The Thai economy is export-dependent, with exports of goods and services equivalent to over 70% of GDP in 2008. Thailand's recovery from the 1997-1998 Asian financial crisis (which brought a double-digit drop in GDP) relied largely on external demand from the United States and other foreign markets. From 2001-2006, the administration of former Prime Minister Thaksin embraced a "dual track" economic policy that combined domestic stimulus programs with Thailand's traditional promotion of open markets and foreign investment. Real GDP growth strengthened sharply from 2.2% in 2001 to 7.1% in 2003 and 6.3% in 2004. In 2005-2007, economic expansion moderated, averaging 4.5% to 5.0% real GDP growth, due to domestic political uncertainty, rising violence in Thailand's four southernmost provinces, and repercussions from the devastating Indian Ocean tsunami of 2004. Thailand's economy in 2007 relied heavily on resilient export growth (at a 17.3% annual rate), particularly in the automobile, petrochemicals, and electronics sectors. Persistent political uncertainty and the global financial crisis in 2008 weakened Thailand’s economic growth by reducing domestic and international demand for both its goods and services (including tourism). Due to minimum exposure to toxic assets, Thai banks have limited direct impact from the global financial crisis. Nonetheless, Thai economic growth slowed to 2.6% in 2008, with fourth quarter growth dropping below zero. In 2009, the contraction continued. First quarter GDP was down by 7.1% year-on-year. To offset weak external demand and to shore up confidence, the Abhisit administration introduced two stimulus packages worth $43.4 billion. The government projected that the Thai economy would be down 3.5% for the year but would see positive growth of 2.5% in 2010.
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 of Prime Minister Abhisit has promised to look for ways to expand investment opportunities, focusing more on green technology/manufacturers.
The organized labor movement remains weak and divided in Thailand; less than 2% of the work force is unionized. In 2000, an amended State Enterprise Labor Relations Act (SELRA) was passed, giving public sector employees similar rights to those of private sector workers, including the right to unionize. In 2009, efforts to streamline the State Railway authority met resistance from the powerful railways union, including a short strike which halted trains nationwide, showing that organized labor still has some potential political clout.
Roughly 40% of Thailand's labor force is employed in agriculture (data based on Bank of Thailand.) Rice is the country's most important crop; Thailand is the largest exporter in the world rice market. Other agricultural commodities produced in significant amounts include fish and fishery products, tapioca, rubber, corn, and sugar. Exports of processed foods such as canned tuna, canned pineapples, and frozen shrimp are also significant.
Thailand's increasingly diversified manufacturing sector is the largest contributor to growth. Industries registering rapid increases in production included computers and electronics, furniture, wood products, canned food, toys, plastic products, gems, and jewelry. High-technology products such as integrated circuits and parts, hard disc drives, electrical appliances, vehicles, and vehicle parts are now leading Thailand's growth in exports. Nonetheless, with export growth weakened in 2008 and inflationary pressure becoming less of a concern, the Bank of Thailand loosened monetary policy, allowing the baht to depreciate relative to the dollar to stimulate exports. Machinery and parts, vehicles, electronic integrated circuits, chemicals, crude oil and fuels, and iron and steel are among Thailand's principal imports.
The United States is Thailand's largest export market and third-largest supplier after Japan and China. While Thailand's traditional major markets have been North America, Japan, and Europe, economic recovery among Thailand's regional trading partners has further boosted Thai export growth (21.6% in 2004, 15.0% in 2005, 17.2% in 2006, 17.3% in 2007, and 16.8% in 2008). Export growth has also been high in some of Thailand's non-traditional export markets including India, China, and the Middle East.
Thailand is a member of the World Trade Organization (WTO) and the Cairns Group of agricultural exporters. Tourism contributes significantly to the Thai economy (about 6%). As a result of political protests that closed Bangkok’s airports from late November to early December 2008, tourism figures declined significantly at the end of December, a time when tourism is normally at its peak in Thailand.
Bangkok and its environs are the most prosperous part of Thailand, and the seasonally barren northeast is the poorest. An overriding concern of successive Thai governments has been to reduce these regional income differentials, which have been exacerbated by rapid economic growth in and around Bangkok. The government has tried to stimulate provincial economic growth with programs such as the Eastern Seaboard project and the development of an alternate deep-sea port on Thailand's southern peninsula. It also is conducting discussions with Malaysia to focus on economic development along the Thai-Malaysian border.
Although the economy has demonstrated moderate positive growth in recent years, future performance depends on continued reform of the financial sector, attracting foreign investment, and improving domestic investment and consumption to balance past reliance on exports. Telecommunications, transportation networks, and electricity generation showed increasing strain during the period of sustained economic growth (the projected energy needs of the country exceed current capacity) and may pose a future challenge. Thailand's growing shortage of engineers and skilled technical personnel may limit its future technological creativity and productivity.
Information by U.S. Department of State