Thailand’s Economic Revival and Investment Prospects as growth will be boosted by a recovering tourism industry and improving consumption.
Thailand’s GDP outlook for 2023 is expected to show growth ranging between 2.7% and 3.6%, an improvement from the 2.6% growth seen in 2022.
This growth will be driven by the recovery of the tourism industry and an increase in private consumption.
Despite facing various challenges in the current year, including a weaker baht, a decline in exports due to external risks, and a projected decrease in public consumption, Thailand presents significant opportunities for foreign investors.
The country’s strategic geographical location at the center of ASEAN positions it as an essential manufacturing and distribution base with direct access to Chinese and other Asian markets.
Several industries in Thailand are showing promising growth prospects in 2023. Tourism is a crucial sector, contributing approximately 20% to the country’s GDP. In 2019, before the pandemic, Thailand welcomed a record 39 million international tourists, generating $64 billion for the economy. Between January and May 2023, Thailand already welcomed 9.47 million international tourists, aiming to surpass the 11.5 million foreign travelers in the entirety of 2022. The country expects 25 million foreign visitors in 2023, with a revenue target of $71 billion.
Another sector with promising growth prospects is food exports. Thailand is one of the world’s largest net exporters of food, ranking among the top 10 producers of various agricultural products. Food exports contribute approximately 23% to GDP annually, and in 2023, it is predicted to bring in $44.3 billion, a 2.1% increase compared to the previous year. The rising global demand from countries recovering from the pandemic, particularly China, is driving this growth.
Despite being a Muslim minority country, Thailand has become the 12th largest global exporter of Halal products and the fifth largest producer of Halal foods. Halal food accounts for 20 percent of Thailand’s total food exports, with 60 percent of these exports going to Muslim-majority countries like Indonesia, Malaysia, and Brunei.
This makes Thailand well-positioned to serve as a hub for Halal food and beverage manufacturing in the region. The country has made significant progress in key strategies related to the Halal food industry, including increasing its capacity in Halal certification, formulation, and research and development.
The country has witnessed strong domestic consumption and export-oriented manufacturing, leading to its classification as an upper-middle-income nation in 2011. Manufacturing plays a crucial role in Thailand’s economy, contributing 27% to GDP in 2021. With a focus on attracting investments in mid/high-tech manufacturing, Thailand aims to position itself as an attractive destination for value-added manufacturing, especially as neighboring countries like Vietnam and Cambodia become centers for low-cost production.
Additionally, the Thai government has set its sights on becoming a hub for electric vehicle (EV) production. Major automotive companies such as Mercedes and Toyota have chosen Thailand as their manufacturing base for EVs. The government has also implemented incentive plans to attract EV production by Chinese car manufacturer Great Wall Motor. This focus on EV manufacturing aligns with Thailand’s ambition to lead in the production of electric vehicles in Southeast Asia.
Medical tourism has been a significant contributor to Thailand’s economy. In 2019, the country earned US$1.8 billion from over four million medical tourists, accounting for three percent of the GDP. The industry was projected to reach 3.5 percent until the pandemic struck. Medical treatments in Thailand are often up to 30 percent cheaper compared to the West, while maintaining a quality of healthcare comparable to leading hospitals worldwide. The Thai medical tourism industry is expected to reach a market value of US$24.4 billion by 2027.
Thailand currently has 14 free trade agreements (FTAs), with the Regional Comprehensive Economic Partnership (RCEP) being the latest addition.
As the world’s largest free trade agreement, RCEP provides a competitive advantage for Thailand by facilitating the import of components, raw materials, and industrial inputs from member countries. Thailand aims to conclude FTAs with the European Union (EU), Sri Lanka, and the United Arab Emirates (UAE) by mid-2024.
These agreements will expand market access for Thai exports and attract foreign investment. Notably, an FTA with the UAE would be the first such agreement with a country from the Middle East. The UAE is currently Thailand’s sixth-largest trading partner and the largest in the Middle East. Furthermore, an FTA with Sri Lanka would provide Thailand access to the South Asian market and establish connections with India, Pakistan, Bangladesh, and Nepal.
Source: Thailand Business News