At the start of 2009, the prospects were somewhat bleak for the Thai economy, already deep in recession, but 12 months later the country is well on its way to recovery, though there are still a snags that could undermine growth.
Though Thailand's economy contracted by 2.8% year-on-year in the third quarter, the shrinkage was far less than the 7.1% in the first three months of 2009 or the 4.9% in the second quarter. According to a report issued by the Bank of Thailand in December, the fall in GDP should be around 3% for the year compared to 2008, while the coming year should see economic growth of between 3.3% and 5.3%.
There are a number of signs that the Thai economy is again moving forward: consumer confidence is on the rise and a key indicator of economic health – automotive sales – shot up 23.8% in November, the highest rate of increase in more than four years.
With just over 53,000 units rolling off the lots in November, the third month in a row of rising sales, the automotive sector is looking to see a reversal of some of the losses it posted earlier in the year, though even with the better figures for the last few months of 2009, overall sales could be down around 14% for the 12-month period.
At least some of the growth being seen can be attributed to the $3.5bn stimulus package announced in January and rolled out by the government across the first half of the year, which aimed to increase spending through a mix of cash payments to low-income earners, tax cuts, education loans, and subsidies for transport and utilities.
Even more significant to bolstering the longer-term health of the economy was the $39bn spending programme that the government launched in October. Set to run for three years, the scheme foresees major investments in transportation, logistics, health care and education projects, which will strengthen Thailand's economic infrastructure for the future while creating direct jobs and boosting capital flows.
Help for Thailand's economy is also coming from abroad, with export orders starting to increase again after a sharp drop in the first half of the year. With the economies of the US, Japan and Europe all moving out of recession in the latter part of 2009, experts are now predicting that the year-end drop in overseas sales of goods and services will be 15%, rather than the 20% or more forecast earlier.
October's export figures showed sales of $14.8bn, a 3% decline over the same month in 2008, continuing the trend of recovery. With exports contributing up to 60% of the country's GDP, this upward movement is the precursor of increased employment and a stepping up of private investment.
In late November, the commerce minister, Porntiva Nakasai, said exports could rise by 3% to 5% in the last quarter of 2009, meaning the year-end rate of contraction could be as low as 13%, and post growth of 10% to 15% in 2010.
Another boost from overseas came via Thailand's crucial tourism industry. Hard hit late in 2008 by waves of protests that caused many prospective visitors to think twice about holidaying in the country, as well as by the global recession eating into the trade, the tourism sector was showing signs of solid recovery as the year came to a close.
By the end of November, Thailand had recorded 12.44m foreign arrivals, with the Tourism Authority of Thailand (TAT) raising its 2009 projections to 14.1m on the back of strong bookings for the final month of the year. Though still 500,000 down on the 2008 figures, if the TAT estimates are correct, it would be a good result after a slow start to the year.
However, while there are strong indicators that the Thai economy is moving towards recovery, there are also a number of factors that could slow this progress in the coming year.
At the end of September, a court issued an injunction ordering work on projects being built or those already completed at the Map Ta Phut Industrial Estate in Rayong province, south of Bangkok, be halted as they did not comply with existing environmental and health regulations.
The ruling, in response to a petition tabled by local residents and non-government organisations, directly affects at least 65 separate projects, with a total value of around $12bn.
Various reports showed the damage to the economy, including an analysis by the state's Fiscal Policy Office in early December suggesting that shutting down Map Ta Phut could cut Thailand's GDP by between 0.5% and 1% and cost as many as 100,000 jobs.
As the year closed, the saga was no clearer to resolution, with the committee set up by the government to draft new industrial development guidelines still to table its findings. On December 2 the Supreme Administrative Court upheld the lower court's ruling on suspending work at Map Ta Phut.
Also threatening to tarnish the achievements of the economy is the issue of political stability. With the supporters of ousted former premier Thaksin Shinawatra at times taking to the streets in protest against the government of Prime Minister Abhisit Vejjajiva throughout the year, and with further large-scale rallies already announced for January, there could be disruptions to economic activity.
While there is cause for optimism as Thailand heads into the new year, this should be optimism tinged with an element of caution, with the country facing a number of external and internal risks in 2010.