How trade is having an incredible influence on the Thai economy
Trade is the lifeblood of the Thai economy, with exports of goods and services accounting for almost 70% of the country's economic output. This compares to a world average of just 30%.
The country's heavy reliance on trade means that any major shifts in demand have significant implications for its economic outlook. And with exports expected to strengthen by 1.7% in 2017 as global economic conditions improve, this outlook is brightening.
Source: World Bank, World Databank, as of 2014/2015.
Long-term drivers of Thailand's export economy
In addition to slowly improving global growth, Thai exports are expected to benefit from increased infrastructure investment and the government's ongoing commitment to free market principles.
This should allow the country to continue leveraging its large, low-cost labor force to manufacture and export a wide variety of goods to a diverse range of partners.
China, the US, and Japan account for about 31% of Thai exports, according to National Economic and Social Development Board data, exposing the country to the world's three largest economies.
It's important to note that trade with the US could shift depending on the incoming government's trade policies, however the direction of these is yet to be seen. Thailand's spread of trade partners should also help it weather any changes.
Closer to home, the country is well positioned to benefit from strong regional growth, with the nine ASEAN nations making up a further 25% of the country's exports. These trade ties are reinforced by Thailand's position as a founding member of ASEAN and APEC.
And while Thailand is facing some political uncertainty in a year of mourning following the death of King Bhumibol Adulyadej in 2016, economically, it is largely business as usual.
So if the country's supportive government and large, diversified trade base can continue to boost export growth, there may be a significant upside for the Thai economy.
If you're looking to access the Thai market, consider the iShares MSCI Thailand Capped ETF (THD), or broaden your search to other countries.
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