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The reduction in growth in the Thai economy, evident at the end of fiscal 1996, looks set to continue well into 1997. While the economy is stable, it is not showing any signs of recovery and the slowing has yet to bottom out.
The rate of decline recorded at the end of last year was far more significant than many analysts had expected, and as yet, there is no sign of the economic downturn levelling off. The unexpectedly sharp decline led 1996 real gross domestic product (GDP) growth to fall to 6.6 per cent, compared with 8.6 per cent in 1995.
Significantly, manufacturing production growth fell to 4.1 per cent during November of 1996, its lowest level since 1992. This compared with growth of 10.5 per cent in October of the same year. Recently released data indicate that manufacturing growth for December managed to recover slightly to 4.8 per cent. Private investment, having made a slight recovery during 1996, also fell back into decline during December.
While exports in the Asia-Pacific region continue to pick up, Thailand's overall export performance remains sluggish, with little evidence of any sign of revival. The fall offin exports was mirrored by a decline in imports, leading to an improvement in the current account deficit. Important export markets for the Thai economy include the USA, Japan, Singapore and Hong Kong while major import suppliers include Japan, the USA, Germany and Singapore. Thailand's trade and current account deficits are expected to remain generally unchanged in 1997, with improvements forecast for 1998.
Significant military spending cutbacks are planned for 1997 and beyond, which should also cut the level of imports. This move has been wel-
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