Bangkok, Thailand, October 2024 – Thailand’s economy has demonstrated positive growth in the first half of 2024, yet the country continues to lag behind its ASEAN neighbours. As mid-market leaders weigh the impacts of global uncertainty, concerns over long-term investments in skills and technology are being raised, according to the latest findings from Grant Thornton's International Business Report (IBR) for Q3 2024.
Positive Growth but Lagging Behind ASEAN Competitors
The first half of 2024 showed some encouraging data for Thailand. The country’s GDP grew by 2.3% in Q2, following a 1.6% growth in Q1. This uptick was driven by private consumption, government spending, and a rebound in the export sector, which grew by 4.5% in Q2. Key sectors such as accommodation and food services saw notable growth of 7.8%, fuelled by the recovery in both domestic and international tourism.
However, a closer comparison with neighbouring ASEAN countries, using data from McKinsey & Company and Oxford Economics, reveals that Thailand's growth remains slower than that of its key regional competitors. Nations like Indonesia, the Philippines, and Vietnam are outpacing Thailand in GDP growth, driven by stronger industrial activity and more attractive investment landscapes.
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Ian Pascoe, CEO & Managing Partner at Grant Thornton in Thailand, shared his thoughts on this divergence: "While the positive GDP growth is encouraging, when compared to our ASEAN neighbours, Thailand is trailing behind. It’s imperative that we address the structural challenges holding back our long-term growth potential, particularly around investment in critical areas like technology and workforce skills."
Mid-Market Sentiment and Investment Concerns
Looking ahead, data from the IBR highlights a mixed outlook for the remainder of 2024. Despite some optimism among Thai mid-market businesses regarding future growth and revenues, there are growing concerns about insufficient investment in critical areas.
86% of mid-market Thai businesses expect to increase revenue over the next 12 months, up from 78% in Q2, a significantly higher rate than global, ASEAN, and Asia Pacific counterparts. Similarly, 80% of mid-market Thai businesses expect profitability to rise over the same period, maintaining the same level as in Q2 and staying well above their peers. However, 51% of businesses expect to increase exports, which, while up from 49% in Q2, still trails behind ASEAN counterparts at 61%.
Despite these positive signs, businesses remain cautious in areas of investment. 47% of mid-market businesses in Thailand expect to expand their workforce, down from 56% in Q2 and well below the levels of ASEAN counterparts. Additionally, only 43% of businesses plan to increase investment in people, a figure unchanged from Q2, raising concerns about Thailand’s ability to equip its workforce with the necessary skills to thrive in the digital economy. This lack of investment in people is a major concern for the Grant Thornton team, as Thailand faces growing competition in the region.
The report also highlights that only 56% of Thai businesses plan to increase investment in technology, down from 58% in Q2 and significantly behind ASEAN peers, where 73% are focused on advancing digital transformation. This reluctance to invest in technology further underscores the risk of Thailand lagging behind its regional competitors. Similarly, 47% of businesses plan to increase investment in plant and machinery, an improvement from 34% in Q2, but still below comparator groups.
On the constraints side, the IBR reveals that only 17% of mid-market Thai businesses reported availability of a skilled workforce as a major constraint, improving from 22% in Q2. However, Grant Thornton interprets this as a mismatch with market realities, suggesting that many businesses may have their heads in the sand regarding talent shortages. Furthermore, only 21% of businesses identified cyber security and digital risk as a major concern, a figure that remains well below comparator groups, suggesting a lack of awareness of the growing threats in this area.
A Warning for the Future
Thailand’s economic recovery, though positive, remains vulnerable to both external and internal pressures. To close the gap with regional competitors, Grant Thornton recommends prioritising investment in technology and skills development as essential steps to drive future productivity and competitiveness. Without these investments, Thailand risks continuing to fall behind its ASEAN neighbours in the long term.
About the IBR
The Grant Thornton International Business Report (IBR) has been providing insights into the sentiments of mid-market businesses globally since 1992. It surveys approximately 3,748 C-suite executives across 31 economies, providing a comprehensive analysis of business health, future investment intentions, and key concerns.
The Q3 2024 data for Thailand was gathered through interviews with 90 mid-market business leaders from various industries between 29 July and 6 September 2024. The IBR is conducted in collaboration with Oxford Economics, leveraging their global economic forecasting expertise and unique index model, which assesses mid-market health through a blend of 20 forward-looking indicators.
For more information, or to download the full Grant Thornton IBR Q3 2024 report for Thailand, please contact marketing@th.gt.com
