Economy of Thailand
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| Economy of Thailand | ||||
|---|---|---|---|---|
| Currency | Thai baht (THB) | |||
| Fiscal year | 1 October - 30 September | |||
| GDP per capita | $9,100 (2006 est.) | |||
| GDP by sector | agriculture (10%), industry (44.9%), services (45.2%) (2006 est.) | |||
| Inflation | 5.1% (2006 est.) | |||
| Pop below poverty line | 10% (2004 est.) | |||
| Labour force | 36.41 million (2006 est.) | |||
| Labour force by occupation | agriculture (49%), industry (14%), services (37%) (2000 est.) | |||
| Unemployment | 1.6% (2007 est.) | |||
| Main industries | Automobiles and Automotive parts (11%), Financial Services (9%), Electric appliances and components (8%), Tourism (6%), cement, auto manufacturing, heavy and light industries, appliances, computers and parts, furniture, plastics, textiles and garments, agricultural processing, beverages, tobacco | |||
| Trading Partners | ||||
| Exports | $123.5 billion (2006) | |||
| Main partners | U.S. 15.4%, Japan 13.6%, the People's Republic of China 8.3%,Singapore 6.9%, Hong Kong 5.6%, Malaysia 5.2% (2006) | |||
| Imports | $119.3 billion (2006) | |||
| Main Partners | Japan 22%, the People's Republic of China 9.4%, U.S. 7.4%, Malaysia 6.8%, Singapore 4.6%, (2005) | |||
| Public finances | ||||
| Public debt | $81.6 billion (43.5% of GDP Nominal) (Nov. 2005) | |||
| External debt | $57.83 billion (2006 est.) | |||
| Revenues | $30.2 billion (2004 est.) | |||
| Expenses | $31.94 billion, incl. cap. exp. of $5 billion (2004 est.) | |||
| Economic aid | None | edit | ||
The economy of Thailand is lower middle income industrial developing nation, heavily export-dependent, with exports accounting for 60% of GDP. The exchange rate has reached 37.00/usd (GDP $7.3 trln baht) as of October 26, 2006, for a nominal GDP at market rates of approximately US$ 200 bln. However, due to rapid appreciation in 2007, nominal GDP hovers around $230 bln, slightly smaller than that of Guangdong. This keeps Thailand as the 2nd largest economy in Southeast Asia, after Indonesia, a position it has held for many years. Despite this, Thailand ranks midway in the wealth spread in SouthEast Asia as its 4th richest nation per capita, after Singapore, Brunei, and Malaysia. It is also an anchor economy for the neighboring least developed countries of Laos, Burma, and Cambodia. Thailand's recovery from the 1997-98 Asian financial crisis relied on exports, largely on external demand. Thailand has a strong automotive export industry along with electronic goods manufacturing which has helped to strengthen the baht. Agriculture has always been traditional income generation, but has declined in relative terms in recent years as overall exports increased. Tourism has been on the rise as well, but not without negative consequences. With the instability surrounding the recent coup, however, the GDP growth of Thailand has settled at around 4% from previous highs of 5-7% under the previous administration, as locals as well as foreign companies hold investment back due to political uncertainty.
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[edit] History
Thailand had historically been a tiger economy with growth rates of 9% or more annually from the late 1970s to 1996, with periodic slowdowns mirroring the world or regional economy. However, after the 1997-8 currency crisis, Thailand was impoverished once again, and it wasn't until 2001 that Thailand regained momentum over the baht and economy.
The Thaksin government took office in February 2001 with the intention of stimulating domestic demand 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 domestic stimulus with Thailand's traditional promotion of open markets and foreign investment. This set of policies are popularly known as Thaksinomics. Weak export demand held 2001 GDP growth to 1.9%. In 2002/03/04, however, domestic stimulus and export revival fuelled a better performance, with real GDP growth at 5.3%, 7.1% and 6.3% respectively. However, in 2005, under rising oil prices and inflation, severe droughts and floods, the Southern Thailand Insurgency reaching a high, uncertainty of the future of Thaksin's government and the tourism aftershocks of the Indian Ocean Earthquake Tsunami on December 26th 2004 economic growth slumped to 4.5%. In 2006 the economy sped up a bit under strong export growth, however the military Coup d'état on September 19th 2006 caused economic growth to stagnate into 2007 once again.
