The World Bank In Thailand

Thailand is a development success story, having transformed rapidly from an economy dominated by agriculture to one that is modern, industrialized, and export-led. Thailand’s economy grew at an average annual rate of 7.5 percent in the boom years of 1960–96; with growth slowing to 5 percent a year in 1999–2005, following the Asian Financial Crisis. Income per capita rose from $740 in 1980 to $7,080 in 2019, with a commensurate improvement in living standards, while the national poverty rate fell from 42.5 percent in 2000 to 6.3 percent in 2021.

However, since the mid-2010s structural transformation has stalled, while investment growth has been comparatively weak. Progress in poverty reduction is also slowing, and income and wealth inequality remain high. The poverty rate rose in 2016, 2018, and 2020, mirroring a slowing economy, stagnating farm and business incomes, and the COVID-19 crisis. In 2020, the poverty rate was 5.4 percent in urban areas (home to 0.8 million poor people) and 8.6 percent in rural areas (home to 3.1 million). The distribution of poverty was uneven across geographic regions, with the rate in the South and the Northeast almost twice the national level. With a Gini coefficient of 43.3 percent in 2021, Thailand had the highest level of income-based inequality in East Asia and Pacific; globally, it was the 13th most unequal of the 63 countries for which income Gini coefficients were available.

Thailand successfully navigated a complex global environment and maintained macroeconomic stability following the COVID-19 pandemic. The economy contracted by 6.1 percent in 2020 but thanks to prudential economic management, monetary and fiscal buffers remained adequate to deal with the slowdown.

The subsequent recovery has been relatively slow, with average annual growth of 2 percent between 2021 and 2023. Thailand’s recovery has lagged that of its ASEAN peers, primarily because of significant exposure to underperforming global tourism and trade. The economy is projected to grow 2.4 percent in 2024. Medium-term growth prospects are diminishing as the economy grapples with slower productivity growth, structural constraints to innovation and competitiveness, and an aging population.

Thailand aims to be carbon neutral by 2050 and achieve net-zero greenhouse gas emissions by 2065, but reducing emissions and ensuring climate resilience will require substantial investments and policy reforms. The macroeconomic costs of climate change are projected to rise significantly, while Thailand also faces international competitiveness risks if it takes insufficient action to decarbonize. Previous disasters provide an indication of what is at stake: the 2011 floods caused significant loss of life and $46 billion of damage (more than 12 percent of Thailand’s GDP). The risks from floods, drought and heat stress are increasing as the climate changes. Reducing emissions and adapting to climate change are therefore critical to Thailand’s continued growth and development, and its ability to meet its objective of becoming a high-income country by 2037. Area-based strategies can spur the shift to sustainable urban development, enhanced connectivity, and climate resilience.

Last updated October 2024

Thailand and the World Bank Group have built a strong and productive partnership over the past 75 years. With over 190 staff working with government partners, the private sector, and communities, the Thailand Office serves as a regional hub supporting country programs throughout the East Asia and Pacific and South Asia regions.

The World Bank Group’s work in Thailand is carried out under three platforms: Sustainable Finance, Sustainable Cities, and Sustainable Innovation.

Sustainable Finance

The Sustainable Finance platform supports the financing of sustainable investments across Thailand’s key sectors. It includes green finance, blue finance, and carbon finance. This platform helps ensure that financing flows toward investments needed to reduce carbon emissions in major sectors, helping Thailand meet its international decarbonization commitments and ensure its economic competitiveness in a world in which demand for low-carbon goods and services is increasing. It also helps ensure that investments that build resilience to climate change and natural disaster and protect the environment and biodiversity are adequately financed, even where fiscal space is limited.

Sustainable Cities

The Sustainable Cities platform seeks to transform Thailand’s urban areas into low-carbon and resilient cities and foster inclusive economic growth. This platform helps unlock investments for sustainability and urban infrastructure in secondary cities, so that they can reach their full potential in creating jobs, promoting economic diversification, and ensuring more balanced development across the country.

