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Not making it: Thailand’s economy
South-East Asia’s second-largest economy surprised analysts today, reporting a slip in industrial activity. Once a pillar of growth, Thailand’s export-oriented industrial economy has been sliding sideways for years. Creeping de-industrialisation began in 2010, when manufacturing’s share of GDP was 31%. By 2016 it was down to 27%. The ruling generals are planning a manufacturing revival (“Thailand 4.0”), but it is claptrap. For Thai businesses it is easier to make money in property or food, where competition is low, innovation less important and returns high. To deal with rising automation, the country has to stay cheap or build a highly skilled workforce. Both have proved impossible. A strong baht, military rule and fading foreign interest have not helped; in 2016 FDI inflows slumped to $1.6bn, compared with Vietnam’s $12.6bn. In future, the role of services, including tourism, will only rise: last year Bangkok was the most-visited city on Earth.
Source: The Economist Espresso
