FOREIGN TRADE AND BALANCE OF PAYMENTS
In Thailand's open economy, foreign trade
accounts for a major portion of the national product. Its
importance has grown substantially over the past 20 years
as its share in the national income increased from 34 percent
in 1961 to 67 percent in 1993. As the economy becomes more
open, it is increasingly susceptible to change in world
Exports. During 1988-1992 total value of
exports increased at an annual average of 20.3 percent.
Total value increased from about 18 percent of the Gross
National Product in 1984 to approximately 29.5 percent in
There have been improvements in the structure
of Thai exports value, most notably the diversification
of export commodities. The share in total exports held by
the country's seven major agricultural products, (rice,
tin, rubber, maize, sugar, kenaf and tapioca) declined from
about 54 percent in 1978 to 81.0 percent in 1993. An impressive
rate of export growth has also occurred for textile and
garment, electronic equipment, frozen squid, canned pineapple,
fish meal and canned marine products, gems and jewellery.
Thailand's traditional export markets are
concentrated in the East Asia region. In 1993, Japan tool
up 17.05 percent of total exports and three other countries
in the region --- Malaysia (2.8 percent), Hong Kong 95.29
percent), and Singapore (12.07 percent). With the high rate
of growth in the East Asia region, as well as the growing
economic interdependency between Japan, the newly industrialized
countries in Asia and ASEAN, the prospect for future export
expansion looks bright.
Imports. Thailand's import bill increased
from 242,284 million baht in 1984 to 1,143,000 million baht
in 1993. Most of the increase was experienced after 1986
when the country started a period of economic boom. Between
1961 and 1973, the portion of the total Gross National Product
spent on imports stood at between 18 and 21 percent. During
1973-1982, the ratio increased to 28 percent as a direct
result of substantial rises in the import price of petroleum.
In 1993 expenditures on imports accounted for about 36.6
percent of the Gross National Product.
Import structure has changed in recent
years. The proportion of consumption goods imports has continually
declined from 23.7 percent of total import value in 1967
to only 9.6 percent in 1993 as a result of the government's
industrial development policy oriented towards import substitution.
At the same time, imports of raw materials and capital goods
increased substantially to about 73 percent of total imports
by the end of 1993.
Thailand relies on imports from certain
major trade partners, particularly Japan and the United
States. In 1993 imports from these two countries accounted
for 42.3 percent of toe total. Over the period 1978-1988,
the proportion of imports from West Germany and the United
Kingdom declined from 9.67 percent of the total to about
8.3 percent while imports from Saudi Arabia and Qatar, the
major exporters of petroleum, increased substantially. During
the period under review there has been no significant change
in the direction of imports from ASEAN countries. Imports
from Malaysia and Singapore totaled respectively 6 percent
and 9 percent of the total in 1993.
Terms of trade. With the continuing increase
in fuel prices, world- wide inflation, and the decline of
primary product prices in the world market since 1975, the
terms of trade have become less favourable. However, there
was a significant improvement in 1992/1993 with the sharp
rise in primary commodity prices in the world market.
Balance of payments. Thailand's trade deficit
has been increasing gradually over the past two and a half
decades. Trade deficit of 221,000 million baht was registered
during 1993. the main reason for this deterioration was
the huge demand for import of raw and semiprocessed materials,
and capital goods created by the expanding industrial sector.
At the same time, the world price of many
Thai export commodities continued to decline, resulting
in a lower growth rate in export earnings. While the trade
deficit grew bigger, income from services and foreign capital
inflows were insufficient to offset the tremendous gap.
Consequently, the balance of payments registered a record
deficit of 13,298 million baht in 1978. Since then however,
the situation has turned around, thanks to tight fiscal
and external debt management, lower oil prices, and substantial
increases in capital inflow, exports, and tourism. the balance
of payments has registered a surplus since 1984. By the
end of 1993, Thailand's official foreign reserves stood
at US$ 25,438.8 million, equivalent to about seven months