Economy of Thailand

Thailand, formerly known as Siam, opened to foreign contact in the pre-industrial era. Despite the scarcity of resources in Siam, coastal ports and cities and those at the river mouth were early economic centers which welcomed merchants from Persia, the Arab countries, India, and China. The rise of Ayutthaya during the 14th century was connected to renewed Chinese commercial activity, and the kingdom became one of the most prosperous trade centers in Asia.

When the capital of the kingdom moved to Bangkok during the 19th century, foreign trade (particularly with China) became the focus of the government. Chinese merchants came to trade; some settled in the country and received official positions. A number of Chinese merchants and migrants became high dignitaries in the court.

From the mid-19th century onward, European merchants were increasingly active. The Bowring Treaty, signed in 1855, guaranteed the privileges of British traders. The Harris Treaty of 1856, which updated the Roberts Treaty of 1833, extended the same guarantees to American traders.

The domestic market developed slowly, with serfdom a possible cause of domestic stagnation. Most of the male population in Siam was in the service of court officials, while their wives and daughters may have traded on a small scale in local markets. Those who were heavily indebted might sell themselves as slaves. King Rama V abolished serfdom and slavery in 1901 and 1905, respectively.

From the early 20th century to the end of World War II, Siam's economy gradually became globalized. Major entrepreneurs were ethnic Chinese who became Siamese nationals. Exports of agricultural products (especially rice) were very important and Thailand has been among the top rice exporters in the world. The Siamese economy suffered greatly from the Great Depression, a cause of the Siamese revolution of 1932.[41]

Significant investment in education in the 1930s (and again in the 1950s) laid the basis for economic growth, as did a liberal approach to trade and investment.[42]

Postwar domestic and international politics played significant roles in Thai economic development for most of the Cold War era. From 1945 to 1947 (when the Cold War had not yet begun), the Thai economy suffered because of the Second World War. During the war, the Thai government (led by Field Marshal Luang Phibulsongkram) allied with Japan and declared war against the Allies. After the war, Thailand had to supply 1.5 million tons of rice to Western countries without charge, a burden on the country's economic recovery. The government tried to solve the problem by establishing a rice office to oversee the rice trade. During this period, a multiple-exchange-rate system was introduced amid fiscal problems, and the kingdom experienced a shortage of consumer goods.[43]

In November 1947, a brief democratic period was ended by a military coup and the Thai economy regained its momentum. In his dissertation, Somsak Nilnopkoon considers the period from 1947 to 1951 one of prosperity.[43] By April 1948, junta Phibulsongkram, the wartime prime minister, returned to his previous office. He, however, was caught in a power struggle between his subordinates. To preserve his power, Phibulsongkram began an anti-communist campaign to seek support from the United States.[44] As a result, from 1950 onward, Thailand received military and economic aid from the US. The Phibulsongkram government established many state enterprises, which were seen as economic nationalism. The state (and its bureaucrats) dominated capital allocation in the kingdom. Ammar Siamwalla, one of Thailand's most prominent economists, calls it the period of "bureaucratic capitalism".[44]

In 1955, Thailand began to see a change in its economy fueled by domestic and international politics. The power struggle between the two main factions of the Phibul regime—led by Police General Phao Sriyanond and General (later, Field Marshal) Sarit Thanarat—increased, causing Sriyanonda to unsuccessfully seek support from the US for a coup against Phibulsongkram regime. Luang Phibulsongkram attempted to democratize his regime, seeking popular support by developing the economy. He again turned to the US, asking for economic rather than military aid. The US responded with unprecedented economic aid to the kingdom from 1955 to 1959.[44] The Phibulsongkram government also made important changes to the country's fiscal policies, including scrapping the multiple-exchange-rate system in favor of a fixed, unified system which was in use until 1984. The government also neutralized trade and conducted secret diplomacy with the People's Republic of China, displeasing the United States.

