Thailand experienced rapid economic growth from 1985 to 1997, averaging over 7% annually. This was fueled by low wages, trade reforms, and investment in manufacturing industries. However, the Asian Financial Crisis of 1997 caused a severe recession, as the "bubble economy" of speculation in stocks and property burst. The Thai currency and banking system collapsed, resulting in widespread bankruptcy and unemployment. By the early 2000s, Thailand had fully recovered through strong export growth.

1. Economic Setting::
Thailand
Reported by:
Ronjie Budiao
(Crim. 2-B, Group 7)

2. Economic Setting:
Thailand
• The recent history of Thailand’s
economy is defined by more
than a decade of sustained and
rapid economic growth
beginning in 1985, followed by a
severe recession that started in
late 1997. During the boom

3. Economic Setting:
Thailand
years, economic growth
averaged more than 7 percent
annually, one of the highest
rates in the world. The crisis of
1997 and 1998 wiped out some
of the gains of the boom and
forced major adjustments in Thai
industry and economic policy.

4. Economic Setting:
Thailand
Many different factors
contributed to the rapid growth
of Thailand’s economy. Low
wages, policy reforms that
opened the economy more to
trade, and careful economic
management resulted in low
inflation and a stable exchange

5. Economic Setting:
Thailand
rate. These factors encouraged
domestic savings and investment
and made the Thai economy an
ideal host for foreign
investment. Foreign and
domestic investment caused
manufacturing to grow rapidly,

6. Economic Setting:
Thailand
especially in labor-intensive,
export-oriented industries, such
as those producing clothing,
footwear, electronics, and
consumer appliances. These
industries also benefited from a
tremendous expansion in world

7. Economic Setting:
Thailand
trade during the 1980s. As
industry expanded, many Thai
people who previously had
worked in agriculture began to
work in manufacturing, slowing
growth in the agriculture sector.
Meanwhile, manufacturing

8. Economic Setting:
Thailand
growth spurred the expansion of
service sector activities.

9. Economic Setting:
Thailand
Although Thailand was
technically still a poor country,
spectacular income gains
enjoyed by the urban middle
class made the country one of
the world’s large markets for
luxury cars and other expensive

10. Economic Setting:
Thailand
consumer goods. However, by
Asian standards the gains of
growth were not distributed
equally among the Thai
population: between 1981 and
1994 the incomes of the richest
20 percent of the population

11. Economic Setting:
Thailand
grew significantly in comparison
to those of the poorest 20
percent. Nevertheless, nearly all
Thai benefited in some fashion
from growth.

12. Economic Setting:
Thailand
In the early 1990s a series of
economic policy reforms
introduced by the Thai
government made it easy and
attractive for foreign banks to
offer loans to Thai banks. The
Thai banks used the capital to

13. Economic Setting:
Thailand
domestic finance companies,
property developers, and other
investors, stimulating an
investment boom. In an
atmosphere of great optimism
about continued rapid growth,
the resulting investment boom

14. Economic Setting:
Thailand
created a “bubble economy”
based on speculation in urban
property and stocks. The bubble
burst in 1996 and 1997, when
stock and property prices
declined steeply. As speculators
in these sectors failed to repay

15. Economic Setting:
Thailand
loans, many Thai banks became
unable to service their foreign
debt, causing investor
confidence to fall sharply. The
consequent outflow of capital
caused the Thai banking system
to crash in mid-1997. The

16. Economic Setting:
Thailand
resulting credit shortage drove
many companies into
bankruptcy and created a large
pool of unemployed workers.
Thailand’s economy remained
deep in recession through 1998,
with gross domestic product

17. Economic Setting:
Thailand
shrinking an estimated 8.5
percent that year. In the early
2000s Thailand made a full
economic recovery, driven by
strong growth in exports.

18. Economic Setting:
Thailand
Thai governments, including
unelected military regimes, have
in general worked to ensure
price stability while promoting
economic growth. Other than in
some key infrastructure and
energy sectors, the government

19. Economic Setting:
Thailand
has not made extensive use of
direct interventions in the
market. Instead, it prefers to
exert influence through indirect
measures, such as investment
incentives and taxes on trade.

20. Economic Setting:
Thailand
Thailand’s basic unit of currency
is the baht. The central bank is
the Bank of Thailand
(established in 1942), which
issues the currency. Until 1997
the Thai banking system
combined private and publicly

21. Economic Setting:
Thailand
owned banks, with limited
participation by foreign banks.

22. Economic Setting:
Thailand
In the late 1980s economic
policy reforms greatly facilitated
foreign purchases of Thai stocks
and bonds as well as
international borrowing by Thai
banks. Whereas private foreign
capital flows had previously

23. Economic Setting:
Thailand
consisted mainly of direct
investments in factories and
equipment, by the early 1990s
the major source of foreign
capital was short-term loans to
Thai banks. The boom in capital
inflows placed great stresses not

24. Economic Setting:
Thailand
only on the private banking
system (to which most foreign
loans flowed) but also on the
capacity of the Bank of Thailand
to monitor and regulate the
financial sector. These
institutional weaknesses formed

25. Economic Setting:
Thailand
fault lines along which the Thai
financial economy fragmented
when capital inflows abruptly
reversed in 1997.

26. Economic Setting:
Thailand
Allowed to float, the baht fell as
low as 60 to the dollar before
stabilizing at around 36 by late
1998. The 1997 crisis also led to
a number of reforms in banking
and finance. Restrictions on
foreign ownership of Thai banks,

27. Economic Setting:
Thailand
property, and corporations were
relaxed, and measures were
passed to improve the structure
of the banking sector and the
transparency and efficiency of
financial transactions.

28. Economic Setting:
Thailand
Source:
Microsoft ® Encarta ® 2009. ©
1993-2008 Microsoft
Corporation. All rights reserved.

29. Economic Setting:
Thailand
Khop Khun!!!

30. Economic Setting
as we
Understanding

31. Economic Community
for
establish an

34. Republic of the Philippines
CAPIZ STATE UNIVERSITY
Dumarao Satellite College, Dumarao, Capiz
Theme: “Understanding Better the Political, Economic &
Socio-Cultural Setting of Southeast Asian Nations for
Peace, Prosperity & People”
March 09, 2015 (8:00-11:30 am)
Campus Library