[edit] Macro-economic trend
This is a chart of trend of gross domestic product of Thailand at market prices estimated by the International Monetary Fund with figures in millions of Thai Baht.
| Year | Gross Domestic Product | US Dollar Exchange | Inflation Index (2000=100) |
|---|---|---|---|
| 1980 | 662,482 | 20.47 Baht | 41 |
| 1985 | 1,056,496 | 27.15 Baht | 53 |
| 1990 | 2,191,100 | 25.58 Baht | 64 |
| 1995 | 4,186,212 | 24.91 Baht | 81 |
| 2000 | 4,922,731 | 40.11 Baht | 100 |
| 2005 | 6,924,273 | 41.02 Baht | 111 |
For purchasing power parity comparisons, the US Dollar is exchanged at 22→.34 Baht only.
Before the financial crisis, the Thai economy had years of manufacturing-led economic growth--averaging 9.4% for the decade up to 1996. Relatively abundant and inexpensive labour and natural resources, fiscal conservatism, open foreign investment policies, and encouragement of the private sector underlay the economic success in the years up to 1997. The economy is essentially a free enterprise system. Certain services, such as power generation, transportation, and communications, are state-owned and operated, but the government is considering privatizing them in the wake of the financial crisis.
The Royal Thai Government welcomes foreign investment, and investors who are willing to meet certain requirements can apply for special investment privileges through the Board of Investment. To attract additional foreign investment, the government has modified its investment regulations.
The organized labour movement remains weak and divided in Thailand; only 3% of the work force is unionized. In 2000, the State Enterprise Labour Relations Act (SELRA) was passed, giving public sector employees similar rights to those of private sector workers, including the right to unionize.
Roughly 49% of Thailand's labour force is employed in agriculture.[citation needed] Rice is the country's most important crop; Thailand is the #1 exporter in the world rice market. Other agricultural commodities produced in significant amounts include fish and fishery products, tapioca, rubber, grain, and sugar. Exports of processed foods such as canned tuna, pineapples, and frozen shrimp are on the rise.
Thailand's increasingly diversified manufacturing sector made the largest contribution to growth during the economic boom. Industries registering rapid increases in production included computers and electronics, garments and footwear, furniture, wood products, canned food, toys, plastic products, gems, and jewelry. High-technology products such as integrated circuits and parts, electrical appliances, and vehicles are now leading Thailand's strong growth in exports.
[edit] Industries
[edit] Agriculture, forestry, and fishing
In 2006 agriculture, forestry, and fishing contributed less than 10 percent of gross domestic product (GDP) but employed about 39 percent of the workforce. Thailand is the world’s leading exporter of rice and a major exporter of shrimp. Other agricultural products include coconuts, corn, rubber, soybeans, sugarcane, and tapioca. In 1985 Thailand officially designated 25 percent of the nation’s land area for protected forests and 15 percent for timber production. Protected forests have been set aside for conservation and recreation, while production forests are available for the forestry industry. Between 1992 and 2001, exports of logs and sawn timber increased from 50,000 cubic meters to 2 million cubic meters per year. The regional avian flu outbreak led to a contraction of Thailand’s agricultural sector during 2004, and the tsunami disaster of December 26, 2004, devastated the west coast fisheries industry. In 2006 agricultural GDP was estimated to have contracted by 10 percent.[1]
[edit] Mining and minerals
Thailand’s major minerals include fluorite, gypsum, lead, lignite, natural gas, rubber, tantalum, tin, and tungsten. The tin mining industry has declined sharply since 1985, and Thailand has gradually become a net importer of tin. As of 2003, the main mineral export was gypsum. Thailand is the world’s second largest exporter of gypsum after Canada, even though government policy limits gypsum exports to prevent price cutting. In 2003 Thailand produced more than 40 types of minerals with an annual value of about US$740 million. However, more than 80 percent of these minerals were consumed domestically. In September 2003, in order to encourage foreign investment in the mining industry, the government relaxed severe restrictions on mining by foreign companies and reduced mineral royalties payable to the state.[1]
[edit] Industry and manufacturing
In 2006 industry contributed 44.9 percent of gross domestic product (GDP) but employed only 23 percent of the workforce. This relationship is the opposite of the one applying to agriculture. Industry expanded at an average annual rate of 3.4 percent during the 1995–2004 period. The most important subsector of industry is manufacturing, which accounted for 34.5 percent of GDP in 2004. Thailand is becoming a center of automobile manufacturing for the Association of Southeast Asian Nations (ASEAN) market. By 2004 automobile production had reached 930,000 units, more than twice as much as in 2001. Two automakers active in Thailand are Toyota and Ford. The expansion of the automotive industry has been a boon for domestic steel production. Thailand’s electronics industry faces competition from Malaysia and Singapore, while its textile industry faces competition from China and Vietnam.[1]
[edit] Energy
