Thailand’s Aging Demographic Challenges Its Economic Growth

Thailand’s demographic shifts, such as an aging population and a falling birth rate, are significantly affecting domestic consumption, which has traditionally been a key component of the nation’s economic growth.

Research from the Kasikorn Research Centre emphasizes Thailand’s greater dependency on domestic consumption for economic growth compared to its regional counterparts.

Several factors are reducing consumption levels, including a slow-moving economy, a high cost of living, and substantial household debt. The research also suggests that a continuing decline in the birth rate will likely lead to further reductions in consumption.

Additionally, reduced productivity and lower incomes in the agricultural sector diminish purchasing power, especially among the elderly.

To tackle these issues, the Thai government is urged to modify its economic strategy to boost income and improve quality of life, focusing on supporting small and medium enterprises (SMEs) and encouraging the employment of older workers and skilled foreign professionals.

About 34% of elderly Thais earn a monthly income below the poverty line. Of the 5.1 million senior citizens, 59% or 3.7 million, still work in agriculture and typically earn less than their counterparts in other sectors.

The Kasikorn Research Centre identifies demographic changes as a pressing challenge for the Thai government.

The government is advised to revamp its economic framework to facilitate higher incomes and better living standards, which could help counterbalance the decline in consumption.

The emerging silver economy offers potential opportunities for the financial sector, as many older Thais face challenges in managing their finances and accessing services.

Financial institutions are encouraged to develop and market products specifically designed for the elderly, such as high-interest savings accounts and health-oriented financial services like insurance and medical loans, aiding them in obtaining better healthcare and managing their finances more efficiently.

From becoming an ‘aging’ society to an ‘aged’ society: Thailand is aging before becoming wealthy.

Since 2005, Thailand has been classified as an ‘aging society’, with at least 10% of its population aged 60 or older.

By 2023, the proportion of the population over 60 years old reached 20%, or 13.2 million people, transitioning Thailand to an ‘aged society’.

In less than two decades, the percentage of elderly individuals doubled, transitioning Thailand from an aging to an aged society much faster than other nations, including Singapore and China (25 years), the UK (45 years), and the US (69 years).

Additionally, by 2023, 13.6% of the Thai population was 65 years or older, with projections indicating this number will exceed 20% by 2029, placing Thailand in the category of a ‘super-aged society’.

Once Thailand reaches this demographic stage, it will be grouped with nations like Japan, Germany, Italy, and France, which are wealthy and developed, in contrast to Thailand, which faces the challenge of aging before achieving comparable wealth.