1 international trade and finance of thailand (part 1)

1

International Trade International Trade and Finance of and Finance of

Thailand Thailand (Part 1)(Part 1)

2

Referencesพรายพล คุ้�มทร�พย

เศรษฐศาสตร การเงิ�นระหว่�างิประเทศ: ทฤษฎี�และนโยบาย

2547 บทท�# 10

3

International Economic Relations

2 types:• Exchange of goods and

services – exports and imports

• Investment and loans

4

Benefits of International Economic Relations

Specialization, based on comparative advantage

Expand market size Transfer of knowledge and

technology

5

Benefits of International Economic Relations

Economic growth Income and employment

6

Costs of International Economic Relations

Fluctuations in world trade and capital flows

Foreign domination

7

Costs of International Economic Relations

Economic and social imbalance among

people with different opportunity, education, and economic status

8

International Trade and Financial Structure

• Foreign trade has increased rapidly (exports and imports as % of GDP)

9

Year (X+M)/GDP

1980 49%

1990 65%

1995 75%

1996 69%

1997 77%

1998 83%

1999 85%

2000 107%

2001 107%

2002 102%

10

Year (X+M)/GDP

2003 107%

2004 117%

2005 129%

2006 123%

2007 119%

11

Import structure has hardlychanged, mainly capital goods, raw materials, and crude oil


12

1988-89

1990-91

1992-93

1994-95

Consumer goods

7.82%

8.56%

9.91%

10.43%

Non-durable

3.91%

3.77%

4.28%

3.90%

Durable3.92

%4.79

%5.64

%6.52

%

Intermediate, raw materials

35.74%

34.08%

30.94%

28.86%

For consumer goods

23.72%

23.49%

20.67%

19.08%

For capital goods

12.02%

10.60%

10.28%

9.78%

Capital goods37.7

1%39.5

5%42.1

4%45.1

9%

Others18.7

2%17.8

0%17.0

0%15.5

2%

Total100.00%

100.00%

100.00%

100.00%

Import Pattern of Thailand

13


1996-97 1998-99 2000-01

Consumer goods 7.65% 8.23% 8.42% Nondurables 4.31% 4.95% 5.08% Durables 3.34% 3.29% 3.34% Intermediate+raw 42.03% 48.98% 45.50%Capital goods 33.61% 29.59% 28.83%Others 16.71% 13.20% 17.24%Total 100.00% 100.00%100.00%

14


2002-03 2004-05 2006-07

Consumer goods 8.68% 7.51% 7.67% Nondurables 5.23% 4.39% 4.34% Durables 3.45% 3.12% 3.34% Intermediate+raw materials 44.26% 43.12% 41.72%Capital goods 29.19% 27.22% 26.21%Others 17.86% 22.15% 24.40%Total 100.00% 100.00%100.00%

15

• Mostly import from industrial countries (esp. Japan), but declining share

• Recently import more from ASEAN and China


16

1986-88

1989-91

1992-94

1995-97

1998-

2000

2001-03

Japan27.5

0%30.0

8%29.9

6%28.0

6%24.3

0%23.1

8%

U.S.A.13.3

8%10.8

8%11.7

5%12.8

3%12.7

4%10.1

7%

E.U.15.4

4%13.8

6%14.2

1%14.4

8%11.3

2%11.0

3%

ASEAN13.5

7%12.4

2%12.5

2%12.5

8%15.7

0%16.5

6%Middle East

4.53%

3.92%

3.44%

5.71%

9.04%

9.49%

China3.41

%3.11

%2.62

%3.10

%4.94

%7.25

%South Korea

2.57%

3.51%

4.05%

3.59%

3.50%

3.73%

Taiwan3.91

%4.99

%5.20

%4.58

%4.83

%4.32

%

Others15.6

9%17.2

3%16.2

6%15.0

6%13.6

3%14.2

7%

Total100

%100

%100

%100

%100

%100

%

Sources of Thailand’s Imports

17

2004-06

2007-09

Japan 21.7%

19.2%

U.S.A. 75

% 6.5%

E.U. 92.% 8.5%

ASEAN 17.9%

17.6%

Middle East

13.0%13.9%

China 96.%11.8%

South Korea

37.%39.

