Economy and business in Thailand are dominated by industry and service industries. The industry comprises 36.2 and the service industries 55.6 percent of the economy, while the previously important agriculture comprises 8.2 per cent (2017). However, agriculture is still very important for the country, as 31.8 percent (2015) of the working population are directly employed in agriculture.
Abbreviated as THA by abbreviationfinder.org, Thailand has a gross domestic product (GDP) of US $ 17,900 per capita (2017). GDP grew by just over 3 percent each year in the years 2015–2017.
In 2015, less than 7.2 percent of the inhabitants lived below the poverty line. All the ten poorest provinces (measured in GDP per capita) are in the northeast. Growth in the economy has also brought with it other social inequalities. Among other things, the country’s economy is only dominated by a few powerful families.
Thailand’s economy grew very rapidly from the 1970s until a regional crisis (the so-called Asia crisis) occurred in Thailand in 1997. Between 1985 and 1995, the country benefited from one of the world’s highest growth rates. Thailand was referred to as a successor to the rapidly industrializing countries of Taiwan and South Korea. Unlike in Taiwan and South Korea, however, government participation in the Thai economy has been minimal. Moreover, industrialization in Thailand was to a much greater extent than in Taiwan and South Korea based on imports of foreign capital and technology. The economy is characterized by major inequalities, and growth has mainly taken place in the Bangkok region.
Growth in the Bangkok region has created new, large income gaps in the country and growing social tensions. In the capital, the population rose from three million in 1970 to nearly ten million at the turn of the millennium. The economy seriously accelerated towards the end of the 1980s and continued at a record pace throughout the 1990s. A sharp setback came in 1997 with an acute financial sector crisis, first with an actual devaluation of the currency by about 40 percent. The International Monetary Fund (IMF) supported a $ 16 billion loan.
Since the 1950s, Thailand has regularly had large trade deficits abroad. Foreign trade has changed character since the 1980s. In the past, agricultural and fishery products were the main concern, but after the turn of the millennium, industrial products accounted for over four-fifths of exports and Thailand was granted Newly industrialized country (NIC) status.
In the years following the Asian crisis, Thailand had steady economic growth with annual growth rates of 4.5–7 per cent. The military coup in 2006 obviously had serious financial consequences, with fewer tourists, new investments and weakening private consumption. In 2007-2008, GDP growth was about four percent – the lowest of all the countries in Southeast Asia. In 2008, the economy was hit on two fronts – by both the global financial crisis and the severe riots in the streets. For 2009, negative growth was expected. However, the economy is considered to be significantly better equipped than in 1997, when Thailand’s faltering government finances triggered a financial crisis that not only affected the entire Asian region but had major consequences globally.
Tourism suffered a temporary setback when Thailand was severely hit by the tsunami disaster in Asia in 2004. Around 8300 people lost their lives. Among the victims were 2,500 foreign tourists, including 84 from Norway, 543 from Sweden and 46 from Denmark. Island groups and tourist sites in the Phuket region were particularly hard hit. In 2006, the tourism industry was in good shape again, and in 2007 and 2008 more than 14 million foreign tourists arrived.
However, violent political confrontations led to a sharp decline in the fourth quarter of 2004. After both Bangkok’s main airports were occupied and blocked by protesters in November 2008, a time 350,000 foreigners were stranded, according to the tourism organization. New riots in April 2009 also led to many cancellations. The new main airport Suvarnabhumi was opened in 2006, but soon a number of serious shortcomings came to light. Extensive repair work was needed, including cracks in the runway. The old airport, Don Muang, had to be re-used for international traffic for a period of 2007.
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Thailand’s natural resources primarily include the country’s huge agricultural potential. Agriculture is traditionally the country’s most important industry, although the industry’s share of the country’s total economy has fallen to less than ten percent in recent years. Because of the large population still living in the countryside, agriculture is very important. In total, three quarters of the population is expected to be directly or indirectly dependent on agriculture for their livelihoods.
Thailand is the world’s largest exporter of rice, rubber and manioc and the world’s second largest exporter of sugar. Agriculture is generally little modern. Rice is the main ingredient in the diet, and is grown all over the country, mostly in small family farms. The arid northeast region accounts for close to half of rice production and the northern region accounts for a quarter. However, the most intensive cultivation of rice takes place in the central part of the country, especially in the plains along Chao Phraya. Corn, manioc, cotton and pineapple are grown in the plateau, while rubber is produced in the south. The country is plagued by floods during the rainy season. During the dry season, especially the northeast plateau may be plagued by severe drought.
Animal husbandry for meat production is also very important. Thailand was the world’s third largest exporter of chicken meat until the country was hit by bird flu in 2004. Exports were later largely shifted from exports of fresh and frozen meat to cooked meat. In the low-mechanized countryside, buffalo are still important as migratory animals.
Timber was previously an important export product. In 1938, 70 percent of the land was covered by natural forest, but uncontrolled harvesting reduced the area to around 15 percent. A general nationwide ban on harvesting was introduced in 1989, but is not fully enforced. In order to remedy deforestation, a forest planting program has been implemented.
