Determinación de propiedades funcionales

According to Bank of Thailand statistics, Thailand’s gross external debt rose from $75.3bn in 2009 to $100.6bn in 2010, representing an increase of around 34%. However, gross external debt as a percentage of GDP increased from 28.8% in 2009 to 35.2% in 2010.

International investment position

Foreign direct and portfolio investments

The inflow of FDI into Thailand increased significantly in the 1980s after the Plaza Accord, an agreement signed in 1985 at the Plaza Hotel in New York City by five nations that aimed to depreciate the US dollar by intervening in currency markets.

During 1986–89, Thailand attracted approximately $900m per annum of net FDI flows, representing around 7% of private business investment. Due to political unrest in the early 1990s, FDI in Thailand witnessed a slight decline from $1.7bn in 1993 to $1.3bn in 1994. With the subsequent depreciation of the baht, FDI inflows increased to $3.6bn in 1997, fell to

$2.8bn in 2000, and rose to $3.7bn in 2001.

During 2004–07, total foreign investments increased from $4bn in 2004 to $11.4bn in 2007. In 2006 the country consolidated its position as the second largest FDI recipient in Southeast Asia. However, in 2008 FDI related to mergers and acquisitions in manufacturing dropped, and total FDI declined to $8.4bn, falling further to $5bn in 2009. According to the Thai Board of Investment, a total of 413 projects were approved in 2009 with a combined investment of THB97.8bn ($2.8bn). However, there was a marked improved in FDI in 2010, when it increased to $5.8bn.

Figure 15: Total foreign investment in Thailand, 2005–10

8.1

9.5

11.4

8.4

5.0 5.8

0.0 2.0 4.0 6.0 8.0 10.0 12.0

2005 2006 2007 2008 2009 2010

$bn

Year

FDI

Source: Datamonitor D A T A M O N I T O R

Credit rating

In December 2010, Standard & Poor’s affirmed a BBB+/A-2 foreign currency rating and an A-/A-1 local currency rating for Thailand, and rated the outlook for the country as stable, citing its low level of government debt and prudent fiscal policies . However, the increasing political instability could bring the economy under pressure in the medium term.

Monetary situation

Key monetary indicators

Thailand has traditionally witnessed high inflation, although the figure fell in 2009. The country’s inflation increased from 0.7% in 2002 to 4.7% in 2006, and had reached 5.5% by 2008 due to a significant increase in energy and food prices.

However, falling commodity prices combined with stringent monetary policies led the country to deflation of 0.8% in 2009.

With the economic revival in 2010, inflation went up to 3.3%. The high price of commodities is expected to push inflation in the country upwards in 2011. According to Datamonitor estimates, inflation is expected to reach 4% in 2011.

Figure 16: Consumer price index and consumer price index-based inflation in Thailand, 2004–14

-2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Inflation (%)

Consumer price index

Year

Consumer price index Inflation

Source: Datamonitor D A T A M O N I T O R

Banking sector

The banking sector plays a dominant role in the economy, with estimated financial sector assets at 200% of GDP. Non-performing loans as a percentage of total loans increased slightly from 7.5% in December 2006 to 7.9% in September 2007. The total loans of the banking system have also increased significantly. In 2010, the revenue of commercial banks from payment systems services totaled THB59.9bn ($1.9bn), or 10.5% of total revenue, an increase of 11.8% compared to 2009. According to the Bank of Thailand, the overall banking system is strong, due to domestic economic expansion. In the

first quarter of 2011, the sector experienced strong credit growth, improved asset quality, a decline in non-performing loans, and improved fund mobilization due to deposits and bills of exchange increasing by around 12%. This also led to increased liquidity in the banking system. While loans expanded by 13.4% year-on-year, non-performing loans declined by THB12.1bn ($396m) to THB300bn ($9.81bn). During the quarter, operating profit and net profit increased due to higher net interest income, non-interest income, and declining provisioning expenses. In addition, the Federation of Accounting Professions published a new Thai accounting standard, effective January 1, 2011, in line with the new standards published by the International Accounting Standard and the International Financial Reporting Standard. This led to a decline in capital in the banking system, as banks adopted a new accounting standard entitled Employee benefits for the first time.

Employment

During 2008, the agriculture sector employed around 42.4% of the labor force, followed by the services sector with a share of 37.9%. The industry sector accounted for the remainder of employment. The country continues to be faced by significant income inequality; for example, the average wage levels of employees participating in the private and public sectors in the northeast are around three times lower than those in Bangkok and twice as low as those in the central region. Per capita government expenditure in the northeast – particularly on health and agriculture – is also comparatively lower than other regions, and below the central region by almost half. As a result, the overall enrollment rate of the northeast in comparison with the central, northern, and southern regions is low.

The country's unemployment rate declined from 2.6% in 2001 to 1% in 2010, while the number of employed individuals grew from 34 million in 2001 to 38.6 million in 2010. During 2001–10, employment grew at an average rate of 1.4%.

According to Datamonitor estimates, employment growth is expected to fall to an average of 0.6% during 2011–16, largely due to the impact of the floods that have ravaged the country since July 2011, which have had a significant effect on the manufacturing and tourism sectors. The March 2011 earthquake and resulting tsunami in Japan, which wiped out entire towns and industrial zones supplying critical electronics and automotive components, has also impacted the Thai manufacturing sector, as Japan is the country’s biggest import partner.

Figure 17: Employment in Thailand, 2004–14

0.0 1.0 2.0

34.0 35.0 36.0 37.0 38.0 39.0 40.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Employment growth rate (%)

Number of employed (millions)

Year

Total employment Employment growth rate

Source: Datamonitor D A T A M O N I T O R

Figure 18: Unemployment in Thailand, 2004–14

0.0 2.0

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Rate of unemployment (%)

Number of unemployed (millions)

Year

Total unemployment Rate of unemployment (%)

Source: Datamonitor D A T A M O N I T O R

Outlook

The government has set the national budget for 2011–12 at THB2.3tn ($77.2bn), with an emphasis on reducing social disparity, a problem that has long persisted in Thai society. In November 2011, the prime minister submitted a draft budget bill for 2012 that called for expenditure of THB2.38tn ($77.2bn), including substantial investment in flood recovery and rehabilitation. The budget deficit in the country is expected to rise to around THB400bn ($13.4bn) in 2011–12. The economic revival in 2010 pushed inflation up to 3.3%, and Datamonitor estimates that inflation will increase to 4% in 2011.

Although Standard & Poor’s affirmed a BBB+/A-2 foreign currency rating and an A-/A-1 local currency rating for Thailand and rated the outlook for the country as stable in December 2010, the increasing political instability could bring the economy under pressure.

Datamonitor estimates employment growth to fall to an average of 0.6% during 2011–16. This is reflective of the severe impact of floods on the manufacturing and tourism sectors since July 2011. The March 2011 earthquake and resulting tsunami in Japan, which wiped out entire towns and industrial zones supplying critical electronics and automoti ve components, could also impact the Thai manufacturing sector significantly, as Japan is the country’s biggest import partner.

The country needs to tackle the floods as a priority and return its infrastructure to normalcy as soon as possible in order to sustain the strong economic revival experienced in 2010. Datamonitor expects GDP to grow by 3.7% in 2011.