About 10 years before the ongoing global financial crisis began to affect Thailand, the country experienced domestically a man-made crisis driven by speculative investment and an incorrect exchange rate policy. The large expansion of investment in the property and construction sectors that created a bubble in the Thai economy was financed by cheap dollar loans from overseas. It was followed by a shortage of labor and an increase in wages. The country lost its competitiveness owing to a steady drop in the real exchange rate, expressed as the ratio of tradable to non-tradable prices (Ammar 1999: 360). The export growth rate dropped from 30 percent annually to –5 percent within six quarters between 1995 and 1996 (Figure 1). However, the financial crisis in 1997 did not seriously affect the Western countries that were major consumers of Thai exports. It did however drastically slow down economic activities in the property and construction sectors before spreading its effects widely among other sectors. Thai financial institutions, which formed a major part of the problems in 1997, have learned something from the crisis and have since tended to be more risk averse. New debt instruments created outside Thailand, such as the collateralized debt obligations (CDOs) that helped cause the current global crisis, were avoided by Thai financial institutions (Chalongphob and Somchai 2009: 3). As the global crisis started outside Thailand in 2008, its effects were channeled into the Thai economy through the demand for Thai exports. The impact on exports was greater than that of the 1997 crisis (Figure 1), since the Thai economy depends so much on the export of goods and services. Exports account for about 60-70 percent of Thailand’s GDP.