Economy of Thailand vs ASEAN
The economy of Thailand is showing dismal results for 2016 as a result of the global economic slowdown, unlike its neighboring countries in the ASEAN region. In 2016 itself, with the exception of Thailand and Malaysia, other countries are predicted to face an increase in their Gross Domestic Product (GDP) growth. In addition to the decline in GDP growth, among ASEAN nations Thailand is predicted to have the lowest GDP growth. According to the forecast by the World Bank,
- Thailand will see a decline in its GDP growth (from 2.5% in 2015 to 2.0% in 2016). However, it will return to its growth path in the following year, ceteris paribus.
- The forecasted GDP growth this year for ASEAN, with the exception of Thailand, ranges from 4.5% (Malaysia) to 7.8% (Myanmar)
Despite the positive outlook for 2016, the ASEAN region remains at risk due to various reasons, such as China’s economic slowdown and the sharp appreciation of the US dollar. To counter this, various actions are being undertaken by each respective country in order to boost their economy and maintain economic stability.
Thailand major exports
Despite the slow outlook for the economy of Thailand this year, the top 5 Thailand major exports (by value) made up 56 percent of the total revenue earned from Thai exports. The top 5 Thai export sectors in 2015 were,
- Electronics ($32.08 billion)
- Agro-manufacturing products ($25.61 billion)
- Machinery and Equipment ($19.25 billion)
- Food ($14.88 billion)
- Electrical Appliances ($12.05 billion)
On top of its exports, Thailand was ranked the 7th largest foreign direct investment recipient within East and Southeast Asia as a result of attractive investment incentives by the BOI. In 2014, FDI had rose by 95% to a total of THB 1.02 trillion.
Turnaround for Thailand in 2016-2017?
Due to previous political instability in Thailand, in addition to the global economic slowdown and weak exports, this has affected the economy of Thailand from growing steadily. Thai exports and imports have declined in the first quarter this year by 1.4% and 14.4%, respectively. Additionally, according to the NESDB, the Thai agriculture industry is currently facing a decline in Q1 2016 by 1.5%. However, despite the negative outlook for 2016, there are positive implications towards Thailand economic system from the actions undertaken by the current government.
The interim government, led by Prime Minister Prayuth Chan-Ocha has issued 645.4 billion Baht worth of economic stimulus measures in order to help stimulate local demand. The rapid growth in the tourism sector has also aided Thailand economic system to grow more than expected in the first quarter of 2016. Compared to last year’s Q1, tourists arrivals is seen to increase by 15.5 percent.
Despite the economic stimulus in place, domestic demand remains fragile and susceptible to fluctuations. However, economic stimulus and growth in the tourism sector has successfully impede the effects of weak exports and local demand towards the economy of Thailand, allowing Thailand to exceed the expected growth rate in Q1.