Thailand Megatrends | Unique growth prospects for the new decade

Thailand is poised for a decade of growth according to substantive research released today by real estate and property services giant, Colliers International Thailand. “The research points to four compelling and positive factors that favour Thailand in the new decade” pointed out Patima Jeerapaet, Managing Director of Colliers International Thailand. “I have been involved in real estate for most of my adult life, but the next ten years could be the most exciting” he stressed.

“It is a unique period of opportunity, which provides a window of significant economic and social development for the country” said Antony Picon, Senior Research Manager for Colliers and writer of the report. “Demographic and regional economic factors are pointing in the right direction for sustainable development of the economy and it is vital that this reality is grasped by our policymakers and policy implementers, starting from today” he stated.

1. Demographic dividend presents window of opportunity

“Thailand is at the apex of one of its most dynamic and exceptional demographic periods for potential economic growth” points out Antony Picon from Colliers International Thailand.

While economists still debate about the causes of the Japanese economic miracle and later the explosive growth of the South Korean and Taiwanese economies, one key factor is often overlooked: demographics.

It is no coincidence that both Japan and Korea’s growth was coupled by a dramatic increase in the proportion of people aged between fifteen and sixty four. Korea’s economy expanded by over 8% a year from the 1960’s to 1990’s, occurring during a remarkable increase of the proportion of its population of working age. The same correlation occurred for Taiwan in the eighties and Ireland in the nineties. Some economists refer to it as the Goldilocks period, not too hot and not too cold; a period when many enter the workforce but few leave it for retirement and fewer babies are born due to low fertility rates. Antony referred to Japan. “Its demographic story is instructive; at around the turn of the new millennium the population started to age, which was also a period of sclerotic economic growth for the country”.

Thailand’s window of opportunity

The chart shows that Thailand is reaching the zenith of its most potentially productive period, which is set to last for the next 20 years. Vietnam is also entering this period as its young population enters working age. With the reduced burden of dependants, young and old, more labour and capital can be channeled into output thus fueling rapid economic growth. “This enormous catalyst for development is dependent upon the ability of the economy to absorb the extra workforce productively” highlighted Antony.

The lower fertility rates that accompany lower youth dependency lead to more women in the workforce. The upshot of this is increased household income leading to greater discretionary spending; and as a result greater emphasis on quality and branding of products. Smaller household sizes, coupled with greater spending power will provide the engine for the condominium market in the next decade. Antony emphasized that more families will seek their own home, in a location close to mass transit routes at an affordable price in smaller size units. “Developers will increasingly have to consider amenities and branding for their condominiums to cater to a more discerning buyer in the mid-end category” he said.

Antony remembered fondly the acronyms used in England in the eighties to described these trends in his home country. “Yuppie was most widely used, standing for young upwardly mobile professional but my favourite was DINK, which stood for Double Income No Kids. So perhaps I can start using that name again but this time for Thailand”

View full details