Thailand - Economy

Economy

Thailand is an emerging economy and considered as a newly industrialized country. After enjoying the world's highest growth rate from 1985 to 1996 – averaging 12.4% annually – increased pressure on Thailand's currency, the baht, in 1997, the year in which the economy contracted by 1.9% led to a crisis that uncovered financial sector weaknesses and forced the Chavalit Yongchaiyudh administration to float the currency, however, Prime Minister Chavalit Yongchaiyudh was forced to resign after his cabinet came under fire for its slow response to the crisis. The baht was pegged at 25 to the US dollar from 1978 to 1997, however, the baht reached its lowest point of 56 to the US dollar in January 1998 and the economy contracted by 10.8% that year. This collapse prompted the Asian financial crisis.

Thailand's economy started to recover in 1999, expanding 4.2% and 4.4% in 2000, thanks largely to strong exports. Growth (2.2%) was dampened by the softening of the global economy in 2001, but picked up in the subsequent years owing to strong growth in Asia, a relatively weak baht encouraging exports and increasing domestic spending as a result of several mega projects and incentives of Prime Minister Thaksin Shinawatra, known as Thaksinomics. Growth in 2002, 2003 and 2004 was 5–7% annually. Growth in 2005, 2006 and 2007 hovered around 4–5%. Due both to the weakening of the US dollar and an increasingly strong Thai currency, by March 2008, the dollar was hovering around the 33 baht mark.

Thailand exports an increasing value of over $105 billion worth of goods and services annually. Major exports include Thai rice, textiles and footwear, fishery products, rubber, jewellery, cars, computers and electrical appliances. Thailand is the world's no.1 exporter of rice, exporting more than 6.5 million tons of milled rice annually. Rice is the most important crop in the country. Thailand has the highest percentage of arable land, 27.25%, of any nation in the Greater Mekong Subregion. About 55% of the arable land area is used for rice production.

Substantial industries include electric appliances, components, computer parts and cars, while tourism in Thailand makes up about 6% of the economy. Prostitution in Thailand and sex tourism also form a de facto part of the economy. Cultural milieu combined with poverty and the lure of money have caused prostitution and sex tourism in particular to flourish in Thailand. One estimate published in 2003 placed the trade at US$4.3 billion per year or about 3% of the Thai economy. According to research by Chulalongkorn University on the Thai illegal economy, prostitution in Thailand in the period between 1993 and 1995, made up around 2.7% of the GDP. It is believed that at least 10% of tourist dollars are spent on the sex trade.

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 30.90/USD as of 26 April 2012.

Thailand has a GDP worth US$602 billion (on a purchasing power parity (PPP) basis). 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.

Between 1997 and 2010, 4,306 mergers & acquisitions with a total known value of USD$81 billion with the involvement of Thai firms have been announced. The year 2010 was a new record in terms of value with USD$12 billion of transactions. The largest transaction with involvement of Thai companies has been: PTT Chemical PCL merged with PTT Aromatics and Refining PCL valued at USD$3.8 billion in 2011.

Forty-nine percent of Thailand's labor force is employed in agriculture, however this is less than the 70% employed in 1980. Agriculture has been experiencing a transition from labour intensive and transitional methods into a more industrialised and competitive sector. Between 1962 and 1983, the agricultural sector grew by 4.1% on average a year and continued to grow at 2.2% between 1983 and 2007. However, the relative contribution of agriculture to GDP has declined while exports of goods and services have increased. As of December 2011, the unemployment rate in Thailand stands at 0.4%.

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 IMF has predicted that the Thai economy will rebound strongly from the low 0.1% GDP growth in 2011 to 5.5% in 2012, 7.5% in 2013 thanks to the accommodative monetary policy of the Bank of Thailand and a package of fiscal stimulus measures by the incumbent Yingluck Shinawatra government.

Thailand generally uses the metric system but traditional units of measurement for land area are used, and imperial measure (feet, inches etc.) are occasionally used with building materials such as wood and plumbing sizes. Years are numbered as B.E. (Buddhist Era) in education, the civil service, government, and on contracts and newspaper datelines; in banking, however, and increasingly in industry and commerce, standard Western year (Christian or Common Era) counting prevails.