In Thailand's February 2005 parliamentary elections Prime Minister Thaksin Shinawatra's Thai Rak Thai (Thais Love Thais) Party achieved a sweeping victory. It had already formed the first elected government in Thai history to serve a full four-year term and was now the first individual party to be elected to a full parliamentary majority, and that a massive one. The party's electoral success owes much to the Prime Minister's own political skills and much also to the economic recovery achieved under his government. In 2004, for the first time since the Asian crisis of 1997–98, real output per person exceeded its pre-crisis level of 1996 and in this respect Thailand had finally emerged from the economic after-effects of the crisis. In many dimensions, the economy was booming.

Despite setbacks from rural drought, panic-producing outbreaks of avian influenza and Severe Acute Respiratory Syndrome (SARS), combined with continued political violence in the Muslim southern provinces, estimated growth of real GDP reached a respectable 6.4 per cent in 2004, only marginally below the 2003 growth rate of 6.8 per cent. Growth for 2005 is expected to be slower, at a little over 5 per cent, reflecting a slowdown in export growth, diminished inflows of foreign direct investment (FDI) and the economic consequences of the tsunami of 26 December 2004.

The terrible human costs of the tsunami dominate its economic effects, but the latter are nevertheless significant. Thailand was less severely affected than some other countries with coastlines facing the Indian Ocean, especially Indonesia, Sri Lanka and possibly Myanmar (Burma), but many thousands lost their lives (perhaps between 8,000 and 9,000 out of a regional total approaching 300,000) and entire communities were destroyed. Tourism was sharply affected in the short term and some long-term effect seems certain, but the long-term size of these effects remains unclear.