THAILANDAn Economic Outlook

Prepared By: Shreeya Kharel

Thailand and its Neighboring Countries

BRIEF HISTORY

•Founded in the 13th century

•Was known as Siam until 1939

•People of Thailand are called ‘Thai’ meaning Free.

•One of the Southeast Asian country never to have been colonized.

•King Rama I established Bangkok as the capital in 1782.

DEMOGRAPHICS

Population:65.28 Millions(2007) Population growth rate: 0.64% (2008 est.) Literacy Rate: 92.6 (2007) % Religions: Buddhism- 94.6%, Islam- 4.6%,

Christianity- 0.7%, Hinduism- 0.1%, other- 0.1% (2000)

Language: Thai, English (secondary language), Mandarin, Vietnamese, ethnic and regional dialects.

Thai Food

http://www.youtube.com/watch?v=sswbeMR42lY

Snapshot of the Economyas of 2007

Economic Indicators Units

1. RGDP (In USD Billions) 5194

2. Real Growth rate 4.8%

3. Inflation Rate 2.2%

4. Population (In Millions) 65.74

5. Population below poverty line 10%

6. Literacy Rate 92.6%

7. Unemployment Rate 1.4%

8. GDP Per Capita (PPP) (In USD) 8000

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

0

10

20

30

40

50

60

70

80

Population

Thailand

Year(1980-2013) *Source:ADB

Per

sons

in m

illio

ns

Political Structure

1997 ASIAN Crisis

The failure to dampen overheating pressures that had become increasingly evident in Thailand and many other countries in the region and were manifested in large external deficits and property and stock market bubbles.

Maintenance of pegged exchange rate regimes for too long, which encouraged external borrowing and led to excessive exposure to foreign exchange risk.

Thailand During the Asian Crisis

Thailand was no exception when Asia was hit by the financial crisis in 1996.

From 1978-1997 Thai currency was pegged. Thailand's difficulties resulted from its earlier

economic success. Strong growth, averaging almost 10 percent per year from1985-1996.

Thailand GDP fell to -10%. Thai Bhat devalued immensely. 56 BHT for 1$ By 2003 Thailand had recovered, paid back its

debt to the IMF.

2006 Thailand Coup 2005: General Election. People

were not happy with the outcome. Corruption let to the election winner.

2006:Significant pressure from corruption allegations.

Call for a snap election. The opposition boycotted the elections.

Pressure continued to build, leading to a military coup on 19 September 2006.

First non-constitutional change of government in fifteen years.

Right now the country is under the state of emergency. Military law in-forced.

ThailandProtest against the current government

http://edition.cnn.com/2008/WORLD/asiapcf/09/01/thailand.protests.ap/index.html#cnnSTCVideo

http://www.youtube.com/watch?v=Vue9OIy9vVE

* Source: CNN

Introducing ASEAN-5

ASEAN: Association of East Asian Nations Founded in 1967. Original Members: Indonesia, Malaysia,

Philippines, Singapore and Thailand New Members: Brunei, Cambodia, Laos,

Myanmar and Vietnam. ASEAN Goal: Accelerate Economic Growth,

Social Progress and Cultural Development, Promote Regional Peace and Stability under the guidelines of the UN.

RGDP Growth 2003 2004 2005 2006 2007

Indonesia

4.8 5.1 5.7 5.5 6.3Malaysia

5.8 6.8 5.3 5.7 6.3Philippines

4.9 6.3 4.9 5.4 7.1Thailand

7.1 6.3 4.5 5.1 4.7Singapore

3.5 8.9 7.2 8.1 7.7

Real GDP Growth Rate: ASEAN-5

-15

-10

-5

0

5

10

15

Real GDP Growth (1980-2013)

IndonesiaMalaysiaPhilippinesThailandSingapore

Year *Source:

IMF

Perc

en

t C

han

ge(%

)

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

0

10000

20000

30000

40000

50000

60000

70000

80000

GDP Per Capita (PPP)