%

Taiwan 4.0%37.

%

Others 13.4%

14.9%

Total 10

00. %10

00. %

Sources of Thailand’s Imports

18


Diversify exports in type and market

• High growth of manufactured• Declining trend in labor-

intensive• Increasing trend of hi-tech

products

19


Diversify exports in type and market

• High growth of manufactured• Declining trend in labor-

intensive• Increasing trend of hi-tech

products

20

1993

1994

1995

1996

1997

Agriculture11.8

3%11.3

9%11.4

0%11.8

4%10.1

8%

Fishery5.95

%5.97

%5.06

%4.50

%4.00

%

Manufacture80.4

1%81.1

2%81.8

7%81.5

4%82.4

2% Labor-intensive

22.35%

21.42%

19.28%

16.20%

14.34%

Hi-tech42.8

4%44.2

5%46.8

6%49.3

9%52.4

6% Natural resource-based

9.19%

9.12%

9.14%

9.57%

9.02%

Others1.81

%1.52

%1.67

%2.13

%3.40

%

All groups100

%100

%100

%100

%100

%

Export Pattern of Thailand

21

1998

1999

2000

2001

2002

2003

Agriculture9.39%

8.35%

7.11%

7.36%

7.57%

8.30%

Fishery3.97%

3.56%

3.31%

3.12%

2.41%

2.19%

Manufacture82.30%

84.22%

85.51%

85.01%

85.66%

85.80%

Labor-intensive

13.51%

12.98%

11.74%

12.35%

11.63%

10.23%

Hi-tech54.65%

56.86%

60.79%

58.53%

59.05%

59.39%

Natural resource-based

8.65%

8.97%

8.04%

8.56%

8.60%

8.25%

Others4.33%

3.87%

4.08%

4.51%

4.36%

3.70%

All groups100

%100

%100

%100

%100

%100

%

Export Pattern of Thailand

22


• More than half depend on developed countries (largest market in the U.S.), but declining shares

• Increasing share of export to ASEAN and China

23

1986-88

1989-91

1992-94

1995-97

1998-2000

2001-03

Japan15.1

7%17.5

0%17.1

9%16.0

9%14.2

3%14.6

8%

U.S.A.19.0

9%21.8

4%21.6

1%18.5

7%21.7

2%18.9

1%

E.U.21.3

9%20.5

2%16.7

9%15.7

5%16.7

2%15.2

4%

ASEAN12.9

5%11.6

0%15.5

5%18.8

5%17.8

3%19.9

8%Middle East

8.82%

5.50%

4.27%

3.88%

3.37%

3.55%

China3.12

%1.60

%1.61

%3.11

%3.55

%5.64

%Hong Kong

4.25%

4.44%

5.10%

5.67%

5.08%

5.29%

Others15.2

0%17.0

1%17.8

8%18.0

6%17.5

0%16.7

1%

Total100

%100

%100

%100

%100

%100

%

Markets for Thailand’s Exports

24

2004-06

2007-09

Japan13.3

11.1%

U.S.A.15.

4%11.7 %

E.U.14.1%13.1%

ASEAN2 1 .

6%21.7%

Middle East

41.%53.

%

China83.

%97.

%Hong Kong

54.%58.

%

Others17.7%21.5%

Total10

00.%

10

00.%

Markets for Thailand’s Exports

25


• Trade in services: always in surplus due to income from tourism and Thai workers abroad

