Thailand Economic

ECONOMY

Overview: Thailand's developing; free-enterprise economy has recovered from the Asian financial crisis triggered by speculation against the Thai baht in 1997-1998. By 2002 Thailand's standard of living had returned to the level prevailing before the financial crisis. The recovery reflected the benefit of reform measures tied to assistance by the International Monetary Fund, direct investment from Japan, the United States, Singapore, and other nations, and surging exports. During 2001-2004 the economy grew at a moderate, but the rate of growth was slower than in the booming 1980s and the first half of the 1990s.

The Thai economy in the second quarter of 2007 expanded by 4.4 percent picked up slightly from the 4.2 percent growth rate seen in the first quarter. The first half of year registered an overall expansion rate of 4.3 percent whereby exports of goods and services were the main contributors to economic growth. Expansionary fiscal stances both in term of current spending and capital expenditures also supported the growth momentum, having grown at 7.4 and 3.1 percent respectively, at constant prices. Private consumption and investment, on the other hand, underwent a significant slowdown.

The overall economic situation remained favorable with continued stability. Inflation was 1.9 percent, subsided from the 2.4 percent recorded in the first quarter. Unemployment rate stood at 1.6 percent while current account balance enjoyed a surplus of 1.32 billion USD, following 5.5 billion USD surpluses in the first quarter.

Interest rate continued to decline, credits accelerated while deposits signaled a slowdown. However, liquidity remained at high level and Thai baht has been on an appreciating trend. Stock and bond markets improved favorably which encouraged capital movement from deposits. Fiscal and public debt situation in the second quarter (April-June, 2007), the government experienced a negative cash balance due to 32,990.3 million baht non-budgetary