For the most part, Thailand has strong export industries, generally pro-investment policies, a free-enterprise economy, and a well-developed infrastructure. This has allowed the Southeast Asian country to receive steady growth. It's particularly strong (and dependent) on agricultural and industrial exports such as processed foods, automobiles and vehicular parts, agricultural commodities, and electronics. The country has been attempting to maintain and continue its economic growth by encouraging public investment and domestic consumption to offset its weak exports just a year or two ago, in 2012.
In 2012, growth was exceeding economic analyst and government expectations, jumping by 18.9% from what it was back in 2011 (expectations were low at the time because the great Thai flood happened and proved to be quite the newsworthy natural disaster). There was indeed great recovery and growth after the large-scale flooding of 2011 thanks to an outpouring of support within and outside of the country. Furthermore, Thailand's robust economy attracts quite a lot of migrant workers (about 2.5 million of them) regularly from nearby nations, although it also has industries that are facing upwards pressure when it comes to wages.
The State of the Thai Economy from 2013 Onwards
The country outpaced its neighbors in terms of growth from 2011 to 2012, gaining expansion of more than 6% in 2012. As for its unemployment rate, it's at less than 1% of the labor force, thus it has some of the lowest unemployment levels globally (i.e., most people have jobs). However, according to analysts like the Head of RBS Economic Research Sanjay Mathur, there's weak domestic demand that has resulted in a belated recession of sorts. The country was faced with a long-time-coming slump in the second quarter of 2013, getting a 0.3% contraction between April and June. As is, analysts and investors are waiting to see if external demand is enough to offset the current local drag in consumption.
Meanwhile, the first quarter already had a 1.7% fall. A 3.5% growth should be expected, Mathur said around the time the slump hit. Back in August, the Bank of Thailand left its interest rates at 2.5% following a cut in May. Then, around November, the nation had to trim down its 2013 economic outlook to something more practical. From August to November, recovery was sluggish. In the third quarter of 2013, Thailand cited the current growth and rate for exports as its reasons for recalculating possible growth projections for the remainder of 2013. As the quarter ended in September, the GDP grew about 2.7% thanks to sharp investment contractions.
The Future of the Thai Economy in 2014 and Beyond
Regardless, the Thailand government is doing everything it can bring things right back on track. The government has attempted to boost local demand and hasten budget disbursement since plans to spend 350 billion baht on projects relating to water management and 2 trillion baht on infrastructure have stalled.
Although past natural disasters and political conflictdo have its inevitable effects on the Thai economy, the Thais have a resilient workforce. On the bright side of things, Thailand remains a land of rich employment opportunity, which means they could still turn things around, unlike with the unemployment rates of countries like Greece, Spain, and South Africa (which, according to Bloomberg data, are the nations with the highest unemployment rates). Meanwhile, despite political issues and the economic consequences of natural disasters from two to three years ago coming back to haunt them, Thailand offers a rich job market (with, as mentioned, 1% unemployment), pretty scenery, and a warm climate that serves as the perfect working environment.
Do you want to start a Thailand-based business? Then let Servcorp help you with its virtual office and corporate registration solutions. It's one of the most dependable companies out there when going about Thai startups.