group 4 section 1 thailand.pptx

8/11/2019 Group 4 Section 1 Thailand.pptx

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Section 1: Group 4

Swati Sejal Itisha Ishan Apoorv Sheikh Sh


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Economic History

1950-1973 :Period that Thailand laid foundations forthe subsequent high and stable economic growth.

1974-1985: The period of macroeconomicuncertainty, hardship and difficult adjustments.

1986-1996 : The decade of extraordinary high growth.

1997-2006 : The time of economic crisis.

2006 to current year


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1950-1973A period of Institutionalization leading to High

Stable Growth

Challenge- Macroeconomic Management, Politics and Institutions

The economy was recovering from the damages of 2ndworld war of 1950s.It was eccenand tried to serve many goals at the same time.

The nationalism the arouse post the triumph of the communist in china laid foundatiobusiness- Bureaucrat, relationship that exist through out Thailand's economic history

Economic mismanagement and repression against Chinese businesses led to poor maperformance, thus GDP grew by 3.9% per annum (1951-1958).

1958 Field Marchal, took over -> budget bureau (1959), fiscal policy office (1961), andnational economic development board (1959)

High priority was given to development projects primarily infrastructure construction

Policy shift towards a more investment friendly environment, to both domestic and fo

Role of military -> new industrial promotion act(1959)


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1974-1985Political uncertainty and economic turbulenc

ChallengeMaintaining competitive position of Thailand

Thailand suffered from economic issuesfalling American investment, budget deficits, wrecession (1980s), oil spikes and inflation. Domestic politics was also unstable.

To deal with these issues -> from 1981-1984 Thai baht was devalued three times. At thePlaza Accord -> Baht was devalued further -> Exports became competitive and Thailand attractive destination for FDI -> Public sector struggled -> Private sector flourished.

Switched from fixed exchange rate system to multiple basket peg system.

GDP growth rate 5.4% between 1980-1984.

Structural changes in production. Agriculture suffered due to -> declining world prices aforest area.

Change in policy from import substitution to export-promotion. Enactment of New InvePromotion Act -> factors like unfavorable world economy, over-valuation of baht 1981-1fiscal policy since 1982 limited the success of the act.


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1986-1996Economic Boom, Speculation and bubble

Economic boom was due to external reasons like ->Post Plaza Accord Thailands forand FDI improved -> economic boom 1987-1996 -> sharp decrease in petroleum pro1986 -> exports improved

Need for Japan, Taiwan, and Hong Kong to find new production locations led to FDI

Inspite of this 1987-1996 -> CAD -5.4% of GDP every year.

Shortage of capital was a huge issue -> BIBF facility was granted to Thai banks 1993

borrowed at low interest rates from abroad and lent at high rates to Thai businesseBy 1997 foreign debt rose to USD 109276 (65% was short term) -> USD 38700 in intereserves.


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1997- 2006Challenges: Asian Financial crisis, currency devaluation, political instability

The Thai economy collapsed as a result of 1997 Asian financial crisis. The unemploywent up by 3 folds, and the sharp decrease in value of baht abruptly increased fore

As an effect of the crisis president Minister Chavalit Yongchaiyudh resigned under pwas succeed by opposition leader Chuan Leekpai.

From 1997 to 2001, the government implemented economic reforms based on IMneoliberal capitalism. They pursued strict fiscal policies, enacted 11 laws it called b

medicine, and was able improve the economy with positive GDP growth In 1999. However as unlike economic problems in Latin America and Africa, the financial crborn in private sector, the IMF measure were inappropriate. The positive GDP growbecause countrys GDP has gone down for 2 consecutive year as much as -10.5 %

In terms of baht not until 2002 that Thailand regained its 1996 GDP


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1997-2006 continued The indirect effect of crisis was the rise of Thaksin Shinawatra. Even with weak expthis government performed well from 2002 to 2004 (with rates of 5.3, 7.1, 6.3) resppolicies were later called Thaksinomic.

Thailand paid its IMF debts by 2003.

However the 2ndterm of Thaksin was less successful, as the 2004 Indian ocean tsuhuman toll and impact the GDP.

This led to protest, leading to dissolution of Thaksin government, the party again cpower, however later a group of soldiers calling themselves council for Democraticunder the constitutional Monarchy organized a coup, outsing Thaksin.

Under the Thaksin government the Thailands ranking in IMD global competivenessrose form 31 in 2002, to 25thin 2005, falling back to 29thin 2006.


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2006 -2011

Challenges: U.S financial crisis, Thailand floods After the coup the Thailands economy again suffered, and in last quarter of 2006 and through by military Junta. Thailands ranking in IMD global competitiveness also fell to 33rdby 2007.

In September 2007, general election was held, People power party won, and economy picked

With the U.S financial institution crisis in 2008, the GDP dropped from 5.2% in 2008(Q2) to -4.1

By the end of 2008 the party was dissolved and a coalition government (led by Abhisit Vejjajivs

him, in 2009 Thailand experienced its first negative growth since 1997, GDP of -2.3%.

In 2010 the GDP gowth of Thailand was settled to 4-5 %, from highs of 5-7% under the previouThe political uncertainity was identified as the primary cause of decline in investors and consum

In 2011 general election, Thaksins youngest sister came into power.

The Thailand floods in 2011 covered 65 of countrys 77 provinces, leading to a damage of THB1by 0.1 percent. The countrys competitiveness ranking fell from 27thin 2011 to 30thin 2012.


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2012 onwards. The Yingluck government planned to develop countrys infrastructure ranging fromwater management system to logistics.

The Eurozone crisis in 2012, directly and indirectly harmed the countrys exports. Ihalf economy revived due to increased spending to replace household good, post flwith government flood relief payment.

In December 2013, the Thai Baht dropped to 3 year low due political unrest. Due tgovernments distraction towards political issue, they lost out on trust from foreign i

The fiscal policy tightening, legal challenges, political distraction led to postponinginfrastructure projects.

In 2014, there was a Thai military coup. Thailand due to fear of immigration clameconomy contraction of 2.1 percent from January to March 2014.


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Growth StrategyInvestment for sustainable development

Economic Development Science, technology and innovation

Creative industry

Biotechnology

Social development

Education and training

Social development

Environmental protection

Pollution control

Eco industrial town

Renewable energy


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Logistic Performance Index


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Doing Business in Thailand


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Competitiveness of Thailand Solid macroeconomic foundation (dynamic economy, healthy banking system, mainflation rate)

Cluster of many important business activities (food, natural rubber, rice, petrochemautomobile, tourism)

Good investment environment (Attractive FDI destination and ranked number 11 iliberal investment policy, hospitable country for expat)

High quality of infrastructure (Hub of access to regional market, numerous industr


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group 4 section 1 thailand.pptx

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