Thailand: a rising star in Asia?

Thailand is reported to have the fastest growth rate in Q1 of 2018 in five years. The Thai economy experienced a 4.8% year on year GDP growth and the private consumption in Thailand grew by 3.6% which was 0.2 percent point higher than the previous quarter’s increase. Some economists and investors have raised their estimations of the Thai economic growth in 2018.

There are two crucial sectors supporting the Thai economy. The first one is its rubber industry. Thailand is the world largest rubber exporter that it produced 4.4m tonnes of rubber which was more than a third of global output in 2016. The other sector is its tourist industry. Every year, tourists from all over the world help Thailand to generate approximately $60bn. Rubber is a stable business that many industries, such as the auto industry, largely demand rubber as their important raw materials. Therefore, Thailand does not need to worry too much about its rubber industry. However, tourism can be affected by many factors, including its own national security, the world political tension, as well as the shift in people’s preferences. When Thailand depends too much on its tourism for generating incomes and attracting investment, the Thai economy may be relatively fragile and easy to be affected by the exogenous risk.

However, due to the rising wage level in China, some companies have moved some of their manufactories to Thailand and other countries such as Vietnam. Such change has been helping Thailand to build more diverse economy. A more diverse economy tends to be more stable, as its resistance to exogenous risk becomes stronger and crisis in an individual sector will not have a significant impact on its overall economic performance.

Overall, I think that the Thai economy is highly like to continue its current pace of expansion as long as it is able to maintain its domestic stability (political stability).