Sustaining Innovation

The Sustaining Innovation platform seeks to make Thailand more economically competitive by encouraging local innovation, the adoption of new technologies, and the enhancement of the skills of the workforce. It aims to improve the effectiveness of public innovation policies and financial support and strengthen the business environment to boost Thailand’s attractiveness as a destination for foreign investment and technology transfer. The platform supports efforts to create an environment in which workers are equipped with the skills demanded by Thai businesses and lifelong learning is promoted to adapt to the evolving demands of the global economy.

Last updated October 2024

The World Bank Group partners with Thailand to address challenges that affect people’s daily lives by providing grant funding and technical assistance delivered in collaboration with government agencies, local organizations, international bodies, think tanks, and academic institutions. It provided $54 million in support of Thailand in FY19–24 and will provide $16 million in FY25. Support will include technical assistance and advisory services to the government on matters relating to the three platforms.

Results under the Sustainable Financing Platform

The World Bank Group is working with the Bank of Thailand, other financial regulators, and leading financial institutions to scale up sustainable finance in Thailand. A 2023 study conducted by the World Bank and the Thailand Securities Exchange Commission (SEC) benchmarked the reporting of environmental, social, and governance (ESG) performance by listed Thai companies. It found that overall ESG disclosure levels were good, with better disclosure rates amongst the largest listed companies (by market capitalization) compared to the smaller companies, and made recommendations for advancing Thailand’s sustainability reporting practices.

In 2024, a World Bank team began working with the Bank of Thailand to assess the potential risks to the financial sector from the impacts of climate change. In May, the Bank team delivered a training workshop on climate risk stress testing for the Bank of Thailand and financial institutions. The training focused on the physical risks of climate change such as extreme weather events, building on previous technical work assessing the financial stability risks from flooding.

The International Finance Corporation (IFC)—a member of the World Bank Group focused on the private sector in emerging markets—has a strong record of catalyzing and investing in green and blue bond issuance and sustainability-linked loans in Thailand. Its current work is helping leading financial institutions design and communicate transition strategies to reduce emissions and align with the Paris Agreement goals.

With the support of IFC, Thailand introduced a classification system for environmentally sustainable economic activities called the Thailand Taxonomy Phase 1 in July 2023 covering the energy and transport sectors. It is now developing the second phase of the taxonomy, which will include the manufacturing, agriculture, construction & real estate, and waste management sectors, with a target to launch in mid-2025.  The World Bank and the IFC are also working collaboratively to support Thailand in taxonomy implementation.

The World Bank’s flagship technical assistance program, Partnership for Market Readiness (PMR), worked with Thai officials to design and deploy new carbon pricing instruments to reduce the country’s greenhouse gas emissions. It supported efforts to develop an Energy Performance Certificate scheme database and a measuring, reporting, and verification (MRV) system to measure the energy efficiency of commercial buildings and industries. It also assessed the legal framework for Thailand’s Emissions Trading Scheme (ETS), which aims to cap the total level of greenhouse gas emissions and allow industries with low emissions to sell their extra allowances to larger emitters. Under the Low Carbon City Program it developed greenhouse gas abatement plans for 25 municipalities.

Under the follow-up Partnership for Market Implementation (PMI) program, the Bank will support the government in assessing carbon pricing instruments as it prepares to implement a carbon tax in 2025, with a possible ETS in 2029.

For more than 25 years, another grant-funded project has helped phase out ozone-depleting substances in Thailand. The HCFC (hydrochlorofluorocarbon chemicals) phase-out project has enabled more than 80 small and medium-size foam manufacturers to replace their production technology with alternatives that do not deplete the ozone layer and have less of an impact on global warming.

Results under the Sustainable Cities Platform

The World Bank has partnered with five cities—Khon Kaen, Chiang Mai, Phuket, Rayong and Nakhon Sawan—to help mobilize financing from the private sector for urban infrastructure projects. Since February 2024, it conducted a series of workshops with stakeholders to showcase successful implementation of infrastructure and transit-oriented development (TOD) which allowed central and local government agencies to exchange perspectives.  

Thailand has one of the region’s most advanced carbon markets. The Bank assessed the market potential—including the potential for monetizing emission reductions through carbon finance—of 4 low-carbon interventions. This included rooftop solar installations, energy efficiency retrofits, LED street light replacement, and transition to electrical vehicles, in 10 secondary cities. The combined emission reduction across all interventions in the ten provinces is estimated at 46.2 million TCO2e. With a total capital expenditure of approximately $6.8 billion, these interventions offer substantial savings: $9.5 billion from rooftop solar, $1.3 billion from energy efficiency retrofits, $278 million from LED street light replacements, and nearly $1.3 billion from EV upgrades. Payback periods range from 2 to 5 years, underscoring the strong potential for both environmental impact and financial return.

