Economic review Thailand

The Netherlands Embassy in Bangkok regularly publishes economic reviews about Thailand, Thai-Dutch bilateral trade and investment and our business support services to Dutch companies. This is our review on the first half of 2017.

Thai economy slowly getting back on track

With a GDP growth of 3.5% in the first half of 2017 the Thai economic growth is slowly getting back on track, with tourism and public investment as its main drivers. Still, the second economy of Southeast Asia continues to punch below its weight. Besides the political instability (the military junta is in power since its coup in 2014), several factors continue to hamper a faster recovery. These include the country's historically high household debts and low consumer confidence. But the export orientated Thai economy is also suffering from lower global commodity prices and lower economic growth in some of its main economic partner countries, such as China. In addition, the country faces an increasing competition from upcoming economies in the region, such as Vietnam, Indonesia and Myanmar, in particular in the labor intensive industries. To increase its competitiveness, the Thai government focuses on adding value to its economy by promoting innovation in its most important industries, such as agriculture, biotechnology, life sciences & health and logistics. The aim of the so-called 'Thailand 4.0' strategy is to develop the country from an industrial production based economy to one based on knowledge. To attract innovative technologies from foreign companies, Thailand has beefed up its investment incentive packages (providing interesting opportunities for Dutch companies) and is trying to cut down on bureaucracy and red tape. In the coming years the Thai economy will continue to further improve slowly, with GDP growth in 2017 expected to reach 3.5 to 4.0%.

Bilateral trade and investment continues to increase

In the first half of 2017, total trade between the Netherlands and Thailand expanded 7,1% compared to the first half of 2016. The Netherlands remained Thailand's largest EU investor accounting for more than 40% of total EU foreign direct investment (FDI). While the competitive Dutch fiscal climate often shores up investment statistics, last year’s figures include several Dutch companies which started up in Thailand or expanded their production facilities. The export value from the Netherlands to Thailand increased with 10% compared to H2/2016, with machinery and parts, chemicals and electronic integrated circuits as top products exported to Thailand.

Businesses interested in ASEAN

Steady economic growth in the Netherlands has resulted in companies looking across borders for new growth markets. The dynamic ASEAN region seems to be one of the favorites. Across the region Dutch trade and investment is growing and embassies see a clear increase in the number requests for support by Dutch companies. Most events focusing on the ASEAN region, such as the ASEAN Business Dialogue series of events, are well attended by Dutch entrepreneurs.

The first half of 2017 is marked by a steep increase in number of trade requests with 559 request in 2017 H1 compared to 900 requests in 2016. Agriculture continues to be our main sector, but other sectors, such as water, life sciences, energy and the creative industries, are catching up. 

For more information on the Thai economy, bilateral trade and investment and our business support, please download the presentation below.