Factories slump as trade war (and) politics take toll

[Jonathan Fairfield]

Factories slump as trade war (and) politics take toll 

By   THE NATION 

 

File photo

 

THE superpowers’ trade war has weighed down the country’s manufacturing industry, with a key gauge of activity dropping last month by the most in almost three-and-a-half years. 

The 3.99 per cent fall in the Manufacturing Production Index (MPI) in May was also blamed on political uncertainties. The delays to the formation of a new government are said to have hurt the investment environment and damaged foreign investors’ confidence.

Nattapol Rangsitpol, director-general of the Office of Industrial Economics (OIE), said that the MPI’s plunge was the sharpest year on year since January 2013.

 

The US-China trade war has driven down global exports by 1.01 per cent from November 2018 to April 2019.

 

The MPI for June is forecast to decline on the back of a 6.1 per cent decrease in imports of capital goods in May and a 2.3 per cent drop in imports of raw materials and semi-raw materials (excluding gold) that month.

 

The protracted negotiations for a government to be formed have prompted an investment slowdown in Thailand as investors are in the dark about the direction of government policy.

 

In the previous month, the OIE has revised down its targeted expansion of the MPI to 2 per cent from an earlier estimate of 2.5 per cent, and its targeted growth for industrial GDP (gross domestic product) to 1.5-2.5 per cent from a previous call of 2-3 per cent.

“The OIE is still confident in the new targets as pressure from US firms to cease the trade war is expected to ease the US-China trade war and improve Thailand’s exports,” Nattapol said.

 

Industrial production is slowing down in most countries, particularly in consumer electronics, as a result of the trade war. This has forced plants in China to ease production volumes and has led to fast-paced technological changes in mobile phones.

 

In May, the production of chemical fertilisers, automobiles and engines, rubber products, accessories and hard disk drives dropped, due mainly to declines in domestic consumption and foreign orders.

 

Production of air conditioners and parts in May rose 13.77 per cent year on year, due mainly to the very hot weather, and orders from Vietnam, Indonesia, India and Japan. Palm oil production jumped 26.91 per cent year on year, boosted by biodiesel promotions and a contract with Electricity Generating Authority of Thailand for palm oil. Production of non-alcoholic beverages and drinking water climbed 16.48 per cent in light of the very warm weather in the country, new products, sales campaigns and expansion in China and Vietnam.

 

One among exporters’ major concerns is the baht’s appreciation following the US dollar’s depreciation, which could pressure the Bank of Thailand’s Monetary Policy Committee (MPC) at its meeting today, said Jitipol Puksamatanan, chief markets strategist at Krungthai Bank.

 

The baht opened at 30.65 to the US dollar yesterday morning, compared to the previous day’s close of 30.75 per US dollar.

 

Although the central bank signalled no support for currency speculation to pressure the baht to depreciate, the baht may appreciate further if the MPC views it should support a rise in the policy rate, Jitipol said.

 

Source: http://www.nationmultimedia.com/detail/Economy/30371739

 

-- © Copyright The Nation 2019-06-26

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[Alan Michael]

Globalization is a curse. Every country should strive for self sufficiency as much as possible by making their own products. Thai's are a hard working talented people, they can do it. They are great at growing their own food, but depending on investments from foreign business leads to slavery.

[jesimps]

Couldn't be due to the high value of the baht, could it?

[shaurene]

18 minutes ago, Alan Michael said:

Globalization is a curse. Every country should strive for self sufficiency as much as possible by making their own products. Thai's are a hard working talented people, they can do it. They are great at growing their own food, but depending on investments from foreign business leads to slavery.

There is only one reason. The Thai Baht is OVER VALUED. They cannot see past their noses. Buyers will go to Vietnam, India, China and other countries to buy. 

[soalbundy]

29 minutes ago, Alan Michael said:

Globalization is a curse. Every country should strive for self sufficiency as much as possible by making their own products. Thai's are a hard working talented people, they can do it. They are great at growing their own food, but depending on investments from foreign business leads to slavery.

civilisations world wide have blossomed due to trade, this is true as far back as the bronze age, with trade comes the swapping of ideas, new innovations, knowledge and enlightenment. Globalisation isn't new it was alive and well even in the bronze age, tin from cornwall ending up in the middle East, glass and ceramics from Italy being exchanged for cloth in the North of England, In Pompei products from India have been found even though the might of Rome never reached India. The 'lost wax' method of casting from Italy transformed the production of cast bronze and metal world wide. No country can produce all the products that it needs, that was true then as it is now.

[soalbundy]

26 minutes ago, shaurene said:

There is only one reason. The Thai Baht is OVER VALUED. They cannot see past their noses. Buyers will go to Vietnam, India, China and other countries to buy. 

Since the collapse of the Baht in 1997 the Thais have had a very careful monetary policy, the best brains of the country are in the finance ministry. The industrial infrastructure in Thailand would be very difficult for countries like Vietnam, Cambodia and the Phillipines to copy in the short term, India and China are power houses in their own right, capable of producing high tech and Thailand is on the path to do the same. America doesn't want the competition and is holding its fist over China and to some extent over India, too late in my opinion. Thailand is waiting quietly in the wings treading very softly. Yes a lot of stupid things happen here but where it matters they are very astute. 

[Barry343]

1 hour ago, jesimps said:

Couldn't be due to the high value of the baht, could it?

