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Japan’s Ageing Society: Lessons for Thailand

The United Nations forecast that the population of Thailand over 65 years old will increase from 11 percent to 14 percent, which means Thailand will be the first developing country in the world to completely become an Aged Society. While the country’s economy is slowly recovering, questions arise whether Thailand will follow the same path as Japan in the “lost decade” when it had similar population structure and experienced economic stagnation with  prolonged deflation.

Pisit Serewiwattana, President of EXIM Bank of Thailand argues in his article that Thailand is in a different situation from Japan in the early 1990s due to the three following reasons:

1. Thailand’s economic structure is different from Japan. Thai economy relies on export which constitutes 70% of GDP while the proportion of domestic consumption is only 48%. On the contrary, Japan mostly depended on domestic demand which accounts for 60 percent of GDP and only 20% on export. The impact of Thailand becoming an Aged society on the economy would be less severe than those that affected Japan.

 

2. Tourism helped boost demand in the Thai economy, which is a different scenario from Japan in the lost decade. In the past 5 years, the number of tourists traveling to Thailand expanded 10% annually. In 2017, the revenue from tourism equaled to 12% of GDP, an increase from 8% in 2009. This makes Thailand among the top ten of the world's most visited countries. The case of Japan is different since it did not open much for tourism as shown by the statistics that only 0.2% of the GDP was generated by this sector at that time.

 

3. Thailand’s fiscal fundamental is strong enough to accommodate the economy’s restructuring for an ageing society. Currently, Thailand’s public debt is at 42% of GDP which is still under the 60% benchmark. Japan’s public debt in the 1990s was at 130% of GDP. This means that there is more room for Thailand to maneuver its fiscal policy and launch new initiatives to draw more foreign investment so as to expand the market and increase purchasing power in the long term.

Source: Post Today, 1 May 2018

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