Economy of Thailand
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]
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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]
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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]
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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]
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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.
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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)
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