Is Thailand poor? (Not even slightly. Though wealth inequality is extreme!)

Video #41 | June 21, 2018

In this video I’m going to try and answer the question; Is Thailand poor?

Over the years I have had numerous friends and acquaintances try to tell me that Thailand is a poor ‘third world’ country. Usually I bite my tongue, but not today!

Click on the following link to check out more on Bangkok and Thai Culture.

#VIDEO TRANSCRIPT#

Welcome to the forty-first video of Bangkok Unmasked! The YouTube channel that helps you get the most out of your visit to Bangkok city! If you’re new here, please consider subscribing! In this video I’m going to try and answer the question; Is Thailand poor?

Over the years I have had numerous friends and acquaintances try to tell me that Thailand is a poor ‘third world’ country. Usually I bite my tongue, but not today!

Is Thailand poor? Some interesting stats on Thailand’s economy

First off, for context, I’m going to start this video with 11 stats on Thailand’s economy that I find fascinating.

Is Thailand poor? – Stat #1.

The IMF ranks Thailand 20 out of 195 countries by GDP (PPP). Number 19 is Australia!

Is Thailand poor? – Stat #2.

Exports account for more than two-thirds of Thailand’s gross domestic product.

Is Thailand poor? – Stat #3.

In 2017, according to the IMF, Thailand had a GDP of 15.45 trillion baht (or US$455 billion). This makes Thailand Asia’s 8th largest economy.

Is Thailand poor? – Stat #4.

The industrial and service sectors are the main drivers of Thai gross domestic product. In 2012 they accounted for 39.2% and 52.4% of Thailand’s GDP respectively.

Is Thailand poor? – Stat #5.

Thailand’s agricultural sector produces 8.4 percent of GDP—lower than the trade and logistics and communication sectors, which account for 13.4 percent and 9.8 percent of GDP respectively.

Is Thailand poor? – Stat #6.

Thailand is the second-largest economy in Southeast Asia, after Indonesia. Its per capita GDP however ranks in the middle of Southeast Asian per capita GDP, after Singapore, Brunei, and Malaysia.

Is Thailand poor? – Stat #7.

Thai household debt in Q4/2015 amounted to 11 trillion baht. This is a massive 81.5 percent of GDP.

Is Thailand poor? – Stat #8.

According to Friedrich Schneider, an economist at Johannes Kepler University of Linz in Austria, Thailand’s shadow economy was 40.9 percent of real GDP in 2014.

Is Thailand poor? – Stat #9.

According to the National Economic and Social Development Board (NESDB) in a recent report titled “Poverty and Inequality in Thailand”, 10 percent of the Thai population earned 35 percent of Thailand’s aggregate income and owns 61.5 percent of its land.

Is Thailand poor? – Stat #10.

Thailand was ranked as the world’s third most unequal nation, behind Russia and India, in the Credit Suisse Global Wealth Databook (2016). One percent of the Thai population is estimated to own 58 percent of Thailand’s wealth.

Is Thailand poor? – Stat #11.

According to Trading Economics, Thailand’s average monthly wage in Q1/2018 was 13,721 Baht/Month.

So is Thailand poor?

It’s true that many Thai are poor. Though it has to be noted that very few Thai are starving. The wealth inequality is simply staggering. Bangkok’s rich will happily spend more on a meal with a couple of friends than a taxi driver will earn in a month. And think nothing of it.

With this said, in my opinion, Thailand is not a poor country. According to the IMF, with a nominal GDP of US$6,591 per capita in 2017, Thailand is typical of what economists call the ‘middle income trap’. This is economies that have bootstrapped themselves up to a reasonable level of development and industry but start to stagnate and fail to develop into full-fledged service-based economies. Singapore, Japan and South Korea on the other hand are examples of countries who have managed to overcome the ‘middle income trap’ and become fully developed, modern economies. In 2017 Singapore’s nominal GDP stood at $57,713, Japan’s nominal GDP stood at $39,440 and South Korea’s nominal GDP stood at $30,091.

There are several reasons why Thailand has failed to overcome the ‘middle income trap’.

Reason #1. Corruption

Corruption in Thailand can be felt everywhere. Politicians, judges, civil servants, policemen, army generals – literally everyone wants a piece of the action, and are ready to leverage their institutional power for cash and favors.

Some business people claim that cutting through the red tape can be advantageous. However, what business really needs to thrive is a fair and stable environment i.e. a ‘rule of law’. If the rules keep changing all the time, and everybody cheats, the vast majority of citizens lose.

Reason #2. Political Stability

Thailand has had 19 successful military coups since it became a constitutional monarchy in 1932. Only one elected prime minister in the country’s history has managed to complete their 4-year term.
Foreign capital is generally not enthusiastic on long term investments in countries with such a volatile political climate.

Reason #3. Education

The Thai education system is horrific, and consistently ranks among the worst in Asia. This is why the majority of Thailand’s elite are educated overseas.

Thailand’s schools and universities are underfunded, and teachers work under haphazard and often contradictory guidelines. As an outsider, it seems to me that the education system in Thailand is more focused on instilling patriotism than critical thinking.

Reason #4. A small middle class

Thailand’s middle class is small when compared with most Western countries, and regional neighbors like Japan and Korea.

There’s a huge working class whose income averages about $300 USD per month. There’s also a very significant urban lower middle-class i.e. university graduates and small business owners whose income averages between $500 and $1000 USD a month.

Then there’s the ‘hi-so’. This group is made of large business owners and influential civil servants. Through their investments and connections, they have reaped most of the benefits from the last decades’ economic growth. This is the group driving all the luxury cars in Bangkok, even though they are taxed at 200%+.

While the ‘hi-so’ has a significant impact on the economy, they’re not large enough as a group to fuel the economy on their own. Instead it’s the lower middle class that has driven growth. However, in order to do so they have taken on a lot of debt. My guess is that this probably won’t end well.

Reason #5. Lack of competition

Thailand has a very protectionist economy. There are high taxes on most imported goods, and limitations on foreign investment. The import taxes serve to nurture and develop certain business categories, such as the car industry for example. With this said, many industries like the car industry have grown too cozy over the years. This results in domestic made cars being more expensive in Thailand than elsewhere.

Final thoughts

Ultimately Thailand is a fairly rich country. The problem is that the riches are very badly distributed. This could potentially change if steps are taken to overcome the ‘middle income trap’. However, after living in Thailand for the past 19 years I’m not holding my breath.

Anyway. that’s it for this video. Expect a new video next week.

For all you techies out there, this video was shot on a Samsung Galaxy S8 Plus, and edited using HitFilm Express.

To check out details on arranging a bespoke Bangkok tour with experienced tour guides, and luxury private transport, please click on the link in this video’s description section.

Finally, please don’t forget to subscribe to this channel through the button below! Also, I’d like to hear from you if you have any thoughts or comments on the question; is Thailand poor? Please do reach out to me through the comments section of this video!

Thank you very much for watching. I’ll see you next week. Goodbye.