Fasten your seatbelts for a bumpy 2019 [Editorial]

[webfact]

Fasten your seatbelts for a bumpy 2019

By The Nation

 

 

Thailand’s economy and workforce face greater turbulence in the new year as headwinds strengthen 

As we approach the end of 2018, this is a good time for a reality check on Thailand’s economic outlook for the year ahead. In 2019, economic challenges are likely to increase in severity compared to this year due to both domestic and international factors.

 

Specifically, the Thai tourism sector is facing the reality that growth in Chinese arrivals is cooling after a decade of phenomenal rises. With over 10 million Chinese visiting Thailand this year, the country has become our largest source of foreign tourists, accounting for over 30 per cent of total arrivals.

 

At present, tourism accounts for more than 10 per cent of Thailand’s gross domestic product, which is forecast to slow to a growth rate of 4 per cent or less in 2019. 

 

Meanwhile the export sector, the country’s largest growth driver, is also expected to slow, due to the US-China trade war and other unfavourable world economic factors.

 

While the after-effects of the Phuket ferry tragedy that killed dozens of Chinese tourists in July might have faded, hopes of a quick return to the good old days are unlikely to be realised since the Chinese economy itself faces a new reality of slowing growth amid the trade war with the US.

 

Hence, Thailand can expect fewer Chinese tourists and investors, including those looking to buy Thai condominium units and other property.

 

The Thai property sector is also witnessing the spectre of an oversupply which is turning more worrisome. Besides the emerging glut from several mega-development projects – especially those combining residential, retail, hotel and office space – household and personal debts have jumped among investors-cum-speculators who are over-leveraging their borrowing capacity in hope of lucrative returns in the property sector.

 

One banker reports that property speculation is rife among unscrupulous borrowers, who are securing multiple multimillion-baht loans to buy condo units beyond their payback capacity. For example, with a monthly salary of Bt50,000, you can get multiple loans for, say, four or five separate condo units whose developers are desperate for buyers.

 

Each unit may cost anywhere from Bt2 million to Bt5 million, boosting the individual borrower’s debts to over Bt10 million on a monthly income of Bt50,000. Investors can load up their borrowing in this way by applying for loans simultaneously so as to evade banks’ risk-assessment mechanisms.

 

In other words, the banks are falling short in safeguarding their credit risks as they compete for short-term earnings. And the risks are rising due to the Bank of Thailand’s latest interest rate hike, the first in seven years.

 

Neither is the outlook rosy for employees in the banking sector, as digital and other technologies are adopted rapidly, threatening the jobs of manual workers who are being displaced by automatic and mobile app banking services. The insurance sector is another area feeling the disruptive force of technology, which has the potential to displace all insurance sale agents when new platforms become operational.

 

Data analytics, artificial intelligence, blockchain and the Internet of Things are advancing rapidly, with significant impacts on the economy, labour market, business competitiveness and government. Both positive and undesirable consequences will be obvious when the fifth-generation (5G) mobile network becomes operational in the next few years.

 

Source: http://www.nationmultimedia.com/detail//today_editorial/30361267

 

-- © Copyright The Nation 2018-12-28

[bluesofa]

54 minutes ago, webfact said:

reality check on Thailand’s economic outlook

That must be today's oxymoron.

[YetAnother]

1 hour ago, webfact said:

household and personal debts have jumped among investors-cum-speculators who are over-leveraging their borrowing capacity in hope of lucrative returns in the property sector.

witlessly running down the same path that led to the financial crisis in the USA 2008 from radically overspeculated real estate; course expecting thais to regulate/discipline themselves in such a manner is folly

[bartender100]

Its not just Thailand, here in the UK credit cards and loans are ridiculously easy to get, virtually no credit checks 

 

https://www.express.co.uk/news/uk/1063984/debt-crisis-britons-struggle-to-pay-bills-finances-out-of-control

[Xonax]

Same procedure as every year James!!!

[Brickbat]

Herd mentality, worldwide. Get sucked in to borrow. It’s easy to do. Just make fools compare to their neighbours and peers. And “ this time, it’s different” . Day of reckoning arriving soon , as easy credit fuels a debt crisis worse than the gfc. And this time, it’s definitely different. Fiat currencies under threat, blockchain technology and AI will reduce jobs and rates and oil on the rise. 

[anon537687643]

Vietnam economic growth 7% ! Thailand and its backward, economy education ! Junta spent a trillion baht and what did it achieve? Stopped protests on the Streets! https://www.bloomberg.com/news/articles/2018-12-27/vietnam-s-economy-remains-outperformer-as-growth-tops-7-mark


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[Cadbury]

2 hours ago, webfact said:

Fasten your seatbelts for a bumpy 2019

Thailand's GDP growth stalled in the third quarter and is likely to do the same for the fourth. And the prospects are looking depressed for 2019 with a growth rate of only 3.3% predicted. 

In the early part of 2018 there were some fanciful predictions the GDP growth for this year would come in at 4.7% but alas that seems not to be the case and 4.1% now seems more likely. 

Monthly export figures for 2018 have been up and down like brides nightie and will probably show a 6-7% increase for the year

Predictions are for Exports to expand 5.5% in 2019 while Imports seem likely to increase 7.8% thus setting up a trade deficit of over 1 billion US dollars.

