Thailand has successfully reduced poverty over the past three decades from over 65 percent in 1988 to under 10 percent in 2018. However, the growth of household incomes and consumption growth both have stalled nationwide in recent years. This resulted in a reversal in the progress of poverty reduction in Thailand with the number of people living in poverty rising, according to a new World Bank report which analyzes recent poverty and inequality trends based on official statistics.
Between 2015 and 2018, the poverty rate in Thailand increased from 7.2 percent to 9.8 percent, and the absolute number of people living in poverty rose from 4.85 million to more than 6.7 million. The increase in poverty in 2018 was widespread – occurring in all regions and in 61 out of 77 provinces. In the Central and Northeast, the number of poor increased by over half a million in each region during the same period. The conflict-affected South became the region with the highest poverty rate for the first time in 2017.
The report finds that the recent increase in poverty coincides with emerging and shifting economic and environmental challenges in the economy. Over the past few years, Thailand’s growth rate has been lower than other large economies in the developing East Asia and Pacific region. Thailand had one of the lowest GDP growth rates in the region, at 2.7 percent during the fourth quarter of 2019. Droughts have affected the livelihoods of farmers who are already typically the poorest.
“Recent poverty trends demonstrate that despite Thailand’s level of economic development, households are still vulnerable to shocks and weak economic conditions,” said Birgit Hansl, World Bank Thailand Country Manager. “To meet Thailand’s aspiration of achieving high-income status, Thai households will need better protection from income shocks such as ill-health, job-loss and natural disasters. It will be equally important to support the creation of more productive and higher-paying jobs.”
Since official poverty data were first published in 1988, Thailand’s poverty rate has increased in five instances, the most recent in 2018 and 2016 with the previous three instances occurring in 1998, 2000, and 2008 around the time of financial crises. Thailand is the only nation in ASEAN to experience several increases in poverty since 2000.
While Thailand performs better than its ASEAN peers on many international indicators of well-being, such as education enrolment among primary school aged children, access to water, sanitation, and electricity, and has a low international extreme poverty rate based on $1.90/day at 0.03 percent, inequality remains an issue. The population at the bottom 40 percent of the income distribution is not sharing as well in prosperity, and in the recent period of 2015-2017, consumption and income growth in this bottom 40 percent were negative. The reversal in trend among this bottom 40 during this period is related to declines in all forms of labor incomes, including a stagnation in wage growth and declines in farm and business incomes.
“A more nuanced picture of inequity and a better understanding of vulnerability will be needed to guide Thailand’s next steps towards building a more prosperous society for all.” said Judy Yang, World Bank economist and author of the report. “Eliminating persistent pockets of poverty will require growth strategies that take into account short-run risk mitigation and long-run investment needs.”
The report calls for active interventions and investments to help transform Thailand. In the short-term, Thailand will need to reinforce its safety nets. Populations that are vulnerable would need to be better identified and swift action is needed in creating better jobs for households in a rapidly changing economy.
In the longer term, investing equitably in the next generation will be key. The next generation will be smaller due to demographic changes and lower fertility rates. Every child will need to be given a fair shot and be provided the health and education opportunities to reach their full potential. This will help households break out of the generational poverty trap, support an aging population, and boost Thailand’s growth prospects.