Thailand — From Southeast Asia’s “Tiger” to Structural Strain and the Cost of Stagnation

BANGKOK — Once celebrated as one of Southeast Asia’s economic “tigers,” with GDP growth soaring to 13 percent in the late 1980s, Thailand is now struggling with a prolonged and deep-rooted economic slowdown. The contrast between past dynamism and present fragility has become a subject of debate among both domestic and international analysts.

Economic Hardship in Everyday Life

Like millions of other Thais, 56-year-old Tipvimol Wanitthaphan moved to Bangkok seeking better opportunities and opened a small café. Recently, however, her revenue has fallen by two-thirds, forcing her to consider shutting down when her lease expires in April.

“Many office workers have lost their jobs, so purchasing power has dropped,” she said.

Her story is not unique. It reflects the broader picture of domestic consumption in Thailand, now at its weakest level in decades. The slump has dragged down retail, food services, and other consumer-facing sectors.

Thailand’s 2026 Outlook: “Sick Man” or Turning Point?

Recent economic indicators show Thailand remains stuck in low-growth mode, with expansion forecast at only 1.6 to 2 percent in 2026. That would mark one of the lowest growth rates in Southeast Asia. The International Monetary Fund has pointed to weak consumption, high household debt, and supply chain disruptions as key drags on the economy.

Burin Adulwattana of Kasikorn Bank warned that Thailand’s shift from a once-resilient economy to a fragile one in just a decade is alarming, reflecting deep structural issues ranging from rapid population aging to declining productivity.

International Perspectives: Competitive Pressure and Investor Confidence

International observers argue that Thailand’s struggles are not purely domestic. Aat Pisanwanich, an independent academic and analyst, noted that foreign direct investment flows into Thailand have fallen short of expectations because labor skills and investment policies have lagged behind regional competitors. Countries such as Vietnam, with younger workforces and clearer policy frameworks, have drawn significantly more manufacturing and technology investment.

In financial markets, Thailand’s Stock Exchange of Thailand has underperformed regional peers and seen persistent foreign capital outflows.

Regional Comparison: A Diverging ASEAN Landscape

Across ASEAN, economic trajectories are diverging sharply. Some neighbors have accelerated growth through export diversification and technology investment, while Thailand has struggled to maintain momentum. Analysts warn that if this gap widens, Thailand risks losing further ground in regional production networks.

Political Instability and Structural Reform

Economic challenges have been compounded by prolonged political uncertainty. Thailand has experienced frequent leadership changes in recent years, slowing policy implementation and undermining investor confidence.

The February 8 general election was seen as a test of political stability. The ruling Bhumjaithai Party secured a strong showing, raising hopes of a more stable governing coalition. Political scientist Napon Jatusripitak of the Thailand Future Foundation suggested that a stable administration could help restore policy continuity. However, economists caution that structural reform, not just political stability, will determine Thailand’s long-term trajectory.

Prospects for Recovery and a New Growth Model

Despite talk of Thailand becoming the “sick man of Asia,” many international experts stress that the country is not beyond recovery. Instead, they argue it stands at a crossroads.

Key priorities frequently cited by institutions such as the World Bank include opening more sectors to foreign investment, upgrading workforce skills, and shifting from traditional manufacturing toward high-value industries such as digital infrastructure, advanced electronics, pharmaceuticals, and biotechnology.

More urgent, however, is reviving consumer confidence. Household debt has climbed to nearly 90 percent of GDP, among the highest in Asia, while wage growth has stagnated. Thailand’s population has also declined for four consecutive years, with the birth rate falling to a 75-year low in 2025.

As a result, many families are cutting back sharply. “My customers are coming less often,” said Tewanaree Sawangnate, a Bangkok hair salon owner. She has reduced her own spending as well, focusing only on essential purchases for her children.

Tourism, another crucial economic engine, has also slowed. Thailand welcomed 32.9 million foreign visitors in 2025, down 7 percent from the previous year and still below the 40 million peak recorded in 2019 before the pandemic. Increased regional competition and safety concerns have added further pressure.

A subdued atmosphere now hangs over Bangkok, where restaurants sit half empty, hotels rarely reach full occupancy, and retailers struggle to stay afloat. Once-bustling food streets have seen multiple closures.

Back at her café, Tipvimol has cut personal spending and relies on her daughter to help repay a car loan. “I’ve stopped eating out or meeting friends. Going out costs too much,” she said.

Thailand stands at a pivotal moment

From a roaring “Asian tiger” to an economy facing deep structural strain, Thailand stands at a pivotal moment. Prolonged slow growth, weak consumption, high debt, and rising regional competition have prompted urgent calls for reform from both domestic and international experts.

Thailand’s challenges serve not only as a national turning point but also as a cautionary tale for middle-income economies navigating demographic change, global competition, and the need for structural transformation in a rapidly evolving world economy.