Despite his attempts to maintain power, Luang Phibulsongkram was deposed (with Field Marshal Phin Choonhavan and Police General Phao Sriyanond) on 16 September 1957 in a coup led by Field Marshal Sarit Thanarat. The Thanarat regime (in power from 1957 to 1973) maintained the course set by the Phibulsongkram regime with US support after severing all ties with the People's Republic of China and supporting US operations in Indochina. It developed the country's infrastructure and privatized state enterprises unrelated to that infrastructure. During this period, a number of economic institutions were established, including the Bureau of Budget, the NESDC, and the Thailand Board of Investment (BOI). The National Economic and Social Development Plan was implemented in 1961.[45] During this period, the market-oriented Import-Substituting Industrialization (ISI) led to economic expansion in the kingdom during the 1960s.[46] According to former President Richard M. Nixon's 1967 Foreign Affairs article, Thailand entered a period of rapid growth in 1958 (with an average growth rate of seven percent a year).[47]

From the 1970s to 1984, Thailand suffered from many economic problems: decreasing US investment, budget deficits, oil-price spikes, and inflation. Domestic politics were also unstable. With the Vietnamese occupation of Cambodia on 25 December 1978, Thailand became the front-line state in the struggle against communism, surrounded by three communist countries and a socialist Burma under General Ne Win. Successive governments tried to solve the economic problems by promoting exports and tourism, still important for the Thai economy.[48]

One of the best-known measures to deal with the economic problems of that time was implemented under General Prem Tinsulanonda's government, in power from 1980 to 1988. Between 1981 and 1984, the government devalued the national currency, the Thai baht (THB), three times. On 12 May 1981, it was devalued by 1.07 percent, from THB20.775/US$ to THB21/US$. On 15 July 1981, it was again devalued, this time by 8.7 percent (from THB21/US$ to THB23/US$). The third devaluation, on 5 November 1984, was the most significant: 15 percent, from THB23/US$ to THB27/US$.[49] The government also replaced the country's fixed exchange rate (where it was pegged to the US dollar) with a "multiple currency basket peg system" in which the US dollar bore 80 percent of the weight.[50] Calculated from the IMF's World Economic Outlook Database, in the period 1980–1984, the Thai economy had an average GDP growth rate of 5.4 percent.[51]

Concurrent with the third devaluation of the Thai baht, on 22 September 1985, Japan, the US, the United Kingdom, France, and West Germany signed the Plaza Accord to depreciate the US dollar in relation to the yen and the Deutsche Mark. Since the dollar accounted for 80 percent of the Thai currency basket, the baht was depreciated further, making Thailand's exports more competitive and the country more attractive to foreign direct investment (FDI) (especially from Japan, whose currency had appreciated since 1985). In 1988, Prem Tinsulanonda resigned and was succeeded by Chatichai Choonhavan, the first democratically elected prime minister of Thailand since 1976. The Cambodian-Vietnamese War was ending; Vietnam gradually retreated from Cambodia by 1989, enhancing Thai economic development.

After the 1984 baht devaluation and the 1985 Plaza Accord, although the public sector struggled due to fiscal constraints, the private sector grew. The country's improved foreign trade and an influx of foreign direct investment (mainly from Japan) triggered an economic boom from 1987 to 1996. Although Thailand had previously promoted its exports, during this period the country shifted from import-substitution (ISI) to export-oriented industrialization (EOI). During this decade the Thai GDP (calculated from the IMF World Economic Outlook database) had an average growth rate of 9.5 percent per year, with a peak of 13.3 percent in 1988.[51] In the same period, the volume of Thai exports of goods and services had an average growth rate of 14.8 percent, with a peak of 26.1 percent in 1988.[51]

Economic problems persisted. From 1987 to 1996, Thailand experienced a current account deficit averaging −5.4 percent of GDP per year, and the deficit continued to increase. In 1996, the current account deficit accounted for −7.887 percent of GDP (US$14.351 billion).[51] A shortage of capital was another problem. The first Chuan Leekpai government, in office from September 1992 to May 1995, tried to solve this problem by granting Bangkok International Banking Facility (BIBF) licenses to Thai banks in 1993. This allowed BIBF banks to benefit from Thailand's high-interest rate by borrowing from foreign financial institutions at low interest and loaning to Thai businesses. By 1997, foreign debt had risen to US$109,276 billion (65% of which was short-term debt), while Thailand had US$38,700 billion in international reserves.[52] Many loans were backed by real estate, creating an economic bubble. By late 1996, there was a loss of confidence in the country's financial institutions; the government closed 18 trust companies and three commercial banks. The following year, 56 financial institutions were closed by the government.[52]

Another problem was foreign speculation. Aware of Thailand's economic problems and its currency basket exchange rate, foreign speculators (including hedge funds) were certain that the government would again devalue the baht, under pressure on both the spot and forward markets. In the spot market, to force devaluation, speculators took out loans in baht and made loans in dollars. In the forward market, speculators (believing that the baht would soon be devalued) bet against the currency by contracting with dealers who would give dollars in return for an agreement to repay a specific amount of baht several months in the future.[53]

