Publication Code: N68
During the second half of the 1980s and the first half of the 1990s, the Thai economy transformed into what some called an Asian Economic Miracle. This miracle occurred despite a lack of sound management in two major areas: the domestic and the international financial system. Towards the fourth quarter of 1996, pressure built up by these factors began to tremble the Thai economy and culminated into an economic melt down. Significant economic events since mid-1996 include a decline in export growth, a current account deficit, capital flight, a rapid run down of the foreign exchange reserves at the central bank, the adoption of the floating exchange rate regime, acceptance of the IMF (International Monetary Fund) package, and finally government bailouts such as the FIDF (Financial Institution Development Fund) and the issuance of government bonds to finance bad debts. Hence, 1997-98 represented the turning point of the Thai economy when the economic miracle ended and hardship began.
With less resources and more social problems, public authorities are now facing a greater challenge than ever before in managing the economy. Since the depreciation of the Thai currency in July 1997, millions of Thais have become worse off financially. As the value of the Thai baht to US dollar declined, borrowers found their debts (in US currency terms) nearly doubled. Many businesses had to either downsize or shut down altogether. The general Thai public is suffering from a drastic decrease in real incomes, in the form of both, salary cuts and price increase, as well as increases in unemployment.
The economic crisis has resulted in various social impacts, all of which have gradually worked their way into the many facets of Thai livelihoods. This report aims to trace the economic and social impacts of the crisis between May 1998 and June 1999 and to summarize the budget situations after the crisis. The report has eight parts. Part 1 provides an overview of the economic situation after the crisis. Part 2 investigates the social impacts of the crisis, especially the situation in the labor markets. Part 3 presents the results of TDRI’s questionnaire survey of 600 respondents who were seeking jobs in Bangkok during May-July of 1998. Part 4 summarizes the impacts of the crisis on the rural communities by examining the experiences of 10 rural villages with differing labor market profiles. Our research team visited the villages twice during July-August in 1998 and February–March in 1999. Part 5 reviews the state of Thai women during the boom and bust and the impact of the crisis on slum dwellers. Part 6 monitors the mitigation measures of the government and civil society organizations and, Part 7 looks at the prospects for economic recovery. The final section presents some policy recommendations. This report is based on a number a studies which are listed in the preface.
January 2000