Thailand’s economy in 2011 was affected by both domestic and external factors including the natural disaster in Japan causing Thailand’s manufactured output to contract in the second quarter. Uncertainty on the economic recovery of the US and the public debt crisis of the European Union had given rise to anxiety and declining confidence among investors along with the rising prices of oil which contributed substantially to the pressure on inflation. In conjunction with the devastating floods in many areas of the country during the third and fourth quarters, this has generated massive
damages and ripple effects on economic activities leading to a contraction of Thailand’s
manufactured and service output during the last quarter. It has adversely affected both export and tourism sectors resulting in a lower-than-expected growth rate of the Thai economy in 2011. However, given the government’s effort to revive the economy and the
implementation of numerous measures during the last quarter of 2011, together with a high level of international reserves, low external debts and a surplus current account balance, Thailand’s economy in 2011 was expected to expand at the rate of 0.1 per cent and an inflation rate of 4.2 per cent.
Thailand’s economy in 2012 continues to be affected by the massive damages from
the 2011’s floods. However, once the problems have dissipated, the reconstruction of physical infrastructure and factors of production, the acceleration of efficient water
management, the implementation of urgent measures of both public and private sectors
to heal those affected by the floods, will expedite the recovery in investments and employment. This will provide an impetus to a continued expansion in domestic demand. In addition, Thailand’s economy in 2012 still enjoys support from major factors, namely the mobilization of international investment funds to the Asian economies which
are Thailand’s principal trading partners and the government’s major role in mobilizing the economy. The government will accelerate the measures on restoring the economic sector, reducing cost of living and stimulating consumption along with the continued effort to increase people’s income and the country’s competitiveness. Given the relatively
stable internal and external economies, Thailand’s economy in 2012 is expected to expand
at the rate of 5.5 to 6.5 per cent and inflation rate at 3.5 to 4.0 per cent.