  USD / Thai Baht exchange rate

In the government, there was a call from Virapong Ramangkul (one of Prime Minister Chavalit Yongchaiyudh's economic advisers) to devalue the baht, which was supported by former Prime Minister Prem Tinsulanonda.[54] Yongchaiyudh ignored them, relying on the Bank of Thailand (led by Governor Rerngchai Marakanond, who spent as much as US$24,000 billion – about two-thirds of Thailand's international reserves) to protect the baht. On 2 July 1997, Thailand had US$2,850 billion remaining in international reserves,[52] and could no longer protect the baht. That day Marakanond decided to float the baht, triggering the 1997 Asian Financial Crisis.

Countries affected by the Asian Financial Crisis

The Thai economy collapsed as a result of the 1997 Asian financial crisis. Within a few months, the value of the baht floated from THB25/US$ (its lowest point) to THB56/US$. The Stock Exchange of Thailand (SET) dropped from a peak of 1,753.73 in 1994 to a low of 207.31 in 1998.[55] The country's GDP dropped from THB3.115  trillion at the end of 1996 to THB2.749  trillion at the end of 1998. In dollar terms, it took Thailand as long as 10 years to regain its 1996 GDP. The unemployment rate went up nearly threefold: from 1.5 percent of the labor force in 1996 to 4.4 percent in 1998.[56]

A sharp decrease in the value of the baht abruptly increased foreign debt, undermining financial institutions. Many were sold, in part, to foreign investors while others went bankrupt. Due to low international reserves from the Bank of Thailand's currency-protection measures, the government had to accept a loan from the International Monetary Fund (IMF). Overall, Thailand received US$17.2 billion in aid.[57]

The crisis impacted Thai politics. One direct effect was that Prime Minister Chavalit Yongchaiyudh resigned under pressure on 6 November 1997, succeeded by opposition leader Chuan Leekpai. The second Leekpai government, in office from November 1997 to February 2001, tried to implement economic reforms based on IMF-guided neo-liberal capitalism. It pursued strict fiscal policies (keeping interest rates high and cutting government spending), enacting 11 laws it called "bitter medicine" and critics called "the 11 nation-selling laws". The Thai government and its supporters maintained that with these measures, the Thai economy improved.

In 1999, Thailand had a positive GDP growth rate for the first time since the crisis. Many critics, however, mistrusted the IMF and maintained that government-spending cuts harmed the recovery. Unlike economic problems in Latin America and Africa, they asserted, the Asian financial crisis was born in the private sector and the IMF measures were inappropriate. The positive growth rate in 1999 was because the country's GDP had gone down for two consecutive years, as much as −10.5 percent in 1998 alone. In terms of the baht, it was not until 2002 (in dollar terms, not until 2006) that Thailand would regain its 1996 GDP. An additional 1999 loan from the Miyazawa Plan made the question of whether (or to what extent) the Leekpai government helped the Thai economy controversial.

An indirect effect of the financial crisis on Thai politics was the rise of Thaksin Shinawatra. In reaction to the government's economic policies, Thaksin Shinawatra's Thai Rak Thai Party won a landslide victory over Leekpai's Democrat Party in the 2001 general election and took office in February 2001. Although weak export demand held the GDP growth rate to 2.2 percent in the first year of his administration, the first Thaksin Shinawatra government performed well from 2002 to 2004 with growth rates of 5.3, 7.1 and 6.3 percent respectively. His policy was later called Thaksinomics. During Thaksin's first term, Thailand's economy regained momentum and the country paid its IMF debt by July 2003 (two years ahead of schedule). Despite criticism of Thaksinomics, Thaksin's party won another landslide victory over the Democrat Party in the 2005 general election. The official economic data related to Thaksinomics reveals that between 2001 and 2011, Isan's GDP per capita more than doubled to US$1,475, while, over the same period, GDP in the Bangkok area rose from US$7,900 to nearly US$13,000.[58]

