Thailand’s Demographic Time Bomb: How an Aging Population and Declining Birth Rate are Threatening Economic Growth
Thailand is facing significant demographic changes that are reshaping its economic landscape. The country’s economic growth has long been heavily reliant on domestic consumption, but this key driver is now being impacted by an aging population and declining birth rate. These shifts are posing challenges for the Thai economy, with implications for both individuals and businesses.
The high cost of living, sluggish economy, and high levels of household debt are all contributing to lower domestic consumption in Thailand. If the birth rate continues to fall, there is potential for further reductions in consumption. This trend is concerning as Thailand has a higher reliance on domestic consumption for economic growth compared to other countries in the region.
The study by the Kasikorn Research Centre highlights the urgent need for the Thai government to adjust its economic model to address these challenges. Increasing incomes and improving the quality of life for citizens are crucial steps in stimulating domestic consumption. Additionally, supporting small and medium-sized enterprises (SMEs) to adapt to the changing economic environment is essential for sustaining growth.
One of the key issues highlighted in the study is the impact of lower productivity and incomes in the agriculture sector on purchasing power, particularly for the elderly population. Approximately 34% of the elderly in Thailand earn an average monthly income below the poverty threshold, with a significant portion still working in agriculture. This underscores the need for targeted policies to support vulnerable groups and enhance their financial well-being.
The demographic shifts in Thailand are not only a challenge but also present new opportunities for the finance industry. The growing population of seniors in need of financial services creates a demand for products tailored to their specific needs. Financial institutions can develop products such as high-yield deposit accounts and health-related financial products to cater to this market segment. By addressing the financial needs of the elderly population, institutions can help improve access to healthcare and financial security for this demographic.
Thailand’s rapid aging process is a cause for concern, as the country is moving from an aging society to an aged society at a faster pace than many other nations. By 2023, 20% of the population was over 60 years old, qualifying Thailand as an aged society. The United Nations projects that this proportion will continue to grow, potentially leading to Thailand becoming a super-aged society by 2029.
The transition to an aged society presents unique challenges for Thailand, as the country risks becoming ‘old before it is rich.’ Unlike other developed economies that have aged populations but strong economic foundations, Thailand may struggle to support its elderly population without significant economic adjustments. The government must act swiftly to revise its economic model and implement policies that support rising incomes and improve the quality of life for all citizens.
In conclusion, the demographic changes in Thailand are reshaping the country’s economic landscape and posing challenges for policymakers and businesses alike. By addressing the issues of lower domestic consumption, supporting vulnerable populations, and adapting to the aging population, Thailand can navigate these changes and build a more resilient and inclusive economy for the future.