Thailand's Growth Rebalancing
AbstractThis paper reviews Thailand's structural changes, the 1997 crisis experience, and recovery and lessons from the crisis. The paper then discusses the impacts of the subprime crisis on the Thai economy and the policy responses to date. The paper ends by discussing strategies to rebalance growth by reducing the dependence on exports as the main growth engine. The recovery from the 1997 crisis left Thailand more dependent than ever on exports as the main engine of growth, with the ratio of exports to gross domestic product (GDP) increasing from a precrisis level of about 38% to about 65% recently. The lessons learned from the 1997 crisis led to a more risk-averse financial system, and this helped Thailand avoid the direct impacts of the subprime crisis. However, being highly dependent on exports, Thailand, along with other export oriented East Asian economies, is now heavily affected by the indirect impacts of the subprime crisis, especially in the export industries. Exports and GDP have dropped sharply over the past two quarters. The government has been using fiscal stimulus and monetary easing measures to try to improve the economy. These measures are mostly short-term in nature, and if the subprime crisis is protracted, then the sustainability of the fiscal stimulus will be called into question. In the medium- to long-term, Thailand needs to move to a more balanced growth path, depending less on exports (although exports will still be important) and more on other, domestic sources of growth. The paper concludes by discussing a number of policy strategies that will contribute to a more balanced growth path.
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Bibliographic InfoPaper provided by Asian Development Bank Institute in its series ADBI Working Papers with number 154.
Length: 29 pages
Date of creation: 06 Oct 2009
Date of revision:
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thailand growth rebalancing; exports; trade statistics; financial crises;
Find related papers by JEL classification:
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F30 - International Economics - - International Finance - - - General
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-22 (All new papers)
- NEP-DEV-2010-05-22 (Development)
- NEP-MAC-2010-05-22 (Macroeconomics)
- NEP-SEA-2010-05-22 (South East Asia)
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- Pongsudhirak, Thitinan, 2013. "Between Economic and Political Crises:Thailand’s Contested Free Trade Agreements," Working Papers 63, JICA Research Institute.
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