Thailand is Southeast Asia’s second-largest economy, and its growth is fueled by domestic demand and exports. Right now, both are struggling. In June, consumer confidence showed its sixth straight month of decline, according to data from the Thai Chamber of Commerce. And exports—which make up more than 60% of the Thai economy—fell a fifth straight month in May, according to Industry Ministry data reported by Reuters news agency. Thailand’s central bank cut its forecast for 2015 growth to 3% from a previously predicted 3.8%.
Still, the country is likely to surpass last year’s anemic expansion. Political unrest and street protests disrupted economic activity during the first half the year, before the military seized power in a coup in May 2014. The instability stunted growth, which was less than 1% for the year.
Business travel industry insight
Much of the business travel to Thailand is linked to its status as a regional hub for automobile and electronics manufacturing. Suvarnabhumi International Airport is a gateway to Southeast Asia and a connecting point for various foreign carriers; it has the capacity to accommodate 45 million passengers per year. The World Travel & Tourism Council projects travel and tourism will grow at an annual average of 6.2% in Thailand over the next decade.
- Leaders have approved a $95 billion, eight-year program to improve railways, roads, ports, airports and other infrastructure.
- Thai officials expect exports to grow in the last three or four months of this year.
- The U.S. renewed its Generalized System of Preferences for Thai firms at the end of June. The GSP lowers duties collected on certain exports from developing countries where the U.S. wants to support growth. Thai firms have benefited from the program since 1976.
- Despite an anticipated improvement in manufacturing output by the end of the year, Thailand’s central bank anticipates production of industrial goods will shrink overall in 2015. It would be the third year of decline in a row.
- The country needs stronger public investment from state-owned enterprises, but the Asian Development Bank and other economic institutions contend those enterprises need reform.
- Political disruptions, economic downturns and natural disasters occurred often enough between 2007 and 2014 to confine growth to an average rate of 2.9% during that period.
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