With a well-developed infrastructure, a free-enterprise economy, and pro-investment policies, Thailand appears to have fully recovered from the 1997-98 Asian Financial Crisis. The country was one of East Asia's best performers from 2002-04. Boosted by increased consumption and strong export growth, the Thai economy grew 6.9% in 2003 and 6.1% in 2004 despite a sluggish global economy. Bangkok has pursued preferential trade agreements with a variety of partners in an effort to boost exports and to maintain high growth. In late December 2004, a major tsunami took 8,500 lives in Thailand and caused massive destruction of property in the southern provinces of Krabi, Phangnga, and Phuket. In 2006, investment stagnated as investors, spooked by the THAKSIN administration's political problems, stayed on the sidelines. The military coup in September brought in a new economic team led by the former central bank governor. In December, the Thai Board of Investment reported the value of investment applications from January to November had declined by 27% year-on-year. On the positive side, exports have performed at record levels, rising nearly 17% in 2006. Export-oriented manufacturing - in particular automobile production - and farm output are driving these gains.

Thailand is the U.S.’s 15th largest trading partner. Two-way trade in 2006 was approximately $30 billion, with $22 billion in Thai exports to the U.S. and $8 billion in U.S. exports to Thailand. Both exports and imports grew around 13% in 2006. In Asia, Thailand ranks as the U.S.’s 5th largest trading partner after China, Japan, Taiwan, and Malaysia. The Thai economy is export-dependent with exports accounting for 60% of their GDP. GDP performance has averaged 5-6% since recovery from the Asian financial crisis. 2005 GDP growth stood at 4.8% and 2007 forecast is for similar results. GDP per capita is $3,000. Following the overthrow of the previous government on September 19, 2006, the interim military appointed government has initiatied a number of policies and regulations that have been poorly received by the foreign business community in Thailand. Inlcuded in these policies has been currency controls, foreign business ownership restrictions, compulsory licensing of pharmaceautcials and restrictions on the expansion of foreign owned retail operations. The U.S. and Thailand have enjoyed a special commercial relationship for more than 160 years under the Treaty of Amity and Economic Relations. Under the treaty, with the exception of a few sectors, U.S. companies operating in Thailand are afforded national treatment, or an “equal playing field” with Thai companies, a privilege offered to no other trading partner’s companies.  Current risks to Thailand’s economy include an uncertain political situation, violence in the three southernmost Muslim-majority provinces, as well as the possible effects of the avian influenza on the region.

Thailand’s businesses and consumers are extremely price-conscious, often favoring lower prices over product quality or other benefits. Exporters with products that are competitive for reasons other than price should plan to work with their local partner to undertake an extensive marketing strategy. While Thailand’s average applied MFN tariff rate is 11 percent (24 percent for the agricultural sector and 9 percent for the industrial sector), the highest tariff rates apply to imports competing with locally produced goods often leading to even further price pressures for U.S. exporters hoping to succeed in the market. Corruption and lack of transparency in government procurements, as well as widespread piracy of intellectual property rights are still major concerns for U.S. companies.

Thailand’s economic growth has created opportunities for U.S. companies in a number of infrastructure sectors, including electrical power, telecommunications, and renewable energy. Newly confident Thai consumers are creating opportunities for new sales of U.S. medical products, cosmetics, food supplements and pet food. Thailand also continues to look for U.S. suppliers of automotive accessories, defense equipment, educational services, food processing and packaging equipment, and laboratory and scientific instruments. The interim government is focusing resources on the development of ongoing infrastructure projects, including the expansion of the Bangkok Sky Train and Subway system. U.S. firms engaged in these sectors will find opportunities for success.