# Thailand’s aging population hits consumption and economic growth

- Link: https://www.thailand-business-news.com/economics/142662-thailands-aging-population-hits-consumption-and-economic-growth
- Published: 2024-06-03T07:04:00+07:00
- Author: Akanksha Singh

The demographic changes in Thailand, including an aging population and declining
birth rate, are significantly impacting the country’s domestic consumption, which
has been a major driver of economic growth.

## Key Takeaways

 * Thailand’s economic growth is heavily reliant on domestic consumption, which 
   is being impacted by demographic changes such as an aging population and lower
   birth rate.
 * The high cost of living, sluggish economy, and high household debt are contributing
   to lower domestic consumption in Thailand, with potential for further reduction
   if the birth rate continues to fall.
 * To address the challenges posed by demographic changes, the Thai government needs
   to adjust its economic model to increase incomes and improve the quality of life,
   while also providing support to small and medium-sized enterprises (SMEs) to 
   adapt to the changing economic environment.

The study by the Kasikorn Research Centre highlights that compared to other countries
in the region, Thailand has a higher reliance on domestic consumption for economic
growth.

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Factors contributing to lower consumption include a sluggish economy, high cost 
of living, and high levels of household debt. The study also points out that if 
the birth rate continues to decline, domestic consumption will decrease further.

Additionally, the lower productivity and incomes in the agriculture sector affect
purchasing power, particularly for the elderly population. To address these challenges,
the Thai government is urged to adjust its economic model to improve incomes and
quality of life, with a focus on supporting small and medium-sized enterprises (
SMEs) and incentivizing the hiring of older individuals and skilled foreigners.

Approximately 34% of the elderly in Thailand earn an average monthly income that
falls below the poverty threshold. Out of the 5.1 million senior citizens, 3.7 million(
59%) continue to work in agriculture, earning less on average than those in other
sectors.

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The Kasikorn Research Centre indicates that demographic shifts pose a critical challenge
for the Thai government. It is imperative for the government to revise its economic
model to support rising incomes and enhance the quality of life, which will in turn
mitigate the reduction in consumption.

The silver economy presents new opportunities for the finance industry, as many 
Thai seniors struggle with managing finances and accessing services. Financial institutions
should create and promote products tailored to this market, such as high-yield deposit
accounts and health-related financial products like insurance and medical loans.
This will help elders access better healthcare and manage their finances more effectively.

### **From an ‘aging’ to an ‘aged’ society: Thailand is getting old before it gets rich**

It has long been observed that Thailand is aging rapidly, and as long ago as 2005,
Thailand became an ‘aging society’^(1/), that is, at least 10% of the population
was 60 or older.

However, **in 2023, Thailand reached another demographic milestone when the share
of over-60s reached 20% of the population, or 13.2 million people, qualifying it
as an ‘aged society’**^(2/)**.** 

It therefore took less than 20 years for the share of the elderly in the population
to double and for the country to go from an aging to an aged society, a rate that
is significantly faster than that recorded in many other countries, including Singapore
and China (25 years), the United Kingdom (45 years), and the United States (69 years)
^(3/).

Moreover, **in 2023, 13.6% of the Thai population was 65 or over, and the United
Nations^(4/) expected this proportion to grow to more than 20% by 2029, which would
then qualify Thailand as a super-aged society. **

This is the most aged of the UN’s demographic categories, and once Thailand reaches
this stage, it will join countries including Japan, Germany, Italy, and France, 
but while these are all wealthy developed economies and that are thus ‘old but rich’,
Thailand is at risk of becoming ‘old before it is rich’.

    ```wp-block-verse
    1/ The UN classifies aging countries into 3 levels: (i) If 10% of the population is over 60 or 7% over 65, the country is classified as an ‘aging society’; (ii) if 20% of the population is over 60 or 14% over 65, it is an ‘aged society’; and (iii) when 20% of the population is over 65, the country becomes a ‘super-aged society’. 2/ Department of Older Persons (DOP), https://www.dop.go.th/th/statistics_page?cat=1&id=13/ Bangkok Post, https://www.bangkokpost.com/business/general/2643057/thailands-silver-economy-trends-and-opportunities   4/ UN World Population Prospects 2022
    ```