Thailand has 150,000 fishermen on 50,000 vessels, of which 17,000 are sea trawlers and factory ships. The catches are usually distributed by two thirds in the Gulf of Thailand and in the South China Sea, one quarter on the west coast of the Andaman Sea and the rest in rivers and lakes. Thailand is one of the world’s largest exporters of both shrimp and mackerel (tuna). However, the outlook for the country’s fisheries is mixed as a result of considerable overfishing in domestic waters, conflicts in foreign countries’ waters and unstable export markets. In addition, in December 2004, the tsunami hit the country’s fisheries hard. A total of 4529 fishing vessels and a number of aquaculture facilities were destroyed.
Mining and energy
Thailand is not particularly rich in mineral resources. However, tin, lignite, plaster, tungsten, lead, antimony, manganese, copper, gold, zinc, rubies, sapphires and silver are mined. Gemstones and other jewels are important export products. The largest deposits of lignite are found in the north. The extraction of natural gas and crude oil is undergoing strong development in the Gulf of Thailand.
In 2017, the production of electrical energy was 176.6 TWh. Around 60 percent of self-generated power is produced using natural gas, while coal contributes around 20 per cent. In addition, there will be import power from Laos which in 2017 accounted for around 9 percent of consumption.
Thailand imports large quantities of natural gas via a pipeline from Myanmar, but domestic production has increased in recent years. In 2016, own crude oil production was 257,525 barrels per day.
Development of the industry started around 1960 and followed the advice of the World Bank, but only after 1967 did development begin to accelerate. Until 1971, an import substitution strategy was focused on. Later, more emphasis has been placed on export promotion measures. With the exception of the electricity supply, the petroleum industry and the petrochemical industry, the state authorities have been very reluctant to invest directly in business. A very large proportion of industrial growth has been through foreign investment and foreign technology, especially from Japan, but also from the United States, Europe and other countries of East and Southeast Asia. In the 1980s, much of the industrial growth in labor-intensive production such as textiles, toys, shoes and construction products occurred. In the 1990s, most of the growth occurred in the production of more advanced products such as semiconductors, integrated circuits, hard disk drivers and electrical appliances, as well as passenger and trucks.
Several American and Japanese car manufacturers have established production units in Thailand. In particular, a significant number of pickup cars are produced. The growth in vehicle production has led to strong growth in steel production. Several new oil refineries have also been built since 1996. The transition from labor-intensive to sophisticated high-tech production has been painful. Competition from other countries with lower labor costs has led to parts of labor-intensive production, including textiles, being moved to other low-cost countries. As a counterbalance, efforts are being made to develop Bangkok as a fashion center for Southeast Asia. The development of high-tech production, for its part, suffers from a shortage of skilled labor in several areas, partly caused by the high degree of imported technology.
Most of the industrial growth has taken place in the Bangkok region. Since 1985, most of the growth has been along the eastern side of the Bay of Bangkok in an area called the Eastern Seaboard, which extends from Bangkok to Rayong. The main regional industrial centers are Chiang Mai and Nakhon Ratchasima.
The tourism industry has been growing rapidly since the latter half of the 1980s, from 4.2 million foreign visitors in 1988 to 10.1 million in 2003 and 35.38 million in 2017. The country’s culture and nature attract a large number of foreign tourists each year. In addition, the country is seen as a generally stable society and safe to visit for Western tourists. Among the most attractive areas are Bangkok, Phuket, Pattaya and the areas in the north.
Foreign trade has expanded significantly since 1960, and especially after 1988. In 2016, industrial products comprised 86 percent of export value, and agricultural commodities – mainly rice and rubber – eight percent. Since 1995, computer parts, electronic consumer goods and vehicles have been the country’s most important export products, against earlier textiles and footwear. Thailand is an export-oriented economy: exports account for about 65 percent of the country’s GDP. The main import goods are raw materials and semi-finished products, including parts for the automotive industry.
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The ASEAN (Association of South-East Asian Nations) partner countries are, in sum, the most important trading partners. The most important single export markets are the United States, Japan and China. A quarter of the imports come from Japan.
Transport and Communications
Thailand had a total of 180 053 kilometers of roads in 2006, of which 95 percent were classified with a fixed tire. The development of the road network has closely followed the increase in the number of vehicles, and major traffic problems have developed, especially in the Bangkok region. The railway network covers 4 127 kilometers (2017). There are four main lines out of Bangkok: north to Chiang Mai, northeast to Nong Khai, east to Ubon Ratchathani, and south to Hat Yai and further to Malaysia and Singapore. In Bangkok, the first section of an elevated tram network opened in 1999, while the first subway line opened in 2004.
Note: the capital city of Thailand is Bangkok with a population of 8,800,000 (excluding suburbs, 2018 estimate). Other major cities include Nakhon Ratchasima with a population of 2,500,000, Samut Prakan with a population of 2,100,000, Khon Kaen with a population of 1,700,000, Ubon Ratchathani with a population of 1,700,000, Chiang Mai with a population of 1,700,000, Chon Buri with a population of 1,700,000 (2018 estimate).
International airports can be found at Bangkok (Suvarnabhumi), Chiang Mai, Chiang Rai, Hat Yai, Ko Samui, Krabi, Phuket, Surat Thani. Bangkok’s port in the Klong Toei district can ship up to 10,000 gross tonnes. Two new deep water ports at Laem Chabang and Map Ta Phut southeast of Bangkok are built to relieve Khlong Toei. In the central plain, a network of channels is still important for transport.