In 2004 Thailand’s total energy consumption was estimated at 3.4 quadrillion British thermal units, representing about 0.7 percent of total world energy consumption. Thailand is a net importer of oil and natural gas, but the government is promoting the use of ethanol to reduce imports of petroleum and the gasoline additive methyl tertiary butyl ether. In 2005 daily oil consumption of 838,000 barrels per day (133,200 m³/d) exceeded domestic production of 306,000 barrels per day (48,700 m³/d). Thailand’s four oil refineries have a combined capacity of 703,100 barrels per day (111,780 m³/d). Thailand’s government is considering establishing a regional oil processing and transportation hub, serving the needs of south-central China. In 2004 natural gas consumption of 1,055 billion cubic feet (29,900,000,000 m³) exceeded domestic production of 790 billion cubic feet (22,000,000,000 m³). Also in 2004, estimated coal consumption of 30.4 million short tons exceeded coal production of 22.1 million short tons. As of January 2007, proven oil reserves totaled 290 million barrels (46,000,000 m³), and proven natural gas reserves were 14.8 trillion cubic feet (420 km³). In 2003 recoverable coal reserves totaled 1,492.5 million short tons.[1]
In 2005 Thailand consumed about 127 billion kilowatt-hours of electricity. Electricity consumption rose by 4.7 percent in 2006 to 133 billion kilowatt-hours. According to the state electricity utility, the Electricity Generating Authority of Thailand, power consumption by residential consumers has been increasing because of more favorable rates given to residential customers over the industry and business sectors. Thailand’s state-controlled electric utility and petroleum monopolies are undergoing restructuring. Services: In 2006 the services sector, which ranges from tourism to banking and finance, contributed 45.2 percent of gross domestic product (GDP) and employed 38 percent of the workforce.[1]
[edit] Services
In 2006 the services sector, which ranges from tourism to banking and finance, contributed 45.2 percent of gross domestic product (GDP) and employed 38 percent of the workforce.[1]
[edit] Tourism
Tourism makes a larger contribution to Thailand’s economy (typically about 6 percent of gross domestic product) than that of any other Asian nation. In 2004 some 11 million tourists visited Thailand. However, terrorism in southern Thailand and in Indonesia and natural disasters, most notably the December 2004 tsunami, have taken their toll on tourism. One of the negative side effects of Thailand’s tourism industry is a burgeoning sex tourism industry and a related threat from human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS).[1]
[edit] Banking and finance
Dangerous levels of nonperforming assets at Thai banks helped trigger the attack on the Thai baht by currency speculators that led to the Asian financial crisis in 1997–98. By 2003 nonperforming assets had been cut in half to about 30 percent. Despite a return to profitability, however, Thailand’s banks continue to struggle with the legacy of the financial crisis in the form of unrealized losses and inadequate capital. Therefore, the government is considering various reforms, including establishing an integrated financial regulatory agency that would free up the Bank of Thailand to focus on monetary policy. In addition, the Thai government is attempting to strengthen the financial sector through the consolidation of commercial, state-owned, and foreign-owned institutions. Specifically, the government’s Financial Sector Reform Master Plan, which was first introduced in early 2004, provides tax breaks to financial institutions that engage in mergers and acquisitions. The reform program has been deemed successful by outside experts. As of 2007, there were three state-owned commercial banks and five state-owned specialized banks, 15 Thai commercial banks, and 17 foreign banks in Thailand.[1]
The Bank of Thailand sought to stem the flow of foreign funds into the country in December 2006. This led within one day to the largest drop in stock prices on the Stock Exchange of Thailand since the 1997 Asian financial crisis. The massive selling by foreign investors amounted more than US$708 million.[1]
[edit] Labor
Thailand’s labor force was estimated at 35.5 million in 2006. About 39 percent were employed in agriculture, 38 percent in services, and 23 percent in industry. In 2005 women constituted 48 percent of the labor force and held an increasing share of professional jobs. Less than 4 percent of the workforce is unionized, but 11 percent of industrial workers and 50 percent of state enterprise employees are unionized. Although laws applying to private-sector workers’ rights to form and join trade unions were unaffected by the September 19, 2006, military coup and its aftermath, workers who participate in union activities continue to have inadequate legal protection. According to the U.S. Department of State, union workers are inadequately protected. In 2006 Thailand’s unemployment rate was 2.1 percent of the labor force.[1]
[edit] External trade
The United States is Thailand's largest export market and second-largest supplier after Japan. While Thailand's traditional major markets have been North America, Japan, and Europe, economic recovery among Thailand's regional trading partners has helped Thai export growth (5.8% in 2002). Recovery from the financial crisis depended heavily on increased exports to the rest of Asia and the United States. Since 2005, the rapid ramp-up in export of automobiles of Japanese makes (esp. Toyota, Nissan, Isuzu) has helped to dramatically improve the trade balance, with over 1 million cars produced last year. As such, Thailand has joined the ranks of the world's top ten automobile exporting nations.
