Thailand’s Economic Story.

Posted on Facebook years ago.

HISTORICALLY known as Siam, Thailand, located in Southeast Asia, is an old country that has never been colonized despite European conquests of most of the region in the past. European contact began in 1511 with a Portuguese diplomatic mission to Ayutthaya, which became a regional power by the end of the 15th century. Ayutthaya reached its peak during cosmopolitan Narai's reign, gradually declining thereafter until being ultimately destroyed in the Burmese–Siamese War.

       Yet Siam/Thailand, then and now, remains as one of a few countries that was never conquered by a foreign power. Not unless it is all about economics.

       The 1997–98 Asian financial crisis began in Thailand and then quickly spread to neighboring economies. It began as a currency crisis when Bangkok unpegged the Thai baht from the U.S. dollar, setting off a series of currency devaluations and massive flights of capital. Thai bhat, that time, reached almost 53.

       That crisis could be happening again. Economists predict that Thailand is expectedly to be one of the first to be impacted if the U.S. falls into a recession. Already, as we speak, as the U.S. struggles to get off decades-high inflation, Thai bhat is now at 38—down 22 percent compared with three years ago, before the pandemic. The record low was 22 in 1978. 🇹🇭🇹🇭🇹🇭

THAILAND relies heavily on tourism for its economic growth. Tourist spending accounted for approximately 11 percent of Thailand’s GDP in 2019, or before the pandemic. The country welcomed almost 40 million visitors that year and generated more than $60 billion in revenue, according to World Bank data. Most of tourism’s drivers are Chinese visitors but with Covid travel restrictions in place in Beijing these days, Bangkok only sees darkness.

       Economists who watched the 1997 currency crash say Thailand’s current downturn predictably follows, after Singapore. Thailand’s inflation rate is at a 14-year high of 7.86 percent. After Singapore and Thailand, next to go down in the region are the economies of Indonesia and the Philippines, due to their “domestic oriented economies.”

       Economics is complex and I don’t claim I know much. I just read. The rising strength of the U.S. dollar, which has been appreciating against other currencies since last year but began rising particularly rapidly this summer, is the result of multiple causes. Foremost of which is the decision by U.S. central bankers at the Federal Reserve to begin aggressively raising interest rates to fight inflation.

       The Federal Reserve’s determination to crush inflation at home by raising interest rates is inflicting pain in other countries — pushing up prices, ballooning the size of debt payments and increasing the risk of a deep recession.

       Interest rate increases are pumping up the value of the dollar — the go-to currency for much of the world’s trade and transactions — and causing economic turmoil in both rich and poor nations. In Britain and across much of the European continent, the dollar’s acceleration is helping feed stinging inflation. 🇹🇭🇹🇭🇹🇭

THAILAND’s chief industries are machinery, electronics, foods and wood, chemicals and plastics, automobiles and automotive parts, stone and glass, textiles and furniture. Investments by foreign businesses soared by nearly 75 percent during the first half of 2022 compared to the same period last year as companies.

       Investment is one of the three key pillars of the Thai economy, along with exports and consumption. The sharp rise in the value of foreign investments is a sign that global businesses still see Thailand as a competitive location for their operations. Until the U.S suffers its own economic problem/s.

       Top three trading partners: United States, China, Japan. As Bangkok’s top trade buddy, Washington has showered the former with attention in recent years. In June this year, Thailand joined 12 other countries in signing up to the U.S.-led Indo-Pacific Economic Framework (IPEF), a diverse trade platform that will now be negotiated among partners over the next 18 months.

       The dependency with U.S. investments, however, is majorly blamed for the current currency crash. For one, imports from the U.S. have grown costly etc etcetera. 🇹🇭🇹🇭🇹🇭

ANYHOW, the power struggle between the United States and China is a loud reality in Thailand as both superpowers escalate presence in the country. Although the U.S. is ahead in FDIs, China remains as an important ally to Thailand, partly because of its influence and prominence in the region.

       Trade between Beijing and Bangkok has rose fast in the last few decades. Bilateral trade in 1999 was worth $4.22 billion. Fast forward: China exports to Thailand last year was a whopping $69.36 billion against a mere $5.2 billion in Thai imports.

       China also has military relations with Thailand. Among other deals, in 2017, the Royal Thai Navy signed a contract with the China Shipbuilding Industry Corporation for a S26T diesel-electric submarine, which is derived from the Type 039A submarine. The submarine is expected to be delivered in 2023.

       I can discuss this more and connect it with the 1997 currency crash (with accent on George Soros’ dubious “speculative investing”) but suffice to say that, in these days, foreign military subjugation doesn’t define invasion. It’s all economics.

       For the meantime, the bigger news in Thailand is this horror: “After Day Care Massacre, Thailand Is Roiled With Grief.” News adds: “Anguished families were coming to terms with the loss of their young children as the nation pondered issues like gun violence and the widespread availability of deadly weapons.” 🇹🇭🇹🇭🇹🇭

Photo credits: BBC. Nemo Guides. Savored Journeys.