Phuket in 2004. The Indian Ocean tsunami affected the economy

Thaksin's second term was less successful. On 26 December 2004, the Indian Ocean tsunami occurred. In addition to the human toll, it impacted the first-quarter Thai GDP in 2005. The Yellow Shirts, a coalition of protesters against Thaksin, also emerged in 2005. In 2006, Thaksin dissolved the parliament and called for a general election. The April 2006 general election was boycotted by the main opposition parties. Thaksin's party won again, but the election was declared invalid by the Constitutional Court. Another general election, scheduled for October 2006, was cancelled. On 19 September a group of soldiers calling themselves the Council for Democratic Reform under the Constitutional Monarchy and led by Sonthi Boonyaratglin organized a coup, ousting Thaksin while he was in New York preparing for a speech at the United Nations General Assembly. During the last year of the second Thaksin government, the Thai GDP grew by 5.1 percent. Under his governments, Thailand's overall ranking in the IMD Global Competitiveness Scoreboard rose from 31st in 2002 to 25th in 2005 before falling to 29th in 2006.[59]

After the coup, Thailand's economy again suffered. From the last quarter of 2006 through 2007, the country was ruled by a military junta led by General Surayud Chulanont, who was appointed prime minister in October 2006. The 2006 GDP growth rate slowed from 6.1, 5.1 and 4.8 percent year-over-year in the first three-quarters to 4.4 percent (YoY) in Q4.[60] Thailand's ranking on the IMD Global Competitiveness Scoreboard fell from 26th in 2005 to 29th in 2006 and 33rd in 2007.[59] Thaksin's plan for massive infrastructure investments was unmentioned until 2011, when his younger sister Yingluck Shinawatra entered office. In 2007, the Thai economy grew by 5 percent. On 23 December 2007, the military government held a general election. The pro-Thaksin People's Power Party, led by Samak Sundaravej, won a landslide victory over Abhisit Vejjajiva's Democrat Party.

Under the People's Power Party-led government the country fell into political turmoil. This, combined with the financial crisis of 2007–2008 cut the 2008 Thai GDP growth rate to 2.5%.[60] Before the People's Alliance for Democracy (PAD) and the Yellow Shirts reconvened in March 2008, the GDP grew by 6.5 percent (YoY) in the first quarter of the year.[60] Thailand's ranking on the IMD World Competitiveness Scoreboard rose from 33rd in 2007 to 27th in 2008. The Yellow Shirts occupied the Government House of Thailand in August 2008, and on 9 September the Constitutional Court delivered a decision removing Samak Sundaravej from the prime ministership.

Somchai Wongsawat, Thaksin's brother-in-law, succeeded Samak Sundaravej as prime minister on 18 September. In the US the financial crisis reached its peak while the Yellow Shirts were still in Government House, impeding government operations. GDP growth dropped from 5.2 percent (YoY) in Q2 2008 to 3.1 percent (YoY) and −4.1 percent (YoY) in Q3 and Q4. From 25 November to 3 December 2008 the Yellow Shirts, protesting Somchai Wongsawat's prime ministership, seized the two Bangkok airports, (Suvarnabhumi and Don Mueang), and damaged Thailand's image and economy. On 2 December the Thai Constitutional Court issued a decision dissolving the People's Power Party, ousting Somchai Wongsawat as prime minister.

A coalition government under Abhisit Vejjajiva was formed in 2008

By the end of 2008, a coalition government led by Abhisit Vejjajiva's Democrat Party was formed: "[The] legitimacy of the Abhisit government has been questioned since the first day that the Democrat party took the office in 2008 as it was allegedly formed by the military in a military camp".[61] The government was under pressure from the US financial crisis and the Red Shirts, who refused to acknowledge Abhisit Vejjajiva's prime ministry and called for new elections as soon as possible. However, Abhisit rejected the call until he dissolved the parliament for a new election in May 2011. In 2009, his first year in office, Thailand experienced a negative growth rate for the first time since the 1997 financial crisis: a GDP of −2.3 percent.[60]

In 2010, the country's growth rate increased to 7.8 percent. However, with the instability surrounding the major 2010 protests, the GDP growth of Thailand settled at around 4–5 percent from highs of 5–7 percent under the previous civilian administration—political uncertainty was identified as the primary cause of a decline in investor and consumer confidence. The IMF predicted that the Thai economy would rebound strongly from the low 0.1 percent GDP growth in 2011, to 5.5 percent in 2012 and then 7.5 percent in 2013, due to the accommodating monetary policy of the Bank of Thailand, as well as a package of fiscal stimulus measures introduced by the incumbent Yingluck Shinawatra government.[62]

In the first two-quarters of 2011, when the political situation was relatively calm, the Thai GDP grew by 3.2 and 2.7 percent (YoY).[60] Under Abhisit's administration, Thailand's ranking fell from 26 in 2009, to 27 in 2010 and 2011,[59] and the country's infrastructure declined since 2009.[59]

