Thailand has been upgraded from a lower-middle income economy to an upper-middle income economy, with a GNI per capita of US $ 4.210. The World bank stresses Thailand to avoid the middle income trap and pay attention to raising the productivity of manufacturing, agriculture and services sectors. Thailand's economy has grown steadily for nearly a decade and poverty has been reduced. Despite last year's unrest, the country grew over 7% .
The new government of Yingluck Shinawatra is determined to push ahead with populist programme, such as increase in minimum wage of ($10) a day, this would mean an increase of 90% in some provinces. Economists warn this could trigger higher inflation and hurt small businesses. These firms say they would not be helped much by a cut in corporate tax from 30% to 23%.
The central bank goal is to hold core inflation, which excludes fresh food and energy prices, in a range of 0.5 to 3.0% and it sets monetary policy to achieve that. Inflation hit 2.59% in July, approaching the limit. New Finance Minister said his ministry would look at the central bank's inflation target, which guides monetary policy, to see whether it was causing problems for the economy.
The world bank upgrade is seen as an opportunity for Thailand to show investors that despite the political turmoil of 2010, it has achieved economic stability. Economists say inflation remains high and the new government challenges will be increasing people's income and holding down the cost of living.
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