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Economy Overview:
With a well-developed infrastructure, a free-enterprise economy, and pro-investment policies, Thailand appears to have fully recovered from the 1997-98 Asian Financial Crisis. The country was one of East Asia's best performers in 2002-04. Boosted by increased consumption and strong export growth, the Thai economy grew 6.9% in 2003 and 6.1% in 2004 despite a sluggish global economy. Bangkok has pursued preferential trade agreements with a variety of partners in an effort to boost exports and to maintain high growth. In 2004, Thailand and the US began negotiations on a Free Trade Agreement. In late December 2004, a major tsunami took 8,500 lives in Thailand and caused massive destruction of property in the southern provinces of Krabi, Phangnga, and Phuket. Growth slowed to 4.4% in 2005. The downturn can be attributed to high oil prices, weaker demand from Western markets, severe drought in rural regions, tsunami-related declines in tourism, and lower consumer confidence. Moreover, the THAKSIN administration's expansionist economic policies, including plans for multi-billion-dollar mega-projects in infrastructure and social development, has raised concerns about fiscal discipline and the health of financial institutions. On the positive side, the Thai economy performed well beginning in the third quarter of 2005. Export-oriented manufacturing - in particular automobile production - and farm output are driving these gains. In 2006, the economy should benefit from an influx of investment and a revived tourism sector; however, a possible avian flu epidemic could significantly harm economic prospects throughout the region.

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