In the 2011 general election, the pro-Thaksin Pheu Thai Party again won a decisive victory over the Democrat Party, and Thaksin's youngest sister, Yingluck Shinawatra, succeeded Abhisit as prime minister. Elected in July, the Pheu Thai Party-led government began its administration in late-August, and when Yingluck entered office, the 2011 Thailand floods threatened the country—from 25 July 2011 to 16 January 2012, flood waters covered 65 of the country's 76 provinces. The World Bank assessed the total damage in December 2011 and reported a cost of THB1.425 trillion (about US$45.7 billion).[63]

The 2011 GDP growth rate fell to 0.1 percent, with a contraction of 8.9 percent (YoY) in Q4 alone.[64] The country's overall competitiveness ranking, according to the IMD World Competitiveness Scoreboard, fell from 27 in 2011 to 30 in 2012.[65]

In 2012, Thailand was recovering from the previous year's severe flood. The Yingluck government planned to develop the country's infrastructure, ranging from a long-term water-management system to logistics. The Eurozone crisis reportedly harmed Thailand's economic growth in 2012, directly and indirectly affecting the country's exports. Thailand's GDP grew by 6.5 percent, with a headline inflation rate of 3.02 percent, and a current account surplus of 0.7 percent of the country's GDP.[66]

The Thai baht depreciated during the 2013 Thai protests

On 23 December 2013, the Thai baht dropped to a three-year low due to the political unrest during the preceding months. According to Bloomberg, the Thai currency lost 4.6 percent over November and December, while the main stock index also dropped (9.1 percent).[67]

Following the Thai military coup in May 2014, Agence France Presse (AFP) published an article that claimed that the nation was on the "verge of recession". Published on 17 June 2014, the article's main subject is the departure of nearly 180,000 Cambodians from Thailand due to fears of an immigration "clampdown", but concluded with information on the Thai economy's contraction of 2.1 percent quarter-on-quarter, from January to the end of March 2014.[68]

Since the cessation of the curfew that was enacted by the military in May 2014, the Federation of Thai Industries (FTI)'s chairman, Supant Mongkolsuthree, said that he projects growth of 2.5–3 percent for the Thai economy in 2014, as well as a revitalisation of the Thai tourist industry in the second half of 2014. Furthermore, Supant also cited the Board of Investment's future consideration of a backlog of investment projects, estimated at about 700 billion baht, as an economically beneficial process that would occur around October 2014.[69] Thailand's flagging economic performance led, at the end of 2015, to increased criticism of the National Council for Peace and Order's (NCPO) handling of the economy, both at home and in influential Western media.[70][71] The country's economic growth of 2.8% in the first quarter of 2019 was recorded to be the slowest since 2014.[72]

The military government unveiled its newest economic initiative, "Thailand 4.0", in 2016. Thailand 4.0 is the "...master plan to free Thailand from the middle-income trap, making it a high-income nation in five years."[73]

The government narrative describes Thailand 1.0 as the agrarian economy of Thailand decades ago. Thailand 1.0 gave way to Thailand 2.0, when the nation's economy moved on to light industry, textiles, and food processing. Thailand 3.0 describes the present day, with heavy industry and energy accounting for up to 70 percent of the Thai GDP.[73] Thailand 4.0 is described as an economy driven by high-tech industries and innovation that will lead to the production of value-added products and services. According to General Prayut Chan-o-cha, the prime minister, Thailand 4.0 is composed of three elements: 1. Make Thailand a high-income nation, 2. Make Thailand a more inclusive society, and 3. Focus on sustainable growth and development.[74]

Critics of Thailand 4.0 point out that Thailand lacks the specialists and experts, especially in high-technology, needed to modernise Thai industry. "...the government will have to allow the import of foreign specialists to help bring forward Thailand 4.0," said Somchai Jitsuchon, research director for inclusive development at the Thailand Development Research Institute (TDRI). "...that won't be easy as local professional associations will oppose the idea as they want to reserve those professional careers for Thais only".[73] He went on to point out that only 56 percent of Thailand's population has access to the Internet, an obstacle to the creation of a high-tech workforce. A major thrust of Thailand 4.0 is encouraging a move to robotic manufacturing. But Thailand's membership in the ASEAN Economic Community (AEC), makes cheap workers from neighbouring countries even more readily available, which will make it harder to make the economic case to switch to robots. Somchai also pointed out that the bureaucratic nature of the Thai government will make realisation of Thailand 4.0 difficult. Every action plan calls for results from several ministries, "all of which are big, clumsily-run organisations" slow to perform.[73]

