‘Overshooting’ baht raises fears of sluggish growth

[madmitch]

I tend to look at Thailand's near neighbours when considering whether the currency is overvalued. 4 years ago 1 ringgit was worth around 10 baht; it's now around 7.5. SGD was 0ver 25, now under 23.

 

Yet GDP growth in the three coutries is quite similar, in face Malaysia slightly outperforms Thailand.

 

All this talk about Thailand's foreign currency reserves doesn't quite add up for a non-economist like me; if they have so much foreign currecy then a weaker baht would make it worth more!

 

I still believe that the currency's strength, like so much here, is driven by the big businesses and influential individuals who might benefit from the strong baht.

[DM07]

45 minutes ago, oldhippy said:

If tourism would account for 7 or 10 or 30 % of GDP, that would mean - ceteris paribus - that 7 or 10 or 30 % of the Thai labour force is employed in the tourist industry.

That would not leave much for agriculture, manufacturing, services and government.

I think, you are making one big mistake here: TOURISM and the money it brings in, is not only limited to hotels and tours!

Cars are sold to hotels for transportation of goods and guests.

Farmers deliver goods directly to hotels, as do fishermen.

Hotel uniforms are purchased from factories.

Laundry has to be done!

Engineers repair buses and boats.

Staff has to be hired.

 

Tourism is a bit more than just "tourism", if you catch my drift! 

[luckyluke]

Credible ? :

 

https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2018/thailand2018.pdf

 

 

 

 

[oldhippy]

Nobody, not even this "troll" denies that a strong baht hurts foreign tourism (and exports).

But these sectors are heavily overrated by politicians that don't understand economics. The major part of the economy is the internal economy. A strong baht has both negative and positive effects on the internal economy.

Comparing turnover (sales) of a particular sector to GDP does not make sense, as the combined turnover of all sectors will be much higher than the GDP.

GDP is the sum of all added value (as in VAT), not the sum of all sales (turnovers). It is very possible that tourism turnover is 10% compared to GDP, but tourism certainly does not contribute 10% to GDP.

 

[jabis]

5 minutes ago, oldhippy said:

Nobody, not even this "troll" denies that a strong baht hurts foreign tourism (and exports).

But these sectors are heavily overrated by politicians that don't understand economics. The major part of the economy is the internal economy. A strong baht has both negative and positive effects on the internal economy.

Comparing turnover (sales) of a particular sector to GDP does not make sense, as the combined turnover of all sectors will be much higher than the GDP.

GDP is the sum of all added value (as in VAT), not the sum of all sales (turnovers). It is very possible that tourism turnover is 10% compared to GDP, but tourism certainly does not contribute 10% to GDP.

 

Based on what analysis (highlighted the one question I have). I provided you with data on the official figures, and you still have not answered?

Your macroeconomics here on the scale

Edited February 4, 2019 by jabis
For the <deleted> of it :)

[Toknarok]

    I know precious little about economics, but to obtain a better idea of how much tourists spend in Thailand why not ask them all?

    In Australia when a tourist departed on the departure card was a section asking how much they had spent whilst in Australia. Of course the figure wouldn't be 100% accurate, (people exaggerate}  but what would be the point og exaggerating. I'm sure most people wouldn't mind stating how much they has spent.

    I have never been asked by the Thai Authorities what my spending as a tourist was on my Thailand trips. How do they work out the figures they come up with?

[BritManToo]

1 hour ago, Father Fintan Stack said:

The visa rules changed in 2018 specifically to clamp down on foreigners staying longer term without funds, employment or a valid reason for being in-country.

And that's when they started the ER retirement VISA 3 months single entry ($75) 6 months multi entry($150) or 1 year multi entry ($300).

https://www.movetocambodia.com/planning-your-move-to-cambodia/cambodia-visas/

That site has wrong info on the financials, they are not needed for over 55 years old.

All the Cambodian expat forums repeat the information, no financials required for over 55s.

 

Edited February 4, 2019 by BritManToo

[jabis]

4 minutes ago, Toknarok said:

    I know precious little about economics, but to obtain a better idea of how much tourists spend in Thailand why not ask them all?

    In Australia when a tourist departed on the departure card was a section asking how much they had spent whilst in Australia. Of course the figure wouldn't be 100% accurate, (people exaggerate}  but what would be the point og exaggerating. I'm sure most people wouldn't mind stating how much they has spent.

    I have never been asked by the Thai Authorities what my spending as a tourist was on my Thailand trips. How do they work out the figures they come up with?

Most of the figures come from the world bank, regarding these estimates ????

[oldhippy]

3 minutes ago, jabis said:

Based on what analysis (highlighted the one question I have). I provided you with data on the official figures, and you still have not answered?

