Thailand Economy

The economy of Thailand is an emerging economy which is heavily export-dependent, with exports accounting for more than two thirds of gross domestic product (GDP) the exchange rate is Baht 33.00/USD.

Thailand has a GDP worth 8.5 trillion Baht (on a purchasing power parity (PPP) basis), or US$627 billion (PPP). This classifies Thailand as the 2nd largest economy in Southeast Asia after Indonesia. Despite this, Thailand ranks midway in the wealth spread in Southeast Asia as it is the 4th richest nation according to GDP per capita, after Singapore, Brunei and Malaysia.

It functions as an anchor economy for the neighboring developing economies of Laos, Burma, and Cambodia. Thailand's recovery from the 1997–1998 Asian financial crisis depended mainly on exports, among various other factors. Thailand ranks high among the world's automotive export industries along with manufacturing of electronic goods.

Most of Thailand's labor force is working in agriculture. However, the relative contribution of agriculture to GDP has declined while exports of goods and services have increased.

Tourism revenues are on the rise. With the instability surrounding the recent coup and the military rule, however, the GDP growth of Thailand has settled at around 4-5% from previous highs of 5-7% under the previous civilian administration, as investor and consumer confidence has been degraded somewhat due to political uncertainty.

The incumbent elected civilian administration under Samak Sundaravej in power from January 29 to September 9, 2008 stated that the economy will have grown by 5.5% to 6% by the end of 2008. Due to rising oil and food prices, the annual inflation rate for 2008 shot up to 9.2% in July; a 10-year high, but it will unlikely reach double digit rates later this year as oil and food prices are stabilizing.

History

Thailand had historically been a tiger economy with average growth rates of 9.4% from 1985 to 1996. The military administration under Prime Minister Prem Tinsulanonda in power from 1980 to 1988 began to open up the country's economy to international trade.

However, after the 1997–1998 currency crisis, millions of people were unemployed and impoverished and it wasn't until 2001 that Thailand regained momentum over the baht and economy.

Thailand's 23rd prime minister, businessman Thaksin took office in February 2001 with the intention of increasing domestic activity and reducing Thailand's reliance on foreign trade and investment. Since then, the Thaksin administration has refined its economic message, embracing a "dual track" economic policy that combines increased domestic activity with Thailand's traditional promotion of open markets and foreign investment.

This set of policies is popularly known as Thaksinomics. Weak export demand held 2001 GDP growth to 2.2%. In 2002/03/04, however, increased domestic activity and an export revival fuelled better performance, with real GDP growth at 5.3%, 7.1% and 6.3% respectively. However, in 2005, under rising oil prices and trade deficits, severe droughts and floods, the Southern Thailand Insurgency reaching its peak, uncertainty of the future of Thaksin's government and the tourism aftershocks of the Indian Ocean Earthquake Tsunami on December 26, 2004, economic growth slumped to 4.5%.

In 2005 Thailand also had a current account deficit of -4.3% of GDP, or US$ -7.6 billion. Ever since 2006 Thailand has once again a surplus in its current account and in 2006 the economy was buoyed by strong export growth, however, the military coup d'état on September 19, 2006, which ousted the prime minister and abrogated the 1997 constitution, along with the December 2007 elections, cast uncertainty.

The present elected civilian administration under Samak Sundaravej in power since January 29, 2008 estimates that by the end of this year the economy will have grown by about 5.5% to 6%. Despite the rapid growth of the industrial and financial sectors over the last decades, agriculture and tourism remain the most important sources of revenue.