In September 2020, World Bank forecast that Thai economy would contract 8.9% by the end of the year due to COVID-19 pandemic.[75] The Thai government cut jet fuel tax since February 2020.[76]

Virtually all of Thailand's firms, 99.7 percent, or 2.7 million enterprises, are classed as being small or medium-sized enterprises (SMEs). As of 2017, SMEs account for 80.3 percent (13 million) of Thailand's total employment. In sheer numbers SMEs predominate, but their contribution to the nation's GDP decreased from 41.3 percent of GDP in 2002 to 37.4 percent in 2013. Their declining contribution is reflected in their turnover rate: seventy percent fail within "...a few years".[83]^: 47

Thailand has been the largest rice exporter in the world. Forty-nine percent of Thailand's labor force is employed in agriculture.[84]

Developments in agriculture since the 1960s have supported Thailand's transition to an industrialised economy.[84] As recently as 1980, agriculture supplied 70 percent of employment.[84] In 2008, agriculture, forestry and fishing contributed 8.4 percent to GDP; in rural areas, farm jobs supply half of employment.[84] Rice is the most important crop in the country and Thailand had long been the world's number one exporter of rice, until recently falling behind both India and Vietnam.[85] It is a major exporter of shrimp. Other crops include coconuts, corn, rubber, soybeans, sugarcane and tapioca.[86]

Thailand is the world's third-largest seafood exporter. Overall fish exports were worth around US$3 billion in 2014, according to the Thai Frozen Foods Association. Thailand's fishing industry employs more than 300,000 persons.[87]

In 1985, Thailand designated 25 percent of its land area for forest protection and 15 percent for timber production. Forests have been set aside for conservation and recreation, and timber forests are available for the forestry industry. Between 1992 and 2001, exports of logs and sawn timber increased from 50,000 to 2,000,000 cubic meters per year.

The regional avian-flu outbreak contracted Thailand's agricultural sector in 2004, and the tsunami of 26 December devastated the Andaman Sea fishing industry. In 2005 and 2006, agricultural GDP was reported to have contracted by 10 percent.[88]

Thailand is the world's second-largest exporter of gypsum (after Canada), although government policy limits gypsum exports to support prices. In 2003 Thailand produced more than 40 different minerals, with an annual value of about US$740 million. In September 2003, to encourage foreign investment in mining the government relaxed its restrictions on mining by foreign companies and reduced mineral royalties owed to the state.[88]

Production-line workers at a factory in Chachoengsao.

In 2007 industry contributed 43.9 percent of GDP, employing 14 percent of the workforce. Industry expanded at an average annual rate of 3.4 percent from 1995 to 2005. The most important sub-sector of industry is manufacturing, which accounted for 34.5 percent of GDP in 2004.

Electrical and electronics (E&E) equipment is Thailand's largest export sector, amounting to about 15 percent of total exports. In 2014 Thailand's E&E exports totalled US$55 billion.[89]^: 28 The E&E sector employed approximately 780,000 workers in 2015, representing 12.2 per cent of the total employment in manufacturing.[89]^: 27

As of 2020, Thailand is the largest exporter of computers and computer components in ASEAN. Thailand is the world's second-biggest maker of hard disk drives (HDDs) after China, with Western Digital and Seagate Technology among the biggest producers.[90][91] But problems may loom for Thailand's high-tech sector. In January 2015, the country's manufacturing index fell for the 22nd consecutive month, with production of goods like televisions and radios down 38 percent year-on-year. Manufacturers are relocating to nations where labour is cheaper than Thailand. In April 2015, production will cease at an LG Electronics factory in Rayong Province.[92] Production is being moved to Vietnam, where labour costs per day are US$6.35 versus US$9.14 in Thailand. Samsung Electronics Co. Ltd. will site two large smartphone factories in Vietnam. It made around US$11 billion worth of investment pledges to the Vietnamese economy in 2014. As technologies evolve, e.g., as HDDs are replaced by solid-state drives (SSDs), manufacturers are reexamining where best to produce these latest technologies.[91] In addition, 74 percent of salaried workers in the sector face a high risk of being replaced by robots, as these positions consist of "repetitive, non-cognitive tasks".[89]^: 39

