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- GDP (PPP):
- $985.5 billion
- 0.7% growth
- 3.6% 5-year compound annual growth
- $14,354 per capita
- Inflation (CPI):
- FDI Inflow:
Thailand’s economy is still struggling to regain its growth momentum more than a year after the military seized power. Ongoing political uncertainty undermines the investment climate and keeps the country’s economic dynamism below potential levels. Capital controls have been eased, but authoritarianism coupled with populist economic policies continues to deter flows of investment.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 63.9 (up 1.5 points)
- Economic Freedom Status: Moderately Free
- Global Ranking: 67th
- Regional Ranking: 11th in the Asia–Pacific Region
- Notable Successes: Trade Freedom
- Concerns: Property Rights, Corruption, and Labor Freedom
- Overall Score Change Since 2012: –1
The judicial system remains vulnerable to political interference under the military-controlled government, and property rights are not strongly protected. Systemic corruption further undercuts the rule of law and hampers stable long-term economic development.
Thailand has had 19 military coups since becoming a constitutional monarchy in 1932. The period since the ouster and exile of Thaksin Shinawatra in 2006 has been particularly turbulent. Civilian government returned in 2007, and Pheu Thai, the legacy party of the Thaksin government, won an outright majority in the 2011 parliamentary elections. Thaksin’s sister, Yingluck Shinawatra, became prime minister and later, in spring 2014, was ousted from power in a military coup led by Army General Prayuth Chan-Ocha. New elections, initially expected to be held in October 2015, have been postponed until 2016. Since the 2014 coup, freedom of speech and freedom of association have been severely restricted, and leading politicians have been placed under house arrest. The persistent political instability has negatively affected the economy.
Corruption is widespread at all levels of Thai society. A cultural proclivity to view bribery as a normal part of doing business and to equate cash payments with finders’ or consultants’ fees, coupled with the low salaries of civil servants, reportedly encourages officials to accept illegal inducements. The independent judiciary had been generally effective in enforcing property and contractual rights but has been criticized for political bias.
The top personal income tax rate is 35 percent, and the top corporate tax rate is 20 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 16.2 percent of total domestic income. Government spending amounts to 24.3 percent of gross domestic output. The budget balance remains in deficit, and public debt is at a level close to 50 percent of GDP.
With no minimum capital requirement, starting a business requires only four procedures, but licensing requirements remain time-consuming. Labor regulations are relatively flexible, but informal labor activity remains substantial. The military government indicted former Prime Minister Yingluck Shinawatra in 2015 on criminal charges for her role in a controversial and populist rice subsidy scheme that cost the country billions.
Thailand’s average tariff rate is 6.2 percent. Many agricultural imports face barriers. Foreign investment in some sectors of the economy is restricted or capped, but there is no general screening of foreign investment. Although foreign direct investment is officially welcome, the government prohibits majority foreign ownership in many sectors. The financial system remains relatively resilient and sound despite ongoing political uncertainty.