Market Insights: Thailand
Overview of Thailand’s Economy
China’s illustrious history unfolds as a mesmerizing tapestry of transformation. Beginning as an ancient agrarian society, it has gracefully evolved into a global economic juggernaut. Today, while upholding its agricultural roots, China stands as an undisputed leader in the realms of international business and technology.
This colossal nation has etched a remarkable story of development success onto the world stage. Emerging from the shadows of poverty, China has risen to attain the status of a robust middle-income economy in the span of a single generation. As China marches resolutely into the future, it skillfully harmonizes centuries-old customs with groundbreaking innovations, fashioning a landscape brimming with unparalleled opportunities – though not without its own distinctive set of challenges.
Thailand has historically experienced steady GDP growth in the past 2 decades, with a GDP of $495.34 billion1 and per capita income of $6,9082 in 202 The Pandemic had led to a 6.1% contraction in 20203, with the annual GDP falling to $500.46 billion from the previous $543.98 billion.1 However, the economy is gradually recovering in recent years, experiencing a 2.6% expansion in real GDP 2022.3 This is a testament to the resilience of the Thai economy in the face of economic shocks.
The nation has showcased remarkable resilience, implementing sound economic policies, and embracing diversification. Thailand’s domestic consumption has always served as a main driver of the economy, bolstered by infrastructural improvements such as transport and electricity development. Household disposable income has also grown alongside these structural developments, with Thailand set to increase disposable income to to $9,600 USD by 2030.4 With infrastructure improving and incomes on the rise, it sets a strong foundation for the economy to grow.
Tourism has also served as a key source of economic growth. Even prior to COVID-19 Thailand’s economy has benefitted greatly from tourism, with travel contributing 11.5% of its GDP in 2019.5 The nation’s ability to recover from the COVD-19 pandemic was also largely contributed by it’s international inflows. Goods and services expenditure saw an impressive increase of 11% in 2022, with the number of international tourists rising to 11.5 million in 2022, as compared to 430,000 in 2021.5
Looking ahead, Thailand’s economic prospects appear promising. Alongside easing travel restrictions and strengthening domestic consumption, the nation’s ambitious Thailand 4.0 initiative, emphasizing digitalization, innovation, and creativity,6 is set to propel the country into the next phase of economic growth.
Foreign Direct Investments
Thailand’s Foreign Direct Investment (FDI) landscape displayed encouraging signs of growth in March 2023, reflecting a positive trajectory for the country’s economy. During this period, FDI registered a substantial increase, accounting for 1.5% of the country’s Nominal GDP, as opposed to the previous quarter’s growth of 1.2%.7
This uptick indicates a growing confidence among foreign investors in Thailand’s business environment. The higher FDI contribution suggests that international investors are increasingly recognizing Thailand’s potential as an attractive destination for investment, likely driven by factors such as political stability, strategic geographic location, and policy improvements such as a reworked long-term visa for skilled labor and incentives for companies locating production bases locally. This trend not only bodes well for Thailand’s economic prospects but also underscores the country’s appeal as a robust investment hub in the global market.8
Growing Markets & Markets with High Growth Potential
Several markets are worth watching out for in the Thai economy for potential growth:
Electric Vehicles (EVs) and EV Infrastructure9: Thailand is becoming a hub for electric vehicle production with incentives and support from the government, offering substantial investment opportunities in EV manufacturing and charging station infrastructure.
High-End Tourism9: Despite pandemic challenges, Thailand aims to attract high-value tourists, focusing on wealthy global citizens, pensioners, remote professionals, and highly skilled individuals, prompting investments in high-end tourism facilities and services.
Medical Tourism9: Thailand’s reputation as a leading medical tourism destination with internationally accredited hospitals continues to attract medical tourists, providing growth opportunities for healthcare providers and related services.
Smart Farming and Precision Agriculture9: Thailand’s agricultural transformation through technology, especially in smart farming, precision agriculture, and data analytics, opens avenues for investment in optimizing agricultural operations and increasing production yields.
Thailand, with a population of approximately 72 million people10, boasts a rich tapestry of diversity among its numerous ethnic groups. There are around 70 distinct ethnic groups in the country, with the Thai people comprising the largest group at 20 million.11 Other significant groups include the Lao people (15 million), Khon Muang (6 million), Pak Tai (4.5 million), and Khmer Leu (1.4 million).11 Notably, Thailand is also home to various hill tribes, particularly in the northern provinces, with Hmong and Karen being the most prominent among them.
The median age of Thailand’s population stands at 40.2 years, indicating a relatively mature demographic.10 The fertility rate is 1.3 live births per woman, reflecting a lower birth rate, and life expectancy is a commendable 79.9 years.10
Thailand’s urbanization has been steadily increasing, with 52% of the population residing in urban areas in 2023.10 This shift towards urban living is influenced by economic factors and opportunities in urban centers.
Gender demographics in Thailand show a slight imbalance, with females comprising 51.37% of the population in 2021, compared to 48.63% males, which could be attributed to various social and cultural factors.12
In terms of income distribution, Bangkok and its surrounding areas stand out, with the highest average monthly household income in the country, reaching approximately 39,000 Thai baht.13 Bangkok, as the main urban hub, exhibits the highest population density and economic activity compared to other regions in Thailand.13
Thailand’s demographic landscape reflects a nation characterized by diversity, urbanization trends, and variations in income distribution, all of which play pivotal roles in shaping its future economic and social development.
Thai Consumers and Consumer Trends
Understanding the ever-evolving landscape of consumer behavior in Thailand is crucial for businesses aiming to stay relevant. Here, we delve into the multifaceted trends shaping the market.
