Thailand was fastest growing East Asian economy from 1985 to 1996. It grew at about 9 per cent year on year. Thailand’s booming economy underwent a severe jolt when the currency was devalued and the country was at the forefront of the Asian financial crisis. The Baht was devalued and the stock market fell about 75 per cent. Nearly a million foreign workers were sent home from the country. By 2001, Thailand recovered from the financial mess and paid its debts 4 years ahead of schedule.
Nevertheless, Thailand has made the impressive transition from a low income country to an upper middle income country in 2011. It took 20 years for the Thai economy to transition and stabilize into a country that has now overcome over population and poverty.
Sustained growth averaging above 5 per cent was common in the Thailand economy for most of the 90s. Poverty in Thailand fell drastically to about less than 10 per cent since 2010 and demand for import and export license in Thailand has increased. Although, Thailand inequality is among the lowest in Asia, it still has a considerable education and skill shortage that might cripple its chance at big league inclusion.
But there are three important aspects that need to be underlined before you look at Thailand’s rapid rise in Asia. Firstly, the question of climate change and environmental sustainability is very pertinent. Thais live in a country that is bordered by the ocean on all three sides. A very high segment of the population lives on tourism revenues and changing levels of the sea, the Tsunami ravages of 2004 also caused considerable damage to the eco-system and the economy. Questions have been raised about Thailand’s future and whether the plentiful islands that then country boasts of can actually help in bringing in tourist dollars.
Another big question is whether the country can actually be able to compete with the low cost manufacturing and service hubs such as China and India. Back in the 80s, Thailand was a manufacturing hub for most American and European industrial majors. It remains to be seen whether that competitive edge can still be maintained.
It is also a country that has high energy intensity. About 90 per cent of transport in the country is through the roads. Only 2 per cent is through railways. This transport energy intensity is one of the highest in the world among non oil producing countries such as China, South Korea and Japan.
Another challenge facing Thailand is the threat of military rule and the consistent erosion of democracy as a stable institution. Almost all sections of Thai society is now been ruled by the diktats of the military. Analysts, across the board now predict how this can threaten the rise off the democratic institutions, stable and all inclusive growth in the country. The country has several opportunities for economic and social growth and with improved institutional development, democracy. Improved education and environmentally sustainable growth is the path Thailand will undertake in the future!