The recent history of Thailand’s economy is defined by more than a decade of sustained and rapid economic growth beginning in 1985, followed by a severe recession that started in late 1997. During the boom years, economic growth averaged more than 7 percent annually, one of the highest rates in the world. The crisis of 1997 and 1998 wiped out some of the gains of the boom and forced major adjustments in Thai industry and economic policy. Many different factors contributed to the rapid growth of Thailand’s economy. Low wages, policy reforms that opened the economy more to trade, and careful economic management resulted in low inflation and a stable exchange rate. These factors encouraged domestic savings and investment and made the Thai economy an ideal host for foreign investment. Foreign and domestic investment caused manufacturing to grow rapidly, especially in labor-intensive, export-oriented industries, such as those producing clothing, footwear, electronics, and consumer appliances. These industries also benefited from a tremendous expansion in world trade during the 1980s. As industry expanded, many Thai people who previously had worked in agriculture began to work in manufacturing, slowing growth in the agriculture sector. Meanwhile, manufacturing growth spurred the expansion of service sector activities.

Thailand's investment-oriented economy is among the most rapidly growing in Asia. Despite this success, economic development has been highly uneven, especially in agriculture. Although much of Thailand's export revenues and a majority of the labour force depend on agriculture, its contributions to economic growth have declined consistently since 1950. Aiming at diversification, the government has encouraged investment in small industry. To encourage exports, duties are low, except on rice, to which a premium is attached to prevent domestic shortages. Unions are prohibited and strikes not allowed unless management fails to agree with employees and government mediators.

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.