You , Luckyluke and DM07 are talking about total tourism, including Thais travelling in Thailand. The OP was about foreign tourism.

[jabis]

4 minutes ago, oldhippy said:

You , Luckyluke and DM07 are talking about total tourism, including Thais travelling in Thailand. The OP was about foreign tourism.

No, the OP was regarding tourism GDP, as you have pointed out multiple times

Edited February 4, 2019 by jabis
addendum v2

[oldhippy]

9 minutes ago, jabis said:

No, the OP was regarding tourism GDP, as you have pointed out multiple times

1/ transport equals tourism????

 

2/ quote from OP: "With Thailand so economically reliant on tourism, he warned, any global factors that have an adverse effect on foreigners’ travels would badly hurt here."

OP was about foreign tourism in Thailand.

[jabis]

3 minutes ago, oldhippy said:

1/ transport equals tourism????

 

2/ quote from OP: "With Thailand so economically reliant on tourism, he warned, any global factors that have an adverse effect on foreigners’ travels would badly hurt here."

OP was about foreign tourism in Thailand.

You claim to be a professor of macroeconomics, and don't understand labels of macroeconomics ???? 
1) Yes, tourism falls (like I earlier told you already) under that label and
2) It's talking about tourism, which is reliant on global factors ie. tourism from abroad as well

Edited February 4, 2019 by jabis

[oldhippy]

1 minute ago, jabis said:

You claim to be a professor of macroeconomics, and don't understand labels of macroeconomics ???? 

I certainly do not understand this remark.

 

[Caldera]

5 hours ago, oldhippy said:

1/ I used to be a macro economics lecturer, so maybe I know what I am talking about.

No offense, but most economists don't seem to know what they are talking about most of the time. You will need to forgive me that my trust in your profession is extremely limited. That's not any kind of bias, mind you, it's the fact that I've been reading what they've had to say for the last three decades. If there ever was a field that masquerades as a science but is fundamentally flawed by the standards of any real science, it would have to be economics.

[spidermike007]

5 hours ago, oldhippy said:

For a Thai the exchange rate does not matter. The exchange rate only matters to tourists, and tourism is a very small part of GDP.

 

True. But for a Thai inflation matters, and it has been high, despite what the experts are saying. I see prices jumping every month or so. And that has to be factored into the overall equation. I agree that the baht is way over valued. And I agree that tourism does make up at least 10% of the economy, probably far higher if you take into account all of the ancillary businesses that benefit from tourism. And Western tourism has been dropping, and most of those other businesses benefitted far more from Western tourists, than from the no to low baht Chinese tourists. Thailand does not attract many big spending Chinese tourists. They have many better alternatives, that offer them exceptionally good services, have excellent language skills, know fine wine, do not have stupid import taxes on luxury items, no not lack real law enforcement, do not have major traffic safety issues, etc. 

[Kaoboi Bebobp]

1 hour ago, oldhippy said:

If tourism would account for 7 or 10 or 30 % of GDP, that would mean - ceteris paribus - that 7 or 10 or 30 % of the Thai labour force is employed in the tourist industry.

That would not leave much for agriculture, manufacturing, services and government.

 

That's a pretty thin statement, professor. Everyone knows the Thai workforce is, of necessity, longtime practitioners of multi-tasking. Planting and harvesting rice or fruits, then in the non-farming season, driving a tourist minibus, selling coffee in the market, cleaning hotel rooms, driving taxi in Bangkok. Etc. There are few neat job boundaries when food has to be put on the floor mat.  

 

Moving along: 

 

Reuters, January 2018: 

Quote

Tourist receipts account for about 12 percent of Southeast Asia’s second-largest economy [Thailand], making it one of the most important drivers of growth as Thailand has lagged regional peers since the army took power in 2014.

 

Royal Thai Embassy to US, May 2017:

Quote

The direct contribution of Travel & Tourism to GDP in 2016 was THB1,292.5bn (9.2% of GDP) according to World Travel and Tourism Council recent estimation.

 

In any case, GDP and other numbers are largely not even close to reflecting the "real" economy, never mind the dark economy. 

[mshs]

THB has wound up to where it has as the Japanese fx markets have switched from the Uridashi (NZD long/JPY short) to THB long/JPY short as the interest rates on the THB equaled the interest rates on the NZD which currently stands at 1.75%

 

In effect, the THB has removed itself from the rankings of the other 3rd world country rates, which tend to be higher than those of the "Western" nations.