26


Foreign Direct Investment (FDI):• Large influx of investment from

Japan and NICs in late 1980s• Another wave to buy companies

after the 1997 crisis• Insignificant Thai overseas

investment

27

1990 1991 1992 1993 1994 1995 1996 1997

Direct investment 2,402 1,866 2,015 1,438 904 1,169 1,455 3,180

Foreign direct investment 2,542 2,033 2,151 1,732 1,326 2,004 2,271 3,627

Thai direct invest abroad -140 -167 -136 -294 -422 -835 -816 -447

Others loans 4,535 5,661 2,846 -2,432 -5,845 1,518 5,451 -3,688

Foreign loans 4,535 5,661 2,846 -2,429 -5,778 1,519 5,531 -3,735

Thai loans 0 0 0 -3 -67 -1 -80 47

Portfolio investment 457 163 561 4,852 1,110 3,420 3,488 4,550

Equity securities 457 48 456 2,687 -394 2,254 1,123 3,987

Debt securities 0 115 105 2,165 1,504 1,166 2,365 563

Non-resident baht account 1,336 2,042 1,707 2,685 2,066 3,407 2,924 -5,812

International Capital Flows of Thailand

28

1998 1999 2000 2001 2002 2003

Direct investment 5,019 3,218 2,761 3,702 882 1,394

Foreign direct investment 5,143 3,562 2,813 3,873 1,023 1,815

Thai direct invest abroad -124 -344 -52 -171 -141 -421

Others loans -3,713 -4,359 -4,509 -2,786 -2,200 -1,373

Foreign loans -3,769 -4,312 -4,495 -2,797 -2,226 -1,326

Thai loans 56 -47 -14 11 26 -47

Portfolio investment 422 391 106 -643 -1,109 -205

Equity securities 265 946 897 17 209 584

Debt securities 157 -555 -791 -660 -1,318 -789

Non-resident baht account -4,300 -2,909 -413 -1,286 -5,042 -6,006


29

(Million US$) 2004 2005 2006p 2007p

Direct investment 4,952 6,437 9,191 6,134

Foreign direct investment 4,956 6,503 10,031 7,451

Thai direct invest abroad -4 -66 -840 -1,317

Others loans 708 -1,357 2,881 1,373

Foreign loans 548 -1,308 2,867 1,356

Thai loans 160 -48 13 18

Portfolio investment 197 1,876 1,642 -5,180

Equity securities 180 1,614 2,353 2,366

Debt securities 17 262 -711 -7,546


30

Portfolio investment: • Fluctuate a lot•Increasing impact on Thai stock market


31

Foreign loans: • Before the 1997 crisis,

government borrowing declined, but the private sector borrowed heavily

• Continuous debt repayments after the crisis


32

(in million US$)

1992

1993

1994

1995 1996 1997

Government

13,06

8

14 ,17

1

15 ,71

5

164,

02

168,

01

240,

82

Private sector

30,55

3

379

36

49,15

2

844,

30

919,

41

851,

94

All debts

43,62

1

52,10

7

64,86

7

100,83

2

108,74

2

109,27

6

Long-term

24,70

7

29,47

3

35,68

8

484,

34

609,

99

709,

82

Short-term

18,91

4

22,63

4

29,17

9

523,

98

477,

43

382,

94

All debts/GDP (%)

39

1.

41

6

44

9

60.

0

59.

7

70.

1

Reserves/S-T Debts (%)

11

2. 0

112

4

103

8

70.

7

81.

1

70.

4

Foreign Outstanding Debts of Thailand

33

(in million US$)

19981999

2000 20012002

2003

Government

315,

78

36,22

8

339,

13

283,

06

23,3

0

5

16,9

5

9

Private sector

734,

84

58,82

3

458,

02

392,

03

36,1

5

4

34,7

2

3

All debts

1050,

62

95,05

1

797,

15

675,

09

59,4

5

9

51,6

8

2

Long-term

766,

41

75,51

2

650,

21

541,

20

47,5

4

0

40,8

3

0

Short-term

284,

21

19,53

9

146,

94

133,

89

11,9

1

9

10,8

5

2

All debts/GDP (%)

93.

2

77.

5

64.

8

58.

4

4

6. 9

3

6. 0


103.

9

178

0

222.

3

246.

