Nevertheless, the progress on debt restructuring is slow. Moreover, 10% of restructured loans are turning bad again. In return for aid, the international community wants the government’s commitment to restructure and reform the economy. The Thai economy shrank 10.2% in 1998 and grew 4.2% last year. The government debt is at the record level of 65% of the GDP.

The IMF warned that it is essential to start paring down spending as the recovery becomes self-sustaining. The recovery is export-based and may be fragile. The GDP is expected to grow some 4.5 to 5% this year. Domestic demand and investment remain weak. The fiscal deficit is currently 7% of the GDP and is still growing.

Thailand graduated from a USD 17.2bn IMF stabilisation programme end of June. However, the country must push forward with corporate debt restructuring to avoid undermining a steady recovery. 

After enjoying the world's highest growth rate from 1985 to 1995 - averaging almost 9% annually - increased speculative pressure on Thailand's currency in 1997 led to a crisis that uncovered financial sector weaknesses and forced the government to float the baht. Long pegged at 25 to the dollar, the baht reached its lowest point of 56 to the dollar in January 1998 and the economy contracted by 10.2% that same year.
Thailand entered a recovery stage in 1999, expanding 4.2% and grew about the same amount in 2000, largely due to strong exports - which increased about 20% in 2000.
An ailing financial sector and the slow pace of corporate debt restructuring, combined with a softening of global demand, is likely to slow growth in 2001.