Anticipating Economic Winds: The State of Purchasing Power
In a noteworthy insight, about 33.91% of Thai consumers anticipate a slight decrease in their purchasing power.14 This perception can significantly influence their spending habits and preferences.
To align with this trend, businesses can strategize around offering more budget-friendly options, discounts, and loyalty programs, helping consumers maintain their desired lifestyle despite perceived economic constraints.
E-commerce Revolution: Thriving in the Online Shopping Frenzy
Thai consumers shop online roughly once a month, with fashion items taking the lead at 60.12%, followed by beauty and personal care products (43.42%), food and beverage (34.58%), and consumer electronics (29.47%).15
To thrive in this digital realm, businesses should prioritize user-friendly e-commerce platforms and aim to provide diverse products and personalized shopping experiences. In a world where information is king, companies must leverage influential sources such as website reviews (57.76%), social media (49.12%), and personal experiences (43.81%) to build trust and attract online shoppers.15
However, challenges persist in the online shopping landscape, with trust in payment methods (39.29%), deceptive advertising (38.9%), and concerns about product quality (33.20%) being top consumer worries.15 Addressing these concerns is pivotal for businesses to succeed in the digital marketplace.
When it comes to data privacy, Thai consumers are open to sharing basic information for smoother item delivery (33.40%) and for personalized product suggestions (32.02%).15 Striking the right balance between personalization and privacy is essential for businesses looking to harness customer data for improved shopping experiences.
Health and Wellness: Embracing Change in Consumer Habits
54.46% of Thai consumers have yet to try online health consultations.16 Additionally, a significant 94.96% still prefer to purchase medicine in physical stores.16
To adapt to this trend, businesses in the health and wellness sector can consider initiatives to promote the advantages and safety of online health consultations. Simultaneously, they should focus on enhancing the allure of in-store experiences, emphasizing the value of personalized service and the immediacy of physical pharmacies.
Mobile Network: Providing Connectivity that Matters
The mobile network industry in Thailand places a premium on network quality (16.45%), network coverage (15.94%), and included advantages (15.35%) in mobile subscription plans.17 Consumers are also highly interested in plans offering free or discounted phones (47.09%) and extra data (27.13%).17
Businesses in this sector should prioritize delivering high-quality network services and broad coverage while offering enticing perks like free phones and additional data to attract and retain customers.
Gadgets and Electronics: Capturing the Market
Interestingly, a significant 68.22% of Thai consumers do not own a smartwatch, indicating untapped potential in this market segment.18 Furthermore, performance (19.57%), brand reputation (17.22%), and price (16.96%) are key considerations when purchasing electronic devices.18
To seize this opportunity, businesses should aim to capture the smartwatch market and emphasize the performance, brand reputation, and competitive pricing of their electronic offerings.
Riding the Road: Insights into Automotive and Transportation
The modes of transportation in Thailand reveal intriguing trends, with private motorcycles (43.02%) leading the way, followed by private automobiles (28.29%) and public transport (17.64%).19 Notably, a substantial 94.77% of consumers believe in the future of electric vehicles (EVs).19
For businesses, this indicates a market for both motorcycles and automobiles, with an increasing emphasis on eco-friendly options like EVs. Aligning product offerings with consumer preferences is vital in this sector.
Consumer preferences for new vehicles lean towards full electric (42.83%), hybrid (19.77%), and petrol (14.53%).19 Businesses should tailor their offerings to cater to these preferences, particularly focusing on electric and hybrid options.
Digital Dominance: Online Shopping in the Digital Age
Consumer behavior in the digital age remains an ever-evolving landscape. Despite the removal of Covid restrictions, digital usage continues to thrive, with various generations showcasing distinct priorities for online shopping. It is highlighted that marketplaces, once dominant, are losing ground due to credibility issues, with 76% of respondents encountering suspected fake products or reviews.20
To adapt to this shifting landscape, businesses must prioritize building trust through genuine product reviews and diversify their marketing channels beyond marketplaces. Exploring alternative sources of inspiration such as comparison sites, brand websites, and in-store promotions can be effective.
The number of consumers spending more than 90% of their total expenditure online has surged, offering ample opportunities for businesses to bolster their online presence and enhance customer experiences.20
Social media plays a pivotal role in online shopping, with Facebook and TikTok gaining ground as purchase channels.20 Leveraging these platforms for advertising and sales, especially through live shopping events, can be highly effective. Offering exclusive deals, pleasurable experiences, and fast delivery can drive loyalty and conversions.
In conclusion, the ever-evolving consumer trends in Thailand offer both challenges and opportunities for businesses. By understanding these trends and adapting their strategies accordingly, businesses can thrive in this dynamic and competitive market.
- Thailand’s GDP experienced steady growth over the past two decades but contracted in 2020 due to the pandemic. It is now gradually recovering.
- Tourism is a vital economic driver, with international tourist numbers rebounding significantly in 2022.
- Foreign Direct Investment (FDI) is increasing, reflecting growing confidence in Thailand’s business environment.
- Promising investment sectors include electric vehicles, high-end tourism, medical tourism, smart farming, and precision agriculture.
- Thailand’s demographics are diverse, with urbanization and income disparities.
- Consumer trends highlight the importance of adapting to digital commerce and building trust through genuine product reviews and social media presence.
Detailed Market Entry Research and Analysis
Are you interested in learning more about the Thai economy and business landscape? Our team would love to help. Our team of dedicated research specialists offer a wide range of solutions to help you evaluate new growth opportunities in Thailand and guide your business decisions.
4Euromonitor: Indonesia and Thailand: A Tale of The two Biggest Economies – https://www.euromonitor.com/whitepaper/indonesia-and-thailand-tale-of-two-biggest-economies-in-southeast-asia