Market Update: World Bank warns Thailand of labour crisis, urges AI upskilling – Full Analysis

Environmental risks are a major concern for Thailand. Without urgent action, climate change could cause economic damage worth 7-14% of GDP by 2050. 

According to the World Bank, over 60% of Thailand’s population and businesses are located in flood-prone areas, putting the country at a higher risk than other ASEAN competitors. To combat this, Thailand may need to invest up to US$219 billion to mitigate these risks.

Melinda also discussed the rise of protectionism, with over 400 new protective trade measures introduced annually since 2020. In contrast, fewer liberalising policies have been implemented globally. 

However, she highlighted that ASEAN, including Thailand, is in a unique position to lower trade costs within the region, which could increase Thailand’s income by about 2%. This would strengthen Thailand’s ability to attract the right investments.

Thailand’s path forward: key industries for growth

Melinda observed that Thailand is still stuck in the middle-income trap, with growth rates lower than the target for transitioning to a high-income country. To achieve higher growth, Thailand must leverage its advantages in five key industries:

• Advanced green manufacturing

Thailand should capitalise on electric vehicles (EVs) and solar energy to strengthen local producers by connecting SMEs with the global clean energy supply chain and improving clean energy infrastructure.

Although Thailand has a strong digital technology adoption rate, such as in digital payments, regulatory reforms are needed to facilitate secure data sharing and improve digital government services. 

Strengthening digital infrastructure and fostering public-private partnerships will help expand the digital workforce and improve local businesses.

While agriculture remains a key employment sector, farmers’ incomes remain low. To address this, the focus should shift from quantity to quality, with greater emphasis on safety, traceability, and connecting smallholder farmers to high-value supply chains.

Despite strong tourist long stays, Thailand’s tourist spending lags behind competitors like Malaysia, with an average of just US$103 per day, compared to Malaysia’s US$107. 

To remain competitive, the focus should shift towards sustainable tourism and health tourism, enhancing credibility through international standards to attract high-value customers.

Thailand has great potential in creative industries, such as film, architecture, and the arts. However, compared to countries like South Korea and the US, employment in these sectors is still low. 

Policies should focus on increasing export revenues from creative products and developing cross-border intellectual property laws.