In the summer of 2016, the Thai economy was braced for a period of decline and a marginal slowdown.
After all, the economy had grown by 2.8% in 2015, but a weakening of the global economy and reduced exports saw the following year’s figures revised to just 2.5%. With geopolitical concerns and global economic uncertainty at the heart of this decline, the near-term future in the region looked far bleaker than at any other point in recent history.
Strong fundamentals and robust fiscal stimulus measures helped the Thai economy to consolidate during this period, however, and it is now thriving and beginning to realise its full potential. But how did this transition take place?
Much can change in a Year: How the Thai Economy evolved in 2016
Another key area of growth for Thailand in 2016 was tourism, which has always been the glue that holds the region’s economy together. The rate of expansion was certainly pronounced during the second half of 2016, thanks primarily to increased public investments and a distinct rise in the number of arrivals in the area. In fact, the number of visitors to the region increased by 13.1% during the third quarter of 2016 alone, with an influx of tourists from China largely accounting for this sudden rise.
This was part of a two-pronged strategy to help combat the decline that took hold at the beginning of 2016, as the Thailand government focused on investing in the development of grass-roots and economic staples while also diversifying into new growth markets. These included infrastructure and advanced manufacturing, with steep public spending enabling the nation to begin the process of economic reform.
This approach has clearly reaped significant rewards, with the economy expected to grow by 3.3% during 2017 and the first quarter having seen significant expansion recorded. In fact. The nation’s economy grew at its fastest pace in four years between January and March, with tourism spending continue to increase and exports rose to offset the short-term impact of increased infrastructure spending. LCG traders will have also noticed how the value of Thailand’s currency has increased incrementally in recent times, and this has also increased the value of exports in the region.
This has laid the foundations for the new reforms to drive longer-term growth and diversification, potentially enabling Thailand to realise its true potential as Asia’s second-largest economy.
The Bottom Line: Why the Future is Bright for Thailand
Much can change in a year, particularly in a typically volatile economic and social climate such as Thailand. After all, it was as recently as 2014 that the military were forced to seize power in a bid to end months of street protests, and the economy has struggled manfully to drive growth since this time. Last year finally saw the tide turn for the government, while 2017 is the year that Thailand is beginning to see the type of growth that reflects its true potential.
With a growth rate of 3.3% forecast for 2017, we will continue to see an influx of tourists from neighbouring Asian countries and across the globe. Not only this, but public investments will also begin to see dividends towards the end of the year, with advanced manufacturing projects now well underway. Over time, this should allow the government to scale back its stimulus measures, while establishing Thailand as a true economic force on the global stage.