Thailand Economy Research

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With a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies, and strong export industries, Thailand enjoyed solid growth from 2000 to 2007 - averaging more than 4% per year - as it recovered from the Asian financial crisis of 1997-98. Thai exports are mostly machinery and electronic components, agricultural commodities, and jewelry - continue to drive the economy, accounting for more than half of GDP. The global financial crisis of 2008-09 severely cut Thailand's exports, with most sectors experiencing double-digit drops. In 2009, the economy contracted 2.4%. In 2010, Thailand's economy expanded 7.8%, its fastest pace since 1995, as exports rebounded from their depressed 2009 level.

Steady economic growth at just below 4% for most of 2011 was interrupted by historic flooding in October and November in the industrial areas north of Bangkok, crippling the manufacturing sector and leading to a revised growth rate of 1.5% for the year. The industrial sector is poised to recover however, and the economy will probably grow between 4% and 5%. Nowadays, the inflation rate in Thailand is 4.1% , ranking 99 in the world. According to the government budget report in 2011, the expenditures is $74.99 billion, which is $9.78 billion more than government revenues. In other words, Thai government suffers a budget deficit. [pic 10]

This is the graph of Thai’s exchange rate related to U.S dollars in the past 10 years. From the graph, we can tell that the exchange rate gradually goes down from 2002 to 2012 and the current exchange rate is $1=30.88 Thai Baht. We find two main reasons why Thai Baht becomes more and more appreciate. First of all, in recent year, because of Asia’s high interest rate, an increasing number of foreign investor chooses to do investments in Asia, including Thailand. Thus, the Thailand’s exports increase and the prices of stocks and bonds rise. All of these promote Thai Baht to appreciate. The other reason is that in order to rescue its own economy, U.S tends to decrease its exchange rate related to some developing countries’ currencies to decrease imports and develop domestic goods and services. The depreciation of US dollars will lead to the local goods and services in the US being more competitive to countries which have low-cost labor and productivity.

Part eight:

Basically, the economic growth in Thailand in the past 20 years is stable except the period of Asian financial crisis in the end of 20th century and the period of the Recession in recent years. It's obvious that Thailand's economic growth rate shockingly decreased in 1997 and 1998. According to the data from world bank database, in 1998 Thailand suffered the lowest economic growth rate, which is -11.6.

the most recent report shows that based on nominal exchange rate，the level of per capita income of Thailand is nearly 10% of the U.S. level, and in terms of PPP, Thailand's level of per capita income is around 20% of the U.S. level, which is a double of the nominal exchange rate level. It implies that Thailand's domestic goods are undervalued.[pic 11][pic 12]

Work Cited

- Indexmundi:

http://www.indexmundi.com/thailand/

- World bank: http://databank.worldbank.org/Data/Views/VariableSelection/SelectVariables.aspx?source=World Development Indicators and Global Development Finance

- Eiu.com:

http://0-country.eiu.com.ignacio.usfca.edu/Thailand

- Nationmaster:

http://www.nationmaster.com/country/th/Age_distribution

- United States Census Bureau:

http://www.census.gov/population/international/data/idb/informationGateway.php

- Gapminder

http://www.gapminder.org/world/

Appendix[pic 13]

At the very beginning, in 1992, Thailand and U.S almost share the same number of children/woman, which is about 2. However, the US keeps the total fertility. It even increases to 2.2 children per woman. In contrast, Thailand’s total fertility gradually decreases to 1.6 children per woman after 1992. The gap is 0.6 children per woman in 2010. Therefore, Thailand is diverging with the US in total fertility sector. [pic 14]

In 1992, there is a large difference of PPP between the US and Thailand. The income/ person inflation adjusted in the US is over 30,000 while in Thailand, it is just above 4,000. From 1992 to 2010, data show the US remains stable in this sector. Thailand begins to increase to about 10,000 by the end of 2010. In a word, there is a slight convergence trend with the US.

[pic 15]

In 1992, the child mortality (0-5 year olds dying/1000 born) is very high, about 30 children die from 1000 new born. Differently, as a developed country, only 10 children die per 1000 born in the US. During 8 years, the child mortality in both counties has decreased. Because Thailand’s rapid is faster than the US’, the gap is narrowed to about 10 children dying among 1000 new born. So, there is a convergence of these two countries.[pic 16]

In the last 20 years, life expectancy in the US and Thailand don’t change a lot. Also, there are close to each other. There is a convergence.

Unfortunately, since the data of part 5 and part 6, which are poverty, income, inequality and productivity, are not available at Gapminder. Therefore, we cannot compare two countries in these sectors.[pic 17]

Because cell phones are not popularized all over the world. The number of using cell phones are resemble in two countries. Few people use cell phones at that time. During these 20 years, there is a stable increase of cell phone users in the US. However, there is no change in Thailand until 2000. number of cell phone users in Thailand increase dramaticly after 2000, which lead to both countries sharing 80 cell phone users among 100 people. Although the trends are different, there is still a convergence in two countries.

Similarly, in 1992, the number of internet users are about zero in both countries. During 20 years, the internet users increase to 80 per 100 people in the US. Although there is onlu 25 internet users amoug 100 people in Thailand, we can tell Thailand is gradually catching up the US’ pace. [pic 18]

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