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All indicators
show that Thailand’s economy is recovering from its recent skid.
The explosive growth experienced over the late 1980’s and 90’s halted
suddenly in 1997. Thailand was pressured to float the Thai baht
in July, which resulting in its rapid devaluation virtually shutting
down the economy. The banking and finance industries collapsed,
while the property market, as well as export and import based industries
suffered great damage. Companies overextended with debt payable
in U.S. dollars suddenly found themselves unable to repay principal
or interest at the 50% premium and defaulted. Banks and finance
companies were left with collateral largely held in a collapsing
property market and weak bankruptcy laws. Crippled banks were unable
to lend to exporters keen to capitalize on the demand for suddenly
competitively priced Thai products, while exporters and manufacturers
dependant upon imported components saw prices jump dramatically.
With the help
of a US$ 17 billion IMF stimulus package, large amounts of foreign
investment and a slowly recovering financial sector, Thailand’s
economy is growing again and consumer and investor confidence has
returned. Thailand’s exports have risen above past levels, measured
in U.S. dollars, with imports picking up as well. A large trade
surplus and current account surplus has helped to increase the levels
of foreign reserves in the country, stabilizing the baht and interest
rates in the Kingdom.
Thailand has long
been famous as an exporter of food and traditional commodities,
and while their importance is still great, high technology exports
have become the largest and fasting growing part of the economy.
Large investments from multinationals have helped Thailand to become
an important Southeast Asian production center for many manufacturers
of computers, electronic integrated circuits, automobiles, auto
parts and air conditioners. The government’s initiatives to promote
foreign investments, improved business infrastructures and emerging
local entrepreneurs and businesses have helped Thailand to expand
beyond its traditional export products.
Thailand’s traditional
economy has not been ignored and the country remains a key figure
in the export of many commodities and products associated with South
Asia. The Kingdom is the No 1 rice exporter in the world and, in
fact, the only net food exporter in Asia. It also leads the world
in exports of tapioca, rubber, canned pineapple and frozen shrimp
while being a major player in sugar, corn and poultry. A vibrant
agro-industry sector has emerged with the emphasis on adding value
to these products before they are exported.
Thailand’s economic
future looks bright, as it has established itself as an emerging
base for high technology in the region while remaining able to capitalize
on its wealth of natural resources and agricultural advantages.
Scheduled increases in the trade liberalization of the ASEAN region,
combined with increases in foreign investment, infrastructure and
the re-capitalization of its financial sector will enable Thailand
to continue on its path to prosperity.
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