The Thai economy: effect of US slowdown

Abstract

The paper investigates the effect of US recession on Thai economy. Time series econometric analysis of data on real GDP, real exports, FDI, FII and real imports from 1985 to 2007 of Thailand is used to prove that Thailand is an export led economy and that US is one of the important trading partners of Thailand. Time series regression, of US? real imports on real GDP shows that in the case of US the imports are promoted by GDP growth and hence the exports of Thailand to US depends on the health of US economy. Although US has been a major trading partner of Thailand, it is seen from data analysis that exports are now shifting from US towards other emerging economies such as China and other ASEAN economies. Even in the case of FDI and FII, although US were a major source till 2001 now the share of US is on a downward path. Thus the results show that Thailand is on the path of decoupling from the US economy.