GDP Index, 2019Q4 = 100

115 110 105 100 95 90 85 80

Source: CEIC.

Malaysia

Singapore

Indonesia

Thailand

Inbound tourism is recovering well Foreign visitors per month Million persons 4.5

Thailand

Singapore

Indonesia

Viet Nam

4 3.5 3 2.5 2 1.5 1 0.5 0 Jan-19 Source: CEIC.

Jan-20

Jan-21

Jan-22

Jan-23

Exports are recovering slowly Exports of goods Index, 2019Q4 = 100 200

Thailand

180 160 140 120 100 80 60

Source: CEIC; and OECD calculations.

Singapore

Indonesia

Malaysia

Tight monetary policy will be needed Contribution to consumer price inflation %, y-o-y 8

Food & beverage

Transport

2020

2021

Others

Headline

6 4 2 0 -2 -4

2019

Source: CEIC; Bureau of Trade and Economic Indices.

2022

2023

Core

Growth is projected to pick up 2022

2023

2024

2025

Real GDP growth (%)

2.6

2.7

3.6

3.2

Consumer price index (%)

6.1

1.6

2.2

2.0

Government budget balance (% of GDP)

-3.9

-3.9

-3.1

-2.9

Public debt (% of GDP)

60.5

62.1

62.5

62.6

Source: OECD calculations.

Strengthening public finances

Fiscal consolidation should continue General government budget balance % of GDP 0 -1 -2 -3 -4 -5 Fiscal balance -6

2016

2017

Primary balance 2018

2019

2020

Note: Data since 2023 are targets set under the Medium-Term Fiscal Framework.

Source: Ministry of Finance; NESDC; and OECD calculations.

2021

2022

2023 (est.)

2024 (proj.)

Public debt needs to come down Gross public debt % of GDP 80 Debt ceiling

70 60 50 40 30 20 10 0

2016

2017

2018

Note: * denotes the latest data as of September 2023.

Source: Ministry of Finance; NESDC.

2019

2020

2021

2022

2023*

Population ageing will increase spending pressures % 50 45

Old-age dependency ratio Population aged 65+ relative to 15-64 2000

2040

40 35 30 25 20 15 10 5 0

Philippines

Viet Nam

Indonesia

Thailand

China

Malaysia

OECD

Source: United Nations, Department of Economic and Social Affairs, Population Division (2022). World Population Prospects 2022, Online Edition.

Stronger revenues would improve debt sustainability Gross public debt % of GDP 100 90 80 70 60 50 40

Current debt ceiling

Baseline with ageing-related spending increase and no revenue increase Scenario with lower additional tax revenues Scenario with additional tax revenues Scenario with additional revenues and stronger growth

30 20 10 0

2022

2026

2030

2034

2038

2042

2046

2050

Note: The baseline scenario includes an ageing-related spending increase in social and health spending of 1 and 1.4 percentage points of GDP by 2035 and 2050, respectively, under the assumption of constant government spending per elderly person throughout the estimation periods. The baseline assumes that no additional revenue measures will be taken. The scenario with additional tax revenues assumes that primary balance will be maintained at -1% of GDP from 2035, financed through higher tax revenues. The additional tax revenues and high growth scenario assumes real GDP growth of 4% on top of the scenario with additional tax revenues. The scenario with lower additional tax revenues assumes that only half of these additional revenue measures will be implemented by 2035, implying a primary balance of -1.9% from 2035.

Source: OECD calculations.

Higher and more progressive tax revenues are needed Tax revenue 2021 or latest year available

% of GDP 35 Taxes on personal income Taxes on corporate income 30 Social security contributions Taxes on property 25 Taxes on goods and services Other 20 15 10 5 0

Indonesia Malaysia Singapore Thailand Philippines

Source: OECD, Tax Revenue database; OECD calculations.

China

Korea

Japan

OECD

Enhancing social protection

Labour informality has declined Informal employment % of total employment Total (15+)

70

35-39

60 50 40 30 20 10 0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Note: Informal workers are those who are not protected or have no social security from work. Data cover only private sector workers.

Source: National Statistics Office, Informal Employment Survey.

2020

2021

2022

Taxes and transfers could do more to reduce income inequality Gini index 2021 or latest year available After taxes and transfers

0.60

Before taxes and transfers

0.50 0.40 0.30 0.20 0.10 0.00

OECD

Korea

Japan

Thailand

Singapore

Philippines

Indonesia

Source: OECD, Income Distribution Database; F. Solt (2020), "Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database", Social Science Quarterly 101(3):1183-1199, SWIID Version 9.4, November 2022.

Social security coverage should be broadened Social security contributors % of population aged 15-64, 2021 or latest available year 100 90 80 70 60 50 40 30 20 10 0

Source: OECD (2022), Pensions At a Glance Asia/Pacific 2022.

Public education spending should be raised Public education expenditures % of GDP 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: Government Fiscal Management Information System; World Bank World Development Indicators; and OECD calculations.

2022

Improving the business climate

Boosting productivity is a high priority Factors contributing to GDP growth % 10

Hours worked

Labour quality

Capital

TFP

GDP growth

8

% 10 8

6

6

4

4

2

2

0 -2

0

-4

-2

1990-1995

1995-2000

2000-2005

Note: TFP refers to total factor productivity.

Source: Asian Productivity Organisation, APO Productivity database 2022.