[Cadbury]

11 minutes ago, markaoffy said:

Vietnam economic growth 7% ! Thailand and its backward, economy education ! Junta spent a trillion baht and what did it achieve? Stopped protests on the Streets! https://www.bloomberg.com/news/articles/2018-12-27/vietnam-s-economy-remains-outperformer-as-growth-tops-7-mark 


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While Thailand's GDP (US$1261 billion) is about twice that of Vietnam (US$600billion) Vietnam's economy is going gangbusters while Thailand is just marking time. Thailand will eventually be left in the dust if the inflexible and ineffectual minds of the military continue to rule; it's prospects are grim. 

[Justgrazing]

4 hours ago, webfact said:

 

One banker reports that property speculation is rife among unscrupulous borrowers, who are securing multiple multimillion-baht loans to buy condo units beyond their payback capacity. For example, with a monthly salary of Bt50,000, you can get multiple loans for, say, four or five separate condo units whose developers are desperate for buyers.

 

Each unit may cost anywhere from Bt2 million to Bt5 million, boosting the individual borrower’s debts to over Bt10 million on a monthly income of Bt50,000. Investors can load up their borrowing in this way by applying for loans simultaneously so as to evade banks’ risk-assessment mechanisms.

 

In other words, the banks are falling short in safeguarding their credit risks as they compete for short-term earnings. And the risks are rising due to the Bank of Thailand’s latest interest rate hike, the first in seven years.

Dear Prudence .. was the title of a Beatles song I recall .. 

Anyway they'll have to learn the hard way that what goes up can ( will ) also come back down .. With a crash bit like that Jenga game with the little blocks played in the bars .. Blame those damn farang I wood .. 

[zyphodb]

^^^^ They will ^^^^^

 

[yellowboat]

5 hours ago, webfact said:

Hence, Thailand can expect fewer Chinese tourists and investors, including those looking to buy Thai condominium units and other property.

Thailand's neighbors offer the same sort of fun without the dangers and hassles.   Thailand is losing to Malaysia and Vietnam.  And why should the Chinese leave China when they can have the same sort of fun in their own country ?

[JRinPDX]

Hmmm... so when the bubble eventually pops, condos could go at a steep discount.  I wonder if this will have much impact on other forms of real-estate, like smaller cities that aren't tourism based, or farmland. 

[jerojero]

witlessly running down the same path that led to the financial crisis in the USA 2008 from radically overspeculated real estate; course expecting thais to regulate/discipline themselves in such a manner is folly

And in 1997 when the world financial and real estate markets collapsed with Thailand that led the way.

[from the home of CC]

One banker reports that property speculation is rife among unscrupulous borrowers, who are securing multiple multimillion-baht loans to buy condo units beyond their payback capacity. For example, with a monthly salary of Bt50,000, you can get multiple loans for, say, four or five separate condo units whose developers are desperate for buyers.

 

 

Typical asshat banker statement "unscrupulous borrower" should read 'unscrupulous lenders'.

[marko kok prong]

49 minutes ago, JRinPDX said:

Hmmm... so when the bubble eventually pops, condos could go at a steep discount.  I wonder if this will have much impact on other forms of real-estate, like smaller cities that aren't tourism based, or farmland. 

Yes that will have to happen as it did in the US, houses going for like 10 bucks,but i believe in the States in the case of a mortgage default,they simply write off the mortgage when you return the keys,i may be wrong,if so someone correct me. This is unusual,i know it certainly does not apply in UK ,Australia and i would doubt in Thailand so you will have a lot of people in negative equity,with huge debt's. I have read repeated warnings from economist's that conditions are ripe for another f.c,this report confirms that.

[Machiavelli]

3 hours ago, Cadbury said:

While Thailand's GDP (US$1261 billion) is about twice that of Vietnam (US$600billion) Vietnam's economy is going gangbusters while Thailand is just marking time. Thailand will eventually be left in the dust if the inflexible and ineffectual minds of the military continue to rule; it's prospects are grim. 

It's US$223 billion Vietnam to Thailand's $455 billion 

[anon537687643]

It's US$223 billion Vietnam to Thailand's $455 billion 

Whatever it is, one is rising the other is stagnant !


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[rumak]

6 hours ago, YetAnother said:

witlessly running down the same path that led to the financial crisis in the USA 2008 from radically overspeculated real estate; course expecting thais to regulate/discipline themselves in such a manner is folly

well, according to what you just said..... expecting Americans to discipline themselves was folly as well.

maybe people just like to imitate what the big boys do..

[Cadbury]

40 minutes ago, Machiavelli said:

It's US$223 billion Vietnam to Thailand's $455 billion 

Your numbers seem to be out-of-date. The The S.E. Asia 2017 numbers from my source is Thailand US$1261 billion and Vietnam US$595. 

https://en.wikipedia.org/wiki/List_of_Asian_and_Pacific_countries_by_GDP_(PPP)

[White Christmas13]

5 hours ago, bartender100 said:

Its not just Thailand, here in the UK credit cards and loans are ridiculously easy to get, virtually no credit checks 

 

https://www.express.co.uk/news/uk/1063984/debt-crisis-britons-struggle-to-pay-bills-finances-out-of-control

 

[zzaa09]

An imagined and made up future might be expected. 

 

Whose to know.....

[marcusarelus]

I thought the thread was about posting times.