CHAPTER 9
Economic and Political Crises in Thailand: Social Impacts and Government Responses Veronica Mendizabal, Supang Chantavanich, Samarn Laodumrongchai, Mya Than, Artit Wong-a-thitikul, Warathida Chaiyapa, Cheewin Ariyasuntorn, and Pamornrat Tansanguanwong
Introduction Thailand’s economy is characterized by a significant outward orientation, with exports accounting for well over half of its gross domestic product (GDP). The global financial crisis of 2008–09, therefore, had a significant impact on economic sectors sensitive to external demand, particularly manufacturing, and only a limited direct impact on Thailand’s strong financial system. When the global financial crisis hit the economies of Thailand’s main trading partners, the European Union, Japan, and the United States, demand for Thai manufacturing exports plunged, contracting by 8.9 percent in the fourth quarter of 2008 and a further 16.0 percent by the first quarter of 2009 (World Bank 2009b). Thailand’s main exports severely affected by the crisis were primarily electrical appliances and electronics, followed by autos and auto parts. Textiles and garments, as well as furniture, leatherwear, and other labor intensive-industries were also hit; from a macroeconomic perspective, however, these industries are a small share of exports experiencing a declining trend and progressively moving to lower-wage locations such as Cambodia and Vietnam.
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