Introduction

Thailand has endured a succession of recent crises: the Asian financial crisis of 1997–99, originating with the collapse of its own currency and reducing investor confidence for the entire decade since; the terrible tsunami of December 2004; outbreaks of SARS and Avian Influenza; rural drought; an interminable insurrection in its southernmost Muslim provinces, producing more than 4,000 deaths; and growing concern about the consequences for Thailand of global climate change. As if all that were not enough, in 2008 an additional double crisis overwhelmed the country: a self-inflicted internal political crisis deepening social divisions within the country and culminating in the closure of Bangkok's international airport in late 2008; and the repercussions of the most serious global financial crisis since the Great Depression of the 1930s.

Thailand's immediate prospects are somber, along with the rest of East Asia. In contemplating this depressing story it is easy to lose long-term perspective. Despite the serious problems, the quality of everyday life in Thailand has continued to improve over several decades and poverty incidence has maintained its long-term decline. Thailand has already achieved essentially all of its Millennium Development Goals, well ahead of the target date of 2015, while most developing countries lag far behind schedule. The current crisis will undoubtedly produce a pronounced economic contraction and some worsening of poverty incidence. No one knows how long-lasting this episode of deglobalization will be, but it will be temporary. It should be seen in the context of long term economic improvement which can be expected to continue once the global crisis subsides.

Accordingly, this chapter turns first to Thailand's current twin crises: the internal political crisis and the worldwide financial crisis. It then places these events in longer term perspective by reviewing Thailand's long term economic experience and in particular the impact of the last serious economic crisis to affect Thailand — the Asian financial crisis of 1997–99. To see what is likely to happen as a result of the present contraction it is helpful to look at what happened during previous economic downturns.