2005-2010

2010-2015

2015-2020

Restrictions on foreign direct investment could be streamlined further OECD FDI Regulatory Restrictiveness index Scale from 0 (open) to 1 (closed), 2022 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0

Note: The OECD FDI Regulatory Restrictiveness Index covers only statutory measures discriminating against foreign investors (e.g. foreign equity limits, screening & approval procedures, restriction on key foreign personnel, and other operational measures). Other important aspects of an investment climate (e.g. the implementation of regulations and state monopolies, preferential treatment for export-oriented investors and special economic zones regimes among other) are not considered. See Kalinova et al. (2010) for further information on the methodology.

Source: OECD FDI Regulatory Restrictiveness Index database, http://www.oecd.org/investment/fdiindex.htm.

Barriers to services trade could be reduced, especially in telecommunications Services Trade Restrictiveness Index in telecommunications Scale from 0 (open) to 1 (closed), 2022 0.8

Restrictions on foreign entry

0.8

0.7

Restrictions to movement of people

0.7

0.6

Other discriminatory measures

0.6

0.5

Barriers to competition

0.5

0.4

Regulatory transparency

0.4

0.3

0.3

0.2

0.2

0.1

0.1

0.0

0

OECD

Japan

Singapore

Korea

Source: OECD, Services Trade Restrictiveness Index database.

Thailand Malaysia Indonesia

China

Viet Nam

Achieving the green transition

Thailand has pledged net zero emissions by 2065 Greenhouse gas emissions by source and net CO2 emissions Mt CO2 equivalents per year 500 400 300 200 100 0 -100 -200 -300

Energy Waste Net CO2 emissions

Industrial processes Land use, land use change & forestry

Agriculture Net GHG emissions

2000 2005 2010 2015 2019 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065

Note: Data for 2000-2019 are from the Fourth National Communication, and those from 2020 are from the Long-term Low Greenhouse Gas Emission Development Strategy.

Source: Ministry of Natural Resources and Environment, Fourth National Communication and Long-term Low Greenhouse Gas Emission Development Strategy.

Energy and transport emissions need to decline CO2 emissions from fuel combustion by sector, 2019 Transport other than road, 1% Others, 15%

Industry, 21%

Electricity and heat producers, 35%

Road transport, 28%

Source: IEA Greenhouse Gas Emissions from Energy.

Energy intensity and CO2 intensity have fallen CO2 emissions and contributions from different factors 2000-2019, % change 250

GDP

Energy intensity (Mtoe/USD 2015 PPP)

200 150 100 50 0 -50 -100

Source: World Bank World Development Indicators; OECD Green Growth Indicators.

CO2 intensity (CO2/TES)

CO2 emissions

Energy subsidies are small Energy subsidies, % of GDP Average 2015-2019

3.0

Oil

Coal

Natural gas

Electricity

2.5 2.0 1.5 1.0 0.5 0.0 -0.5

Philippines

Japan

Viet Nam

Korea

Thailand

Malaysia

Source: International Institute for Sustainable Development and OECD; FossilFuelSubsidyTracker.org.

China

Singapore Indonesia

An effective carbon pricing mechanism is needed ETS carbon prices USD/tCO2e 100

EU

90

Korea

New Zealand

Thailand

80 70 60 50 40 30 20 10 0

2016

2017

2018

2019

2020

2021

Source: World Bank Carbon Pricing Dashboard; Thailand Greenhouse Gas Management Organisation, Carbon Market information.

2022

Environmental regulations should be made more stringent Environmental Policy Stringency (EPS) Index, non-market based policies Scale from 0 (least stringent) to 6 (most stringent), 2020 6 5 4 3 2 1 0

Brazil

Indonesia

South Africa

Thailand

OECD minimum

India

OECD average

China

OECD maximum

Note: OECD minimum refers to the member country with the lowest index score, and OECD maximum refers to the member country with the highest index score.

Source: OECD, OECD Environmental Policy Stringency Index; OECD calculations.

Renewable energy sources should expand further Electricity production by source Renewable energy sources other than hydro energy

% 12

Hydro

10 8 6 4 2 0

1997

1999

2001

2003

2005

Source: Ministry of Energy, Energy Statistics of Thailand.

2007

2009

2011

2013

2015

2017

2019

2021

The vehicle fleet is expanding rapidly Registered road motor vehicles Per thousand of population 1000

2021 or latest

900

2008

800 700 600 500 400 300 200 100 0

Viet Nam

Note: Motor vehicles include motorcycles.

Source: ASEAN, ASEANStatDataPortal.

Philippines

Indonesia

Thailand

Malaysia

The electric vehicles market is still incipient Electric vehicles stock Per thousand of population, 2022 160 140

Cars

Vans

120 100 80 60 40 20 0

Note: Electric vehicles include battery electric vehicles and plug-in hybrid electric vehicles. For Thailand, vans are defined as microbuses, passenger vans, other vans and pick up cars. Cars are defied as vehicles under the Motor Vehicle Act, excluding vans and motorcycles. As of end 2022, there were 56 636 cars and 78 vans in Thailand. For the other countries, vans are defined as light commercial vehicles with gross vehicle weight below 3.5t.

Source: IEA, Global EV Outlook 2023; World Bank, World Development Indicators; Department of Land Transport, Vehicle Registration Information.

More freight could travel by rail Inland freight transport by transportation mode as a share of total transport in %, 2019 100 90 80 70 60 50 40 30 20 10 0

Thailand

OECD average Road

Thailand

OECD average Rail

Thailand

OECD average

Waterways

Note: Calculations are based on tonne-kilometre data. The OECD average is calculated as an average of 26 members where data are available. Air and pipeline transport is not included.

Source: ASEAN Railways, Data & Statistics; ITF Transport Statistics.

OECDEconomy OECD

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