 

Some of the rates:

 

Turkey		24.00%
Egypt		14.75%
Mexico		8.25%
South Africa		6.75%
Brazil		6.50%
India		6.25%
Indonesia		6.00%
Colombia		4.25%
Philippines		3.50%
Peru		2.75%

Edited February 4, 2019 by mshs

[spidermike007]

2 hours ago, boonrawdcnx said:

This is all nonsense - reason for a currency to rise is demand and a sound and solid - as much as this is possible in these days - economy.
The US and Europe used to be safe havens during economic downturns - not so anymore. Now the money is flowing to Asia, and for a good reason.
The US and some European countries are so heavily in depth - -thanks to the gangsters on Wall Street - that they currently cannot raise interest rates because they are not even able to be the interest of the depth they have amassed anymore if interest should rise.
To bail out banksters and the crooks on Wall Street US and EU printed debt (money) QE in the region of 30-60 billion a month - to be payed by the tax payers- should actually have the US dollar and Euro down even further. Only the manipulated US stock market has kept them from collapsing. Companies are Buying back shares in the hundreds of billions to artificially inflate share prices - Only what most people don’t know - on borrowed money - thinking they can manipulate share prices up for ever with cheap money - until the bubble bursts again. But next time there is no money in the world that can bail them out.

The US has amassed 22 trillion in debt approx. 107 % of GDP and a trillion $ budget deficit 5% of GDP - Thailand has 1% budget deficit and debt of roughly 46 % of GDP !

Thailand also the 12th highest amount of foreign currency reserves ahead of the UK and Germany.

Now where would you park your money ?

In bankrupt US / Europe or in Thailand ?
I think the answer is easy and that’s the reason why the Baht is so strong.


Sent from my iPhone using Thaivisa Connect

 

And that is the known debt. When they were anticipating the invasion of Iraq, Cheney got congress to pass a bill, that allowed them to wage that war, and the subsequent war in Afghanistan, completely off the books. In other words, it was never added to the accumulated debt. And we are talking about an estimated $7 trillion. So, the accumulated debt is far closer to $30 trillion, and climbing by at least a trillion a year, under the big spender Trump, who seems hellbent on bankrupting America, just like he did with five of his own large companies. He is spending money like a drunk sailor. 

 

The most obvious way in which the true cost of this war was kept hidden was with the use of supplemental appropriations to fund the occupation. By one estimate, 70% of the costs of wars in Iraq and Afghanistan between 2003 and 2008 were funded with supplemental or emergency appropriations approved outside the Pentagon's annual budget. These appropriations allowed the Bush administration to shield the Pentagon's budget from the cuts otherwise needed to finance the war, to keep the Pentagon's pet programs intact and to escape the scrutiny that Congress gives to its normal annual regular appropriations. With the Iraq war treated as an "off the books" expense, the Pentagon was allowed to keep spending on high-end military equipment and cutting-edge technology. In fiscal terms, it was as if the messy wars in Afghanistan and Iraq were never happening.

 

https://www.theguardian.com/commentisfree/2013/mar/11/us-public-defrauded-hidden-cost-iraq-war

 

 

[Jimdandy]

5 hours ago, leeneeds said:

When local neighbours currency is Far more attractive to the tourist dollar, apart from this current new year pig flow I would expect the fall of tourist to happen, 

one dollar us 

                   = Laos kip = 8,565

                   =Cam Riel = 4,012

                   = Viet Dong =23,191

                   = Myan Kyat 1,506

I just spent a week end in Laos and far more value for ones hard earned. Bangkok is becoming expensive even for a meal, I would pay normally around 600 - 800 baht for myself and wife to have a good quality meal (now eating at the same restaurant) we are paying 1200 baht, that meal as much as we enjoyed it has become a luxury that we now only have very other trip, not each trip.

You're right with regard to the fall of tourism. I spent a week in Vietnam in January and bought clothes for my grandson and granddaughter for 110,000 VND each piece, which is about 4.75 USD, I saw the same exact outfits and sizes last weekend at Chatuchak for 300 baht which is about 9.64 USD. two years ago those same outfits at Chatuchak were about 150-200 baht, almost equal to the price in Vietnam today. I ate a sumptuous meal in nice restaurant and got far more for my money. 

[hobobo]

4 hours ago, Fex Bluse said:

As a professor, I imagine you would have learned about logical fallacies. Yet, you have attempted to use several logical fallacies on me. I'm sorry if the below embarrasses you as it was not my intention. 

 

 

1. When you responded to me with, paraphrasing, "try 1% at most!", you were appealing to incredulity, offering no support of your argument.

 

Divine fallacy (argument from incredulity) – arguing that, because something is so incredible or amazing, it must be the result of superior, divine, alien or paranormal agency.^[21]

 

 

2. When you started attacking my interpretation of the meanings of GDP and tourism, you are arguing from another fallacy. However I use the term, as long as I am using it consistently, it has no impact on my argument (percentages). 