Machinery and parts, vehicles, electronic integrated circuits, chemicals, crude oil and fuels, and iron and steel are among Thailand's principal imports. The recent increase in import levels (4.6% in 2002) reflects the need to fuel the production of high-technology items and vehicles.
Thailand is a member of the World Trade Organization (WTO) and the Cairns Group of agricultural exporters. Thailand is part of the ASEAN Free Trade Area (AFTA). Thailand has actively pursued free trade agreements. A China-Thailand Free Trade Agreement (FTA) commenced in October 2003. This agreement was limited to agricultural products, with more comprehensive FTA to be agreed by 2010. Thailand also has a limited Free Trade Agreement with India, which commenced in 2003; and a comprehensive Australia-Thailand Free Trade Agreement which started 1 January 2005. Thailand started free trade negotiations with Japan in February 2004, and an in-principle agreement was agreed in September 2005. Negotiations for a US-Thailand Free Trade Agreement are underway, with the fifth round of meetings held in November 2005.
Tourism contributes significantly to the Thai economy, and the industry has benefited from the Thai baht's depreciation and Thailand's stability. Tourist arrivals in 2002 (10.9 million) reflected a 7.3% increase from the previous year (10.1 million).
Bangkok and its environs are the most prosperous parts of Thailand, and heavily dominate the national economy, with the infertile northeast the poorest. An overriding concern of successive Thai Governments, and a particularly strong focus of the recently ousted Thaksin government, has been to reduce these regional income differentials, which have been exacerbated by rapid economic growth in and around Bangkok and the financial crisis. Although little economic investment reaches other parts of the country except for tourist zones, the government has been successful in stimulating provincial economic growth in the Eastern Seaboard of Thailand, and perhaps , the Chiang Mai area. Despite much talk of other regional development, these 3 regions and tourist zones dominate the national economy.
Although the economy has demonstrated moderate positive growth since 1999, future performance depends on continued reform of the financial sector, corporate debt restructuring, attracting foreign investment, and increasing exports. Telecommunications, roadways, electricity generation, and ports showed increasing strain during the period of sustained economic growth and may pose a future challenge. Thailand's growing shortage of engineers and skilled technical personnel may limit its future technological creativity and productivity.
[edit] Other statistics
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Investment (gross fixed): 28.7% of GDP (2006 est.)
Household income or consumption by percentage share:
- lowest 10%: 2.8%
- highest 10%: 32.4% (1998)
Distribution of family income - Gini index: 51.1 (2002)
Agriculture - products: rice, cassava (tapioca), rubber, corn, sugarcane, coconuts, soybeans
Industries: tourism, textiles and garments, agricultural processing, beverages, tobacco, cement, light manufacturing such as jewelry, electric appliances and components, computers and parts, integrated circuits, furniture, plastics, world's second-largest tungsten producer, and third-largest tin producer
Industrial production growth rate: 6% (2006 est.)
Electricity:
- production: 67.7 billion kWh (2004)
- consumption: 116.2 billion kWh (2004)
- exports: 372 million kWh (2004)
- imports: 3.388 billion kWh (2004)
Electricity - production by source:
- fossil fuel: 91.3%
- hydro: 6.4%
- other: 2.4% (2001)
- nuclear: 0%
Oil:
- production: 230,000 barrels per day (37,000 m³/d) (2005 est.)
- consumption: 785,000 barrels per day (124,800 m³/d) (2001 est.)
- exports: NA
- imports: NA
- proved reserves: 583 million barrels (95,000,000 m³) (November 2003)
Natural gas:
- production: 22,280,000,000 m³ (2003 est.)
- consumption: 29,150,000,000 m³ (2003 est.)
- exports: 0 m³ (2001 est.)
- imports: 5,200,000,000 m³; (2001 est.)
- proved reserves: 377,700,000,000 m³ (November 2003)
Current account balance: minus US$899.4 million (2006 est.)
Exports - commodities: textiles and footwear, fishery products, rice, rubber, jewelry, automobiles, computers and electrical appliances
Imports - commodities: capital goods, intermediate goods and raw materials, consumer goods, fuels
Reserves of foreign exchange and gold: $100 billion (February 2008)
Exchange rates: baht per US dollar - 30.315(2007), 40.5348 (2004), 41.4846 (2003), 42.9601 (2002), 44.4319 (2001), 40.1118 (2000)
[edit] See also
[edit] External links
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