Thailand is the ASEAN leader in automotive production and sales. The sector employed approximately 417,000 workers in 2015, representing 6.5 per cent of total employment across all manufacturing industries and accounting for roughly 10 percent of the country's GDP. In 2014, Thailand exported US$25.8 billion in automotive goods.[89]^: 12–13 As many as 73 percent of automotive sector workers in Thailand face a high risk of job loss due to automation.[89]^: xix

Car production in Thailand

Year	Units	Production for		Export value (THB billion)	Export value as % of GDP
		Domestic	Export
2005	1,125,316	690,409	434,907	203.025	2.86%
2006	1,188,044	646,838	541,206	240.764	3.07%
2007	1,287,379	598,287	689,092	306.595	3.60%
2008	1,394,029	610,317	783,712	351.326	3.78%
2009	999,378	447,318	552,060	251.342	2.78%
2010	1,645,304	750,614	894,690	404.659	4.00%
2011	1,457,795	723,845	733,950	343.383	3.26%
2012	2,453,717	1,432,052	1,021,665	490.134	3.97%
2013	2,457,086	1,335,783	1,121,303	512.186	3.97%
2014	1,880,007	757,853	1,122,154	527.423	3.99%
2015	1,913,002	712,028	1,200,974	592.550	4.33%
2016	1,944,417	776,843	1,167,574	631.845	4.40%
2017	1,988,823	862,391	1,126,432	603.037	4.04%
2018	2,167,694	1,024,961	1,142,733	594.809	n/a

Source: Federation of Thai Industries

Gem and jewelry exports are Thailand's third-largest export category by value, trailing automotive and parts and computer components. In 2019, gem and jewelry exports, including gold, exceeded US$15.7 billion, up 30.3% from 2018 (486 billion baht, up 26.6%). Key export markets included ASEAN, India, the Middle East, and Hong Kong. The industry employs more than 700,000 workers according to the Gem and Jewelry Institute of Thailand (GIT).[93]

Thailand's 2004 energy consumption was estimated at 3.4 quadrillion British thermal units, representing about 0.7 percent of total world energy consumption. Thailand is a net importer of oil and natural gas; however, the government is promoting ethanol to reduce imports of petroleum and the gasoline additive methyl tertiary butyl ether.

In 2005 Thailand's daily oil consumption of 838,000 barrels per day (133,200 m³/d) exceeded its production of 306,000 barrels per day (48,700 m³/d). Thailand's four oil refineries have a combined capacity of 703,100 barrels per day (111,780 m³/d). The government is considering a regional oil-processing and transportation hub serving south-central China. In 2004, Thailand's natural-gas consumption of 1,055 billion cubic feet (2.99×10¹⁰ m³) exceeded its production of 790 billion cubic feet (2.2×10¹⁰ m³).

Thailand's 2004 estimated coal consumption of 30.4 million short tons exceeded its production of 22.1 million. As of January 2007, proven oil reserves totaled 290 million barrels (46,000,000 m³) and proven natural-gas reserves were 14.8 trillion cubic feet (420 km³). In 2003, recoverable coal reserves totalled 1,493 million short tons.[88]

In 2005, Thailand used about 118 billion kilowatt hours of electricity. Consumption rose by 4.7 percent in 2006, to 133 billion kWh. According to the Electricity Generating Authority of Thailand (the national electricity utility), power consumption by residential users is increasing due to more favorable rates for residential customers than for the industry and business sectors. Thailand's electric utility and petroleum companies (also state-controlled) are being restructured.

In 2007 the service sector (which includes tourism, banking and finance), contributed 44.7 percent of GDP and employed 37 percent of the workforce.[88] Thailand's service industry is competitive, contributing to its export growth.

Dangerous levels of non-performing assets at Thai banks helped trigger an attack on the baht by currency speculators which led to the Asian financial crisis in 1997–1998. By 2003, nonperforming assets had been cut in half (to about 30 percent).