 

Argument from fallacy (also known as the fallacy fallacy) – assumption that if an argument for some conclusion is fallacious, then the conclusion is false.^[7]

 

3. When challenged with my argument that Thai tourism might account for around 30% or higher, you again appealed to a logical fallacy, this time stating you were a professor and thus your argument is to be taken over mine, despite, yet again, offering no material support of your argument.

 

Appeal to authority (argument from authority, argumentum ad verecundiam) – an assertion is deemed true because of the position or authority of the person asserting it.^[70][71]

• Appeal to accomplishment – an assertion is deemed true or false based on the accomplishments of the proposer.^[72] This may often also have elements of appeal to emotion (see below).

Not getting involved in your "debate", but he never claimed he was a Professor, merely a lecturer. In my years studying for a BSc and MSc at the London University (UCL) I had over 50 lecturers and less than 10 Professors.

[Jimdandy]

11 minutes ago, spidermike007 said:

gangsters on Wall Street -

Gangsters on Wall Street!? And I thought they were just 'wise guys' trying to make a buck.

[mshs]

32 minutes ago, Caldera said:

No offense, but most economists don't seem to know what they are talking about most of the time. 

And academics seem to know even less and educate impressionable young minds who turn out to be dumb, in debt and spineless.

[cornishcarlos]

It's all a bit complicated 

[lipflipper]

Manipulating the Baht for their own personal gain, why ever would the Bank of Thailand do something as stupid as that??? Oh wait, I get it now, it's to protect their assets and to hell with the damage it's doing to the overall Thai economy. The U.S. has warned Thailand over and over that if this manipulation continues they are going to be named a currency manipulator and join China and India in suffering the consequences. Can't happen soon enough for me.

Sent from my CMR-AL19 using Thailand Forum - Thaivisa mobile app

[macca3248]

It makes it hard for a lot of expats especially from Aussie when the exchange rate is now about 22 THB to the Aussie dollar ,where as 5 years ago it was around 34 THC to the Aussie dollar ..

That is a 33% drop in income for pensioners on aged pensions !

 

 

[mshs]

Countries                       Debt to GDP (%)

Japan	234
Italy	128
Portugal	118
United States	109
Singapore	109
Belgium	99
France	96
Spain	95
United Kingdom	86
Canada	84
Austria	72
Ireland	65
Israel	61
Finland	60
Germany	56
China	54
Netherlands	51
Australia	41
Denmark	35
Iceland	35
Sweden	34
Luxembourg	23
New Zealand	23
Russia	19

[zydeco]

3 hours ago, boonrawdcnx said:

To bail out banksters and the crooks on Wall Street US and EU printed debt (money) QE in the region of 30-60 billion a month - to be payed by the tax payers- should actually have the US dollar and Euro down even further.

And just in December, the US president and his economic team put pressure on the Fed to stope interest rate increases and QT. In fact, they're getting ready for another QE. QE4. And that has caused the collapse in the dollar. Just a couple of month's ago, it was almost 34 baht to the dollar. Just looking right now and it is: 31.33.  Trump's economic "policy" is built around cheap dollars and inflating the stock market bubble. He doesn't care about anything else, and if our inflation rate looks like Venezuela's?  Who cares! The return on the Venezuelan stock market over the past year has been 174,000 percent! Trouble is the currency is worthless.

[Buffy Frobisher]

A better than even chance that there's a bit of that going on. Just prior to the Government takedown a couple of coups back we were in the final stages of negotiating a £5 Million deal with the rouge government of the day for a product they wanted. We were told that when the goods were delivered into Thailand from the UK, our funds would be transferred to the UK out of the BVI on an L/C from a well-known bank operating there. That's right - payment for a Thai Government transaction paid from the BVI! That clearly put our company at risk from EU AML law so we backed out, as attractive as the deal was. I've wondered ever since how big the shovel out to the BVI and other havens is on a daily basis, and if that actually does influence the Baht's strength.

 

3 hours ago, NCC1701A said:

Ring ring:

 

"Hello, big boss of Thai banks."

"Yes I am super big boss of Thailand and I am buying a house in the South of France. Need strong baht."

"But that might cause of recession!"

"I don't care. No smog in Monaco.

 

Edited February 4, 2019 by Buffy Frobisher
font sizing

[exemplary21]

3 hours ago, oldhippy said:

If tourism would account for 7 or 10 or 30 % of GDP, that would mean - ceteris paribus - that 7 or 10 or 30 % of the Thai labour force is employed in the tourist industry.

That would not leave much for agriculture, manufacturing, services and government.

 

Incorrect. This ignores differing levels of productivity across sectors.

[Fex Bluse]

1 hour ago, hobobo said:

Not getting involved in your "debate", but he never claimed he was a Professor, merely a lecturer. In my years studying for a BSc and MSc at the London University (UCL) I had over 50 lecturers and less than 10 Professors.

True. Correction noted.