ASEAN is a region on the rise, with expanding domestic demand, strong foreign direct investment and a robust tourism industry. Combined regional gross domestic product (GDP) doubled between 2009 and 2022 to reach US$3.6 trillion—at the heart of that growth is the rapidly evolving ASEAN consumer.
Growth in the ASEAN-6 countries of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam averaged 3.8% in 2023, rising to 4.5% in the first half of 2024. This compares favourably to major economies, which grew at an average 3.1% and 3.2% over the respective timeframes.
ASEAN’s story is one of continued consumption. Two trends are set to shape the future of that consumption—an optimistic but economically aware consumer, and one which is increasingly resilient and open to customer-centric products and services—a situation laid out in detail in the ASEAN Consumer Sentiment Study 2024, developed in partnership between Boston Consulting Group (BCG) and United Overseas Bank (UOB).
Our findings demonstrate an intriguingly pragmatic optimism across the region. What’s also clear, however, is more work is needed to unlock the full potential of this expanding consumer base. But what does this mean for Thailand?
Thailand is the second-largest economy in ASEAN, with real GDP growth forecast at ~3.5% to 2030. With a diverse and rapidly growing consumer base, Thai consumers are embracing digitisation and shifting towards more customer-centric experiences. Understanding these shifts will help businesses connect with Thai consumers in ways that resonate with their unique preferences and expectations.
Consumer considerations in current economic conditions
Thai consumers are carefully navigating the complex economic landscape, but their outlook is slightly less optimistic compared to other ASEAN nations. Our research showed that optimism about the economy is notably subdued in Thailand, with only 35% of Thai consumers feeling positive about the country’s future economic performance.
Despite these concerns, Thai consumers continue to be optimistic, and this optimism is reflected through resurgence in the ‘experiential’ spending categories such as entertainment (e.g., concerts/events/festivals), lifestyle (e.g., spa/massage) and leisure travel alongside dining out—where spends have increased for about 40% of Thai consumers, especially for the Gen Z (56%) and Gen Y (45%).
This confidence in discretionary spending likely stems from a growing sense of financial security, with 82% of Thai consumers expecting themselves to be the same financially or better off by this time next year. One potential reason for this confidence may be a growing number of people turning to additional sources of income, with almost half (45%) of Thai respondents taking on a second source of income in response to evolving financial pressures
Even with a less optimistic outlook compared to other ASEAN nations, Thai consumers are ready to bounce back after the long spell of macro-challenges driven by their thirst to enjoy products and experiences catering to their aspirations, and not just their needs!
Rising intra-regional travel driving cross-border spend and alternative modes of payments
Tourism is one area where this optimistic sentiment reflects strongly. High intra-regional travel within ASEAN has contributed to strong cross-border spending. Two-thirds of ASEAN consumers have spent overseas within ASEAN in the past year, with 63% of Thai consumers contributing to this growing trend.
More frequent travelling may also have catalysed the shift in payment preferences, as consumers lean towards alternative payment modes with higher convenience. In Thailand, 59% of respondents prefer paying by physical or mobile credit/debit cards when travelling abroad, with 41% of Thai travellers opting for scan-to-pay, reflecting the growing trend across ASEAN where cash is being displaced by alternative payment methods.
Growth of digital banking
ASEAN consumers have always been at the forefront of digital adoption, apparent through their increased utilisation of digital banking and demand for personalised services and solutions.
Online is now the preferred channel for many in Thailand for various activities including performing local fund transfers and gathering information about new products. Having said that, a third of consumers in Thailand still prefer omni-channels for making high monetary value transactions and seeking financial and investment advice. This is likely due to the fact that these activities are seemingly more complex and require higher levels of trust, transparency, and support. This underlines the importance for banking and financial institutions to continue on the path of hybrid channel strategies.
91% of Thai consumers desire personalised products and services, where 78% prefer personalised offers to be delivered via mobile banking apps and 64% prefer via email. This presents a clear opportunity for businesses to tailor products and solutions catering to the specific needs of different segments, going beyond traditional segmentation and venturing into hyper-personalisation.
For instance, UOB successfully deployed hyper-personalisation at scale through its UOB TMRW mobile app, serving more than 129 million AI-driven nudges to 3.6 million of its regional customers. The impact is striking—more than one in three customers interacted with the insights and customers who are digitally engaged have 100% higher current/saving account balances and 50% higher average card spend.
Serving the evolving Thai consumer
Despite the challenges of the current economic landscape, Thailand continues to maintain its status as an upper middle-income country. The majority of Thai consumers (78%) are well-informed about the amount they need to secure a comfortable retirement and 58% have an emergency fund to cover three to six months of necessary spending—both higher rates versus ASEAN peers—reflecting a growing awareness and proactive approach to financial planning in the country.
What this means for business
The response to evolving financial pressures has led to a shift in spending habits and financial behaviours, as well as purchasing preferences, with Thai consumers increasingly seeking personalised and unique experiences in their purchases. This trend, along with accelerated digital adoption, presents significant opportunities for businesses to position themselves as future leaders.
By identifying untapped demand areas and delivering tailored solutions through a strategic mix of hybrid approaches, companies can effectively meet the evolving needs of Thai consumers. With these strategies in place, businesses will be well-positioned to thrive in this dynamic and growing ASEAN market.
Authors:
- Aditi Bathia, Consumer Insights Expert for SEA, BCG
- Yuttachai Teyarachakul, Head of Personal Financial Services, UOB Thailand