Despite a return to profitability, Thailand's banks continue to struggle with unrealized losses and inadequate capital. The government is considering reforms, including an integrated financial regulatory agency which would enable the Bank of Thailand to focus on monetary policy. In addition, the government is attempting to strengthen the financial sector through the consolidation of commercial, state- and foreign-owned institutions. The 2004 Financial Sector Reform Master Plan provides tax breaks to financial institutions engaging in mergers and acquisitions. The reform program has been deemed successful by outside experts. In 2007 there were three state-owned commercial banks, five state-owned specialized banks, fifteen Thai commercial banks, and seventeen foreign banks in Thailand.[88]

The Bank of Thailand sought to stem the flow of foreign funds into the country in December 2006, leading to the largest one-day drop in stock prices on the Stock Exchange of Thailand since the 1997 Asian financial crisis. The sell-off by foreign investors amounted to more than US$708 million.[88]

In 2019, the Bank of Thailand kept its benchmark interest rate unchanged for a fourth straight meeting, with the concerns of high household debt and financial stability risks.[94]

One Baht note

Retail employs more than six million Thai workers. Most are employed by small businesses. Large multinational and national retail players (such as Tesco Lotus, 7-Eleven, Siam Makro, Big C, Villa Market, Central Group and Mall Group) are estimated to employ fewer than 400,000 workers. This accounts for less than seven percent of Thailand's total employment in retail.[89]^: 70

In 2016, tourism revenue, 2.53 trillion baht, accounted for 17.7 percent of Thailand's GDP, up from 16.7 percent in 2015. It is expected to generate 2.71 trillion baht in 2017. The global average for GDP contribution from tourism is nine percent.[95]

Cryptocurrencies

Thailand's Ministry of Finance approved four licensed brokers and dealers of cryptocurrencies in the country: Bx, Bitkub, Coins and Satang Pro. The country still did not elaborated regulation for ICOs, though it announced in late 2018 to loosen the rules.[96]

The following table shows the largest trading partners for Thailand in 2021 by total trade value in billions of USD.[107]

Country	Total Trade Value	Import Value	Export Value	Balance
China	128.24	66.43	61.82	-4.61
United States	65	14.58	50.43	35.85
Japan	61.92	35.57	26.35	-9.22
Malaysia	23.05	12.05	11	-1.05
Australia	17.99	6.42	11.57	5.15
Indonesia	17.37	8.22	9.15	0.93
Singapore	17.15	7.34	9.81	2.46
South Korea	16.9	9.9	7.01	-2.89
Hong Kong	16.51	2.84	13.67	10.84
India	15.08	6.41	8.67	2.26

The economy of Isan is dominated by agriculture, although output is poor and this sector is decreasing in importance at the expense of trade and the service sector. Most of the population is poor and badly educated. Many labourers have been driven by poverty to seek work in other parts of Thailand or abroad.

Although Isan accounts for around a third of Thailand's population and a third of its area, it produces only 8.9 percent of GDP. Its economy grew at 6.2 percent per annum during the 1990s.

In 1995, 28 percent of the population was classed as below the poverty line, compared to just 7 percent in central Thailand. In 2000, per capita income was 26,317 baht, compared to 208,434 in Bangkok. Even within Isan, there is a rural/urban divide. In 1995, all of Thailand's ten poorest provinces were in Isan, the poorest being Sisaket. However, most wealth and investment is concentrated in the four major cities of Khorat, Ubon, Udon, and Khon Kaen. These four provinces account for 40 percent of the region's population.

In his televised national address on 23 January 2015 in the program "Return Happiness to the People", Prime Minister Prayut Chan-o-cha addressed the government's policy on the establishment of special economic zones.[108]

He said that the policy would promote connectivity and regional economic development on a sustainable basis. There are currently 10 SEZs in Thailand, with trade and investment valued at almost 800 billion baht a year.

In 2014, the government launched a pilot project to set up six special economic zones in five provinces: Tak, Mukdahan, Sa Kaeo, Songkhla, and Trat. In the second phase, which is expected to begin in 2016, seven special economic zones will be established in another five provinces: Chiang Rai, Kanchanaburi, Nong Khai, Nakhon Phanom, and Narathiwat.[108]

In early 2015, the government approved an infrastructure development plan in special economic zones. In 2015, the plan includes 45 projects, budgeted at 2.6 billion baht. Another 79 projects, worth 7.9 billion baht, will be carried out in 2016. Relying on a mix of government revenue, bond sales, and other funding, Prayut plans to spend US$83 billion over seven years on new railways, roads, and customs posts to establish cross-border trade routes. The idea is to link some 2.4 billion consumers in China and India with Asia's newest economic grouping, the ASEAN Economic Community, of which Thailand is a member.[109]

Critics of the SEZs maintain that free trade agreements and SEZs are incompatible with the principles of the late-King Bhumibol's sufficiency economy,[110] claimed by the government to be the inspiration for governmental economic and social policies.[111]