IndonesiaMalaysiaPhilippinesThailandSingapore

Year *Source:IMF

US

D($

)

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

-10

0

10

20

30

40

50

60

70

Inflation (1980-2013)

IndonesiaMalaysiaPhilippinesThailandSingapore

Year *Source:IMF

Infl

atio

n A

nnua

l %

ASEAN-5 Market Size by CountryPotential for development

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

0

10

20

30

40

50

60

70

80

Export and Import (% of GDP)

Exports of goods and services (% of GDP) Imports of goods and services (% of GDP)

Year (1980- 2007) *Source:World Bank

% o

f G

DP

Export and Import

Key Export Products %

1. Machinery 13.4

2.Electrical Apparatus 12.7

3.Electrical Appliances 8.8

4.Vehicles parts & accessories

6.0

Key Import Products %

1. Fuel & Lubricants 13.9

2. Minerals & Metal Products

13.9

3. Electronic Parts: Industrial

11.7

Machinery, Tools. 10.1Key Export Partners %

1. U.S.A 12.6

2. Japan 11.9

3. China 9.7

4. Singapore 6.3

Key Import Partners %

1. Japan 20.3

2. China 11.6

3. U.S.A 6.8

4. Malaysia 6.2

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

0

1000000000

2000000000

3000000000

4000000000

5000000000

6000000000

7000000000

8000000000

9000000000

10000000000

FDI Inflow

Thailand

Year (1980-2006) *Source:World Bank

US

D($

)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070

1000

2000

3000

4000

5000

6000

7000

8000

9000

FDI Outflow

FDI Outflow

Year (1990-2007) * Source: ADB

US

D I

n M

illio

ns

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

0

10

20

30

40

50

60

Composition of GDP :THAILAND

Agriculture, value added (% of GDP) Industry, value added (% of GDP) Services, etc., value added (% of GDP)

Year(1980-2007) *Source: World Bank

% o

f G

DP

Val

ue A

dded

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Unemployment Rate

Thailand

Year(1990-2007) *Source: ADB

(%)

Exchange Rate

Foreign Denomination Thailand Bhat (THB)

1 USD($) 35.04

1 Yen(¥) 0.35

1 Euro (€) 45.48

1 Pound (£) 55.80

*The exchange rate market can be quite volatile and predicting future rates accurately is not easy.

*The Thailand Bhat has been slowly appreciating against the USD over the years which means that the the purchasing power of the Thailand Bhat had increased.

Other Economic Indicators

Economic Indicators Rankings

1. Economic Openness 63.5

2. GINI Index 42 (Medium)

3. Corruption Perception Index (CPI)

3.3 on a scale of 10. USA: 7.2

Production Efficiency

The economic prosperity comes not only from government programs but also from entrepreneurial inspiration – productivity.

Policies to Affect the Saving Rate Policies to Raise the Rate of Productivity

Growth. (Technology, HD, R&D, Education, Health Care)

Establish the right institutions. Use its resources efficiently.

*Source: Prof. Yu (WSU)

Solow Model: Where does Thailand Stand?

Thailand as a Whole

ASEAN-5 may have been overlooked after the financial crisis in 1997.

Attractive alternative destination for business, trade, investment and tourism.

Economic growth post financial crisis (1997) had picked up significantly, until 2006 due to political imbalance in the country.

Highly educated workers, reasonably competitive wage rate.

Strong agricultural sector. Emerging industrial sector.

Thailand as a Whole (Contd.)

In conclusion, Thailand holds a promising base for manufacturing and agricultural sectors supported by its abundant labor force, reasonable wage, highly educated human capital and good infrastructure.

Rising per capita means growing middle class with higher spending power.

The regions long term prospects will be further enhanced by its openness to trade and foreign investment-friendly policies.

Conclusion

With economic support from various countries and economic integration projects which are underway such as AFTA (ASEAN Free Trade Area), Chiang Mai Initiative, Thailand has potential to grow from a developing nation towards a developed nation.