You have stated what I have been saying for the last few months, if the baht was lowered 20% they would make a killing on the world market.

 

[RichardColeman]

58 minutes ago, Barry343 said:

You have stated what I have been saying for the last few months, if the baht was lowered 20% they would make a killing on the world market.

 

get real, the elites would need to ensure their overseas investments are sorted first and all the military hardware ordered

[Kwasaki]

5 hours ago, Jonathan Fairfield said:

May was also blamed on political uncertainties.

Whow Theresa is getting blamed for everything now. ????

[Kwasaki]

1 hour ago, Barry343 said:

You have stated what I have been saying for the last few months, if the baht was lowered 20% they would make a killing on the world market.

Yeah I could with a rise on the pensions. ????

[Srikcir]

1 hour ago, soalbundy said:

the best brains of the country are in the finance ministry.

Maybe as a general statement over the economic history of Thailand since 1932.

But in terms of the Prayut junta-government, it took 5 years to match the nation's GDP growth rate plummeted by pro-military protests and junta economic policies. Currently, the GDP growth rate has  regressed back 2 years. 

https://tradingeconomics.com/thailand/gdp-growth-annual

(I added horizontal reference line)

Thailand needs great economic policy makers.

If Prayut recycles junta-economics, the "best brains" won't matter.

[Burma Bill]

2 hours ago, jesimps said:

Couldn't be due to the high value of the baht, could it?

yes indeed. Their products are too expensive to purchase.

[Naam]

2 hours ago, Barry343 said:

You have stated what I have been saying for the last few months, if the baht was lowered 20% they would make a killing on the world market.

only in your wishful dreams.

[Naam]

50 minutes ago, Burma Bill said:

3 hours ago, jesimps said:

Couldn't be due to the high value of the baht, could it?

yes indeed. Their products are too expensive to purchase. 

yep! that's why Thailand's exports in 2018 amounted to US-Dollars 180,000,000,000.-

 

1. Quote

    

   1. Machinery including computers: US$42.9 billion (17.2% of total exports)
   2. Electrical machinery, equipment: $35 billion (14%)
   3. Vehicles: $30.4 billion (12.2%)
   4. Rubber, rubber articles: $15.5 billion (6.2%)
   5. Plastics, plastic articles: $14.5 billion (5.8%)
   6. Gems, precious metals: $11.9 billion (4.8%)
   7. Mineral fuels including oil: $10.6 billion (4.2%)
   8. Meat/seafood preparations: $6.6 billion (2.6%)
   9. Organic chemicals: $6.1 billion (2.5%)
   10. Cereals: $5.7 billion (2.3%)

    

    

[Naam]

1 hour ago, Srikcir said:

Maybe as a general statement over the economic history of Thailand since 1932.

But in terms of the Prayut junta-government, it took 5 years to match the nation's GDP growth rate plummeted by pro-military protests and junta economic policies. Currently, the GDP growth rate has  regressed back 2 years. 

https://tradingeconomics.com/thailand/gdp-growth-annual

(I added horizontal reference line)

Thailand needs great economic policy makers.

If Prayut recycles junta-economics, the "best brains" won't matter.

compare Thailand's growth rate with other countries but omit they fake figures of China and India.

China	6.40	Mar/19	%
India	5.80	Mar/19	%
Indonesia	5.07	Mar/19	%
Saudi Arabia	3.60	Dec/18	%
United States	3.20	Mar/19	%
Spain	2.40	Mar/19	%
Australia	1.80	Mar/19	%
United Kingdom	1.80	Mar/19	%
Netherlands	1.70	Mar/19	%
South Korea	1.70	Mar/19	%
Switzerland	1.70	Mar/19	%
Canada	1.30	Mar/19	%
Euro Area	1.20	Mar/19	%
France	1.20	Mar/19	%
Mexico	1.20	Mar/19	%
Singapore	1.20	Mar/19	%
Japan	0.90	Mar/19	%
Germany	0.70	Mar/19	%
Brazil	0.50	Mar/19	%
Russia	0.50	Mar/19	%
South Africa	0.00	Mar/19	%
Italy	-0.10	Mar/19	%
Turkey	-2.60	Mar/19	%
Argentina	-5.80	Mar/19	%

 

[Pib]

6 hours ago, Barry343 said:

You have stated what I have been saying for the last few months, if the baht was lowered 20% they would make a killing on the world market.

 

And that would automatically increase the cost of materials "imported" into Thailand raising prices for Thais ....and factories to make products to export.  Plus, Thailand would surely be labeled a currency manipulator by other countries resulting in higher tariffs being placed on Thai exports...higher tariffs drive higher prices and fewer exports.  

 

It's fine balancing act in determining "just right" valve of a currency.

 

Edited June 26, 2019 by Pib

[chama]

12 hours ago, jesimps said:

Couldn't be due to the high value of the baht, could it?

Yes, but that isn't as easy to explain as a trade war or the buffoons in the political circus. 

[chama]

The trade war will eventually end and an equilibrium will be found. The political circus never seems to end...that may be the biggest danger. And when political leaders don't understand how to manage currency strength in the world economy even greater damage can be done to exports, GDP and other standard measurements of economic strength.

[Chelseafan]

18 hours ago, jesimps said:

Couldn't be due to the high value of the baht, could it?

You said in 12 words what the article couldn't in over 500 !