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Thai economy holding strong in spite of global headwinds

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The Thai economy ( THD , quote ) remains in a strong position to continue outperforming this year, even as other emerging markets struggle with global macroeconomic headwinds.

[caption align="alignright" caption="At this point, the Thai economy is almost as idyllic as this beach"] Image Courtesy Rev Stan: http://www.flickr.com/people/revstan/ [/caption]

As central banks across the planet moved in coordinated fashion this week in an attempt to bolster the global economy -- which looks increasingly weak in light of recent manufacturing numbers, a handful of Southeast Asian economies remain stable.

While developed countries attempt to cope with staggering unemployment rates, the Thai economy has an unemployment rate, astoundingly, under 1% , although these figures will likely rise seasonally as recent graduates enter the workforce.

As well, stable foreign exchange rates, declining oil prices, reasonable inflation, and strong domestic demand have put the economy in a strong position to deal with a European-caused global slowdown.

The latter is what has really helped the Thai economy during the global credit crunch. As a result of the devastating floods a year earlier, the Thai government has dedicated significant capital to rebuilding infrastructure that was ruined the year before.

Because inflationary pressures have dissipated, the Thai central bank has the flexibility to cut rates further in the event that the Thai economy does begin to suffer the fate of other global nations.

The Thai economy is so insulated from the current global economic crisis that consumer confidence has actually increased , whereas most citizens throughout the world are becoming less and less positive about their respective economies.

While the Thai economy is unlikely to reach the growth rates this year that it has in past boom times, it is likely to continue at a respectable pace.

For American investors looking for exposure to the Thai economy, the best way to play is through the iShares MSCI Thailand Index Fund. This ETF is currently trading right at its 50-day moving average; if THD can hold its 50-day, and break through its 100-day moving average, the fund could move substantially higher.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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