8

3

2

6. 6

3

8

8. 4


34

(in million US$)

2004200520062007

Government14,930

13,994

14,092

12,043

Private sector36,382

38,045

45,551

49,695

All debts51,312

52,039

59,643

61,738

Long-term39,138

35,631

41,089

40,098

Short-term12,174

16,408

18,554

21,640

All debts/GDP (% )

35.70

32.50

32.80

29.50


409.30

325.10

361.00

404.10


35

• Chronic deficits in current account before 1997

• Continuous surpluses in trade and current accounts since 1998 after floating the baht


36

Year Current a/c balance Nominal GDP Current a/c balance

(mill. Baht) (bill. Baht) as % of GDP

1990 -186,184 2,183.5 -8.53%

1991 -193,263 2,506.6 -7.71%

1992 -160,074 2,830.9 -5.65%

1993 -161,129 3,165.2 -5.09%

1994 -203,153 3,629.3 -5.60%

1995 -338,346 4,186.2 -8.08%

1996 -372,159 4,611.0 -8.07%

Current Account and GDP of Thailand

37

Current Account and GDP of Thailand

Year

Current a/c balance

Nominal GDP

Current a/c balance

(mill. baht)

(bill. baht)

As % of GDP

1997

-40,222 4,732.6 -0.85%

1998 592,170 4,626.4 12.80%

1999 469,988 4,637.1 10.14%

2000 371,512 4,923.3 7.55%

2001

274,810 5,133.8 5.35%

2002 302,029 5,451.9 5.54%

38

•Before 1997, the balance of payments was always in surplus because of large inflows of foreign investment and loans, leading to accumulation of international reserves


39

Thailand's Balance of Payments Unit: bill. Baht1991 1992 1993 1994 1995 1996

Exports (f.o.b.) 721 815 921 1118 1382 1379Imports (c.i.f.) 968 1021 1143 1345 1755 1797Trade balance -247 -205 -222 -227 -374 -418Net services & transfers 54 45 61 24 36 45Current A/C balance -193 -160 -161 -203 -338 -372Capital A/C balance 288 241 266 306 545 494Balance of payments 106 77 99 105 180 55

40

YearEnd of YearReserves

1976 1,893

1980 3,026

1985 3,004

1990 14,273

1991 18,416

1992 21,182

1993 25,439

1994 30,279

1995 37,027

1996 38,725

Thailand’s International Reserves

Unit :mill. US$

41


• Big drop of reserves from defending the baht in 1997

• After the crisis, large outflows of capital to repay foreign debts, causing deficits in BOP

42


• The baht depreciation greatly helped exports, causing surpluses in current account and BOP

• Reserves started to grow again

43

Thailand's Balance of Payments Unit: bill. Baht1997 1998 1999 2000 2001 2002

Exports (f.o.b.) 1,790 2,181 2,150 2,731 2,808 2,868Imports (c.i.f.) -1,875 -1,678 -1,800 -2,514 -2,696 -2,720Trade balance -85 503 350 217 112 148Net services & transfers 45 89 120 154 164 181Current A/C balance -40 592 470 372 276 329Capital A/C balance -162 -413 -298 -405 -213 -173Balance of payments -299 58 173 -58 58 181

44

Thailand's Balance of Payments Unit : billion baht2003 2004 2005 2006 2007 p 2008 p 2009 p

Exports (f.o.b.) 3,233 3,823 4,407 4,838 5,212 5,831 5,160Imports (c.i.f.) -3,078 -3,764 -4,733 -4,804 -4,773 -5,829 -4,490 Trade balance 156 59 -327 34 439 2 670Net services & transfers 42 51 24 50 101 48 30Current A/C balance 197 110 -302 85 540 50 700Capital A/C balance -200 149 448 258 -93 478 -49 Balance of payments 2 230 221 478 586 812 825

45

Thailand’s Reserves (including net forward position)

Unit: mill. US$

Year End of Year Reserves

1997 8,9621998 22,9641999 29,9862000 30,5262001 30,9702002 38,4392003 47,3512004 54,4322005 55,9062006 73,9262007 106,5412008 117,9632009 154,088

1 international trade and finance of thailand (part 1)

Documents

crude oil international

economic status

world trade

import structure

import pattern of thailand1988

capital goods12

exchange of goods

services exports