Thailand: Open to Foreign Investment
Despite internal political tensions and severe flooding in 2011, Thailand continues to maintain an open, market-oriented economy and encourages foreign direct investment as a means of promoting economic development, employment, and technology transfer. In recent decades, Thailand has been a major destination for foreign direct investment and hundreds of U.S. companies have invested in Thailand successfully. Thailand continues to welcome investment from all countries and seeks to avoid dependence on any one country as a source of investment. Following the significant impact of flooding in 2011, investors are seeking implementation of an improved government water management plan as a critical element to maintaining investor confidence.
The Thai economy remains resilient in the face of the floods and the continuing global economic crises. GDP growth in 2010 was nearly 8 percent, and the government anticipated 2011 growth at a rate of four to five percent pre-floods (year-on-year). However, with flooding affecting 60 of 77 provinces, a contraction occurred in the fourth quarter following growth of 3.1 percent in the first three quarters. Annual GDP growth for 2011 was 1 percent for the year.
Despite reduced economic performance due to the floods of 2011, Thailand was able to recover and record an annual GDP of 6.5% in 2012. Fixed investment reached a high base after being propelled by reconstruction and replacement of damage done by the 2011 floods. For 2013, the annual GDP expanded 2.9%. Consumer confidence has been on a downward trend since March 2013 and fell in January of 2014 to a 2 year low. In the fourth quarter of 2013, the Thai GDP grew only 0.6% compared to 2.7% from the previous quarter as poltical unrest hurt demand, tourism, and investment.
Projections of the 2014 Thai GDP growth were estimated at 4.5% at the beginning of the year, however, due to continued political violence and demonstrations the projected annual GDP was revised to 2.5% but could drop as low as 1.4%. Despite Thailand's current political situation, the country has experienced a steady increase in exports of 4.8% due to rising demand from Thailand's bordering nations of Myanmar, Laos, and Vietnam. Thai businesses are also planning to increase their investment into e-commerce as the smartphone industry continues to grow rapidly.
Thailand is also preparing to become a part of the ASEAN trading bloc which will take affect starting in 2015.