Between 1988 and 1996, Thailand's poverty incidence dropped from about 33 percent of the population to about 11 percent, translating to more than 1 million people being lifted out of poverty each year.  But with the onset of the financial crisis in 1997 an additional 3 million people became poor, with the incidence of poverty climbing to 16 percent in 1999.  Incomes are distributed more unequally in Thailand than in most middle income countries.  The crisis has caused the gaps between the rich and poor to widen.  The poorest 20 percent of the population received only 3.8 percent of aggregate national income while the richest 20 percent received about 59.0 percent in 1999.  Regional inequalities are also pronounced.  Inequality dilutes the impact of growth in reducing poverty incidence.

Historically, reductions in poverty incidence in Thailand have correlated strongly with the aggregate growth of GDP per capita.  A 1 percent increase in per capita income has been associated with an average annual proportional reduction in the headcount measure of poverty incidence of about 1.5 percent.  But experience also suggests that once growth of per capita income falls below about 3 percent, increases in poverty incidence can occur.  The expected slowing of GDP growth to 2-3 percent in 2001 might reasonably be expected to place upward pressure on poverty incidence. Poverty, which is concentrated in rural areas, is the product of a wide range of disadvantages that impede access to needed resources and that limit economic opportunities.  The north-northeast region area development loan, programmed for 2002, and the southern region area development loan, programmed for 2004, will help address the needs of Thailand's rural poor.  Broader social dimensions of Thailand's poverty problems will be covered in the second social sector reform loan programmed for 2003.

Poverty in Thailand Poverty and Public Policy