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Thailand

Thailand’s economy decreased slightly its growth rate from 5.1% in 2006 to 4.8% in 2007, below the 6.3% average growth rate for the South-East Asian region that year
In contrast with most South East Asian countries, both private consumption and gross fixed investment grew more slowly in 2007 than in 2006

Private consumption decreased its growth rate from 3.2% in 2006 to 1.4% in 2007
Gross fixed investment decreased its growth rate from 3.8% in 2006 to 1.4% in 2007

In contrast, government consumption increased its growth rate sharply, from 2.3% in 2006 to 10.8% in 2007
Overall, the growth rate of domestic demand, defined as private and government consumption plus gross fixed investment, decreased from 3.2% in 2006 to 2.4% in 2007
Export growth remained strong, though its growth rate decreased slightly from 8.5% in 2006 to 7.1% in 2007 (in volume term). In terms of value, it increased moderately from 17.0% in 2006 to 18.1% in 2007.
Economic growth is forecast edge up slightly to 4.9% in 2008

The inflation rate decreased significantly, from 4.7% in 2006 to 2.3% in 2007
The inflation rate declined from 2.4% in the first quarter to 1.9% in the second and 1.6% in the third
However, the inflation rate increased to 2.9% in the fourth quarter of 2007 and continued increasing in early 2008, to 5.4% year-on-year in February
The acceleration of inflation towards the end of the year was the result of higher world oil and commodity prices, as well as the relaxation of some price administration measures
The Bank of Thailand cut its policy rate, the one-day repurchase rate, on 5 occasions between January and July of 2007, from 4.93755 to 3.25%, and kept it at that level since then
Despite the increase in headline inflation towards the end of 2007, core inflation rate remained at 1.5% in February of 2008, well within the Bank’s 0% - 3.5% inflation target range
The baht continued appreciating against US dollar during 2007, putting significant downward pressure on domestic price inflation
The inflation rate is forecast to increase to 3.3% in 2008

Since the introduction of tight foreign exchange restrictions in December of 2006, the offshore and onshore exchange rates of the baht started to differ
While the onshore rate appreciated 6.3% between January and December of 2007, from 36.0 THB/USD to 34.0 THB/USD, the offshore rate appreciated 14.1%, reaching 30.3 THB/USD in December of 2007
The gap between offshore and onshore rates decreased substantially during the first two months of 2008, as it was expected that the new government would remove the foreign exchange restrictions
Between the end of December and the end of February, the onshore exchange rate appreciated an additional 5% to around 32.0 THB/USD
The Bank of Thailand announced the removal of the foreign exchange restrictions on February 29 of 2008
Foreign exchange reserves increased over 30% between January and December of 2007, from US$ 66.8 billion to US$ 87.5 billion. Reserves climbed to US$ 92.8 billion in January of 2008

The current account surplus increased by US$ 11.5 billion, from US$ 3.1 billion in 2006 to US$ 14.6 billion in 2007, almost all of which is explained by an improvement in the goods trade surplus
In April 2007 Thailand signed a free trade deal with Japan, and this Japan-Thailand Economic Partnership Agreement (JTEPA) took effect on the 1st November 2007. In January 2008 Thailand reached an agreement with the Republic of Korea that allowed the country to join the ASEAN-Korea Free Trade Agreement.

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