At the request of the Office of National Water Resources (ONWR), a World Bank team carried out a rapid damage assessment of the 2024 floods in Northern Thailand. Estimated damages within the catchments to buildings, infrastructure, agriculture, and fisheries range between US$ 0.9 to 1.2 billion, representing approximately 0.20% of Thailand’s 2023 GDP.

Since 2007, the Bank has been promoting peace and development by providing grant-funded support to the government, communities, and civil society organizations (CSOs) in conflict-affected areas of Southern Thailand. Initially, projects were implemented in 27 communities in Pattani, Narathiwas, and Yala provinces. They supported a range of community development activities, using the community-driven development (CDD) approach and small grants to CSOs financed by the State and Peacebuilding Fund and the Korea Trust Fund for Economic and Peace-Building Transitions. During a second phase, the Bank provided livelihood and psychosocial support to 200 former combatants of insurgent groups and detainees/returnees to integrate them back into civilian life despite ongoing subnational conflict.

Since 2022, the World Bank, the Thai Health Academy, the National Human Rights Commission of Thailand, and other stakeholders have sponsored a training of trainers (TOT) program to strengthen skills within conflict-affected communities to promote resilience, mental health, and human rights. The TOT network now has over 500 participants, who support the most vulnerable groups in Southern Thailand.

Results under the Sustaining Innovation Platform

Since 2021, the World Bank has partnered with the Equitable Education Fund to help narrow learning gaps between schools serving households from different socioeconomic statuses and geographic areas and raise the literacy, digital, and social-emotional skills of Thailand’s future workforce.

The Fundamental School Quality Level (FSQL) for Thailand has been implemented in 275 remote schools around the country, serving as a self-assessment tool to evaluate the quality of schools. The pilot of this instrument has provided quality indicators on school leadership and management, classroom management, teacher development, and infrastructure. Currently, a second pilot phase is underway, featuring an improved version of the instrument with potential of making the FSQL results publicly accessible, as part of a broader initiative aimed at enhancing accountability within the education system.

More recently, the Bank has been supporting reforms at technical and vocational education and training (TVET) colleges by preparing a novel social and emotional learning (SEL) program, which will be delivered across Thailand in 2025. This work will prepare a validated instrument designed to improve teachers’ pedagogical abilities to deliver SEL. The Bank is also supporting efforts to improve the ability to diagnose skills gaps in Phayao, Rayong, and Pattani provinces. The results will lead to actionable policy recommendations.

Knowledge Work

Twice a year, the World Bank publishes the Thailand Economic Monitor (TEM), which reviews recent economic developments and provides an independent analysis of the near- and medium-term economic outlook. The report also provides advice on growth-promoting policies.

Other examples of analytical work include the following:

• Towards a Green and Resilient Thailand (2024) report introduces the BCG+ model to help strengthen Thailand's green agenda. 
• The Systematic Country Diagnostic Update (2024) outlines the Bank’s assessment of reform priorities for Thailand’s social and economic development.
• Bridging the Gap: Inequality and Jobs in Thailand (2023) focuses on how the country can reduce income inequality by boosting worker skills.
• The Public Revenue and Spending Assessment (2023) can be used to help the government make revenue and expenditure choices that will make the economy more inclusive and sustainable.
• The Thailand Rural Income Diagnostic (2022) examines the challenges of and opportunities for improving income and productivity in the rural sector.
• The Thailand Country Private Sector Diagnostic (2022), a joint World Bank–IFC report, assesses the challenges of and opportunities for private sector–led growth.
• Unleashing Sustainable Finance in Southeast Asia (2022) assesses the current state of play in sustainable finance in ASEAN countries, including Thailand, and proposes a new framework for policy action.
• The report series on Labor Markets and Social Policy (2021) aims to strengthen social protection and labor market policies in Thailand in the context of aging and economic transformation

Last updated October 2024