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 33.00/USD.
Thailand has a GDP worth $8.5 trillion Baht (on a purchasing power parity (PPP) basis), or US$627 billion (PPP). 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.
Most of Thailand's labour force is working in agriculture. However, the relative contribution of agriculture to GDP has declined while exports of goods and services have increased.
Tourism revenues are on the rise. 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 incumbent elected civilian administration under Samak Sundaravej in power since January 29, 2008 states that the economy will have grown by 5.5% to 6% by the end of 2008. Due to rising oil and food prices, the annual inflation rate for 2008 shot up to 9.2% in July; a 10-year high, but it will unlikely reach double digit rates later this year as oil and food prices are stabilizing.
Before the 1997 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 of Thailand is an advocate of the free enterprise system. Certain services, such as power generation, transportation, and communications, are state-owned and operated, but the government has considered 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 4% of the labour 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.
49% of Thailand's labour force is employed in agriculture. 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
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.
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 annually since then. 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 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 a more comprehensive FTA to be agreed upon 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 in 2001).
Bangkok is the most prosperous parts of Thailand, and heavily dominates the national economy, with the infertile northeast being 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 disparities, which have been exacerbated by rapid economic growth in 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 the Chiang Mai area. Despite much talk of other regional developments, these 3 regions and other tourist zones still 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.