The strength and resilience of Thailand’s economy continues to be reflected in the data, beginning with its 12% growth in gross domestic product during the first quarter of 2010. That was the best rate of growth in about 15 years, nearly three times better than Q1 2009, and about double the preceding quarter. It is estimated that GDP growth for the first half of 2010 will be approximately 10%. The global economy is improving, exports of both agricultural goods and industrial goods are rising, and benefits of free trade agreements are spurring trade. All of this has combined to lift Thailand to significant levels of economic growth coming out of the global recession. That momentum for higher growth continues unabated, as the Bank of Thailand recently raised its full-year 2010 growth forecast to between 6.5% and 7.5%, from its previous forecast of between 4.3% and 5.8%. In its July 2010 Inflation Report, the Bank observes that the “Main driving forces were exports and private investment, which expanded robustly in line with the global recovery.”
Some international organizations also foresee growth to be even higher than previous forecasts. At the conclusion of the International Monetary Fund’s (IMF) staff mission to Thailand for the 2010 Article IV Consultations, 16 July 2010, the IMF stated that
“Over the past year, the Thai economy has come through two difficult tests: a global crisis, then a round of domestic political turmoil. Its performance has been impressive, with growth rebounding after each setback. Two factors contributed to this robust performance. First, Thailand’s sound economic framework, which meant that the country entered the crisis from a position of strength, on all sides—banks, corporate, and public; second, the policy response, which was one of the most forceful in the region…. For 2010, we expect real GDP to expand by 7-8 percent, as the economy benefits from some further normalization in investment and consumption, supported by continued monetary and fiscal support.
Thailand did in fact respond quickly to the global economic recession, adopting two economic stimulus packages. Under the second, referred to commonly as TKK2, the government has approved an investment framework worth 1,296 billion baht, covering 2010-2012, not only designed to inject spending into the domestic economy, TKK2 also targets spending to improving the nation’s infrastructure and making Thailand even more competitive.
The stimulus package, in addition to directing funds to enhance water management, transportation and energy, among others, also contains funds to support Thailand’s transition from being a low labor cost manufacturing based economy to one that is firmly founded on the skills, innovation and creativity of the Thai work force. For the 2010 to 2012 period, 8.24 billion baht has been approved.
Despite the political unrest and concerns about Thailand’s investment environment, the Ministry of Commerce has announced that exports from January to June 2010 totaled US$93.07 billion, which is a 36.6% increase year on year. “At US$18 billion, June’s export receipts were unprecedentedly high. Such strong showing is an affirmation of the resilience of the Thai economy overall and its exports sector in particular, despite the April-May political conflict,” Hong Kong and Shanghai Banking Corp said in a report sent from its Singapore office. During the same period, imports rose 51.7% to US$86.69 billion, resulting in a surplus of US$6.38 billion.
The Commerce Ministry growth target for exports in 2010 has been increased from 14 per cent to 19 per cent, with a projected export value of US$183 billion. In this regard, it should be noted that in July 2010 Thailand’s National Economic and Social Development Board (NESDB) and the United Nations Development Programme (UNDP) began working in partnership to build a Creative Economy.