Thai GDP growth to fall to 0.8 per cent, lowest in nine years: Tisco

[saengd]

24 minutes ago, robblok said:

the guy has no clue what he is talking about. I wonder if he has any economic background. 

We have to be kind. This is a somewhat specialist area that not many people are interested in and even fewer people have knowledge about. The trick is to try and educate as many people as possible and explain these things in a such as way as to make it sound simple and straight forward which is not easy. The more people understand it the more they will be able to make better financial decisions and the less stressful life here will become for them in Thailand. I'm fortunate that I had a great teacher, (thanks Walter), hopefully I can pass some of this stuff along to others.

[Hank Gunn]

1 hour ago, saengd said:

Hahaha. yes, thanks. Sorry, that's exactly what I should have written, I was testing you to see if you were paying attention....(joke)

 

OK so you get 10 points for spotting that one, stay tuned because there'll be more!

You might also explain to people that they are getting confused between private and public debt (i.e. private debt is debt in the private sector: consumer loans, business loans, etc.; whereas public debt is the debt a sovereign nation has in relation to their GDP, often incurred through the sale of govt. bonds and/or through trade deficits/surpluses). Public debt can be okay if it's not too big and is used to spur domestic economic growth.

[saengd]

Just now, Hank Gunn said:

You might also explain to people that they are getting confused between private and public debt (i.e. private debt is debt in the private sector: consumer loans, business loans, etc.; whereas public debt is the debt a sovereign nation has in relation to their GDP, often incurred through the sale of govt. bonds and/or through trade deficits/surpluses). Public debt can be okay if it's not too big and is used to spur domestic economic growth.

Feel free to jump in and make whatever contributions and/or clarifications you feel like at any time, I don't have a monopoly on this subject (but it sometimes feels like I do), I can always learn too and am keen to do so. 

[Hank Gunn]

2 minutes ago, saengd said:

Feel free to jump in and make whatever contributions and/or clarifications you feel like at any time, I don't have a monopoly on this subject (but it sometimes feels like I do), I can always learn too and am keen to do so. 

Okay, I got to take off for a few hrs. but maybe I'll jump in and explain the differences between fiscal and monetary policy that governments and central banks, respectively use to tweak their economies (unless you want to take that one). ????

 

But I'd love to hear more about FX markets.

[saengd]

2 minutes ago, Hank Gunn said:

Okay, I got to take off for a few hrs. but maybe I'll jump in and explain the differences between fiscal and monetary policy that governments and central banks, respectively use to tweak their economies (unless you want to take that one). ????

 

But I'd love to hear more about FX markets.

Go for it.....I'll see what I can do to oblige. :))

[Brickbat]

46 minutes ago, robblok said:

In this discussion you have shown that you are absolutely not knowledgeable and that @seangd knows his stuff. I too know my stuff as I worked at as stock trading firm and understand that if the bad was propped up it would be visible in trades and so on.

 

You now come up with household debt while we were talking government debt. That really shows tha tyou have no clue and are just one of those guys with their strange theories that hopes that the baht will freefall. 

On the contrary, it’s just a “ discussion” to me. But insults from you both , and hoping the baht stays strong. I suspect you both have invested locally.

socrates said that when arguments are lost, people resort to insults.

and btw, when the household debt bubble bursts, what do you think will happen to the economy? And it’s currency? 

[robblok]

1 minute ago, Brickbat said:

On the contrary, it’s just a “ discussion” to me. But insults from you both , and hoping the baht stays strong. I suspect you both have invested locally.

socrates said that when arguments are lost, people resort to insults.

and btw, when the household debt bubble bursts, what do you think will happen to the economy? And it’s currency? 

Its a discussion but to have a good discussion you need to know what your talking about. You clearly don't, you also dont seem to have any economic background or knowlegde. I just call them as i see them and you sir are not well informed on this topic. You sound like someone with limited education in this field. You might be good at something else but certainly not with this.

 

As for me, i prefer the baht to drop like a stone. I get my income from abroad. But wanting something does not make it happen or make the facts any different then they are.

[robblok]

22 minutes ago, saengd said:

We have to be kind. This is a somewhat specialist area that not many people are interested in and even fewer people have knowledge about. The trick is to try and educate as many people as possible and explain these things in a such as way as to make it sound simple and straight forward which is not easy. The more people understand it the more they will be able to make better financial decisions and the less stressful life here will become for them in Thailand. I'm fortunate that I had a great teacher, (thanks Walter), hopefully I can pass some of this stuff along to others.

Not sure how you can stand it to talk with people who have no clue or knowledge just barstool gossip. I am smart enough not to get involved in topics about cars and other stuff I know nothing about. 

 

Sure this is not easy to understand you need to have a certain inteligence and economic education.

 

I just don't get it how people think that professional who buy up the Thai bonds have less information or knowledge then they do. The idea of the baht being propped up without any evidence is laughable as all trades volumes and so on are all registered and public knowledge.

[saengd]

1 minute ago, Brickbat said:

On the contrary, it’s just a “ discussion” to me. But insults from you both , and hoping the baht stays strong. I suspect you both have invested locally.

socrates said that when arguments are lost, people resort to insults.

and btw, when the household debt bubble bursts, what do you think will happen to the economy? And it’s currency? 

I agree it's just a discussion, hopefully one where everybody can learn something. My apologies if you think I've insulted, that wasn't my intent, I accept I can be direct and sometimes dismissive but not intending to insult.

 

What happens when the consumer debt bursts.

 

Non Performing Loans (NPL's) are a guide to the state of consumer lending, NPL's are loans where the consumer is no longer making payments for more than three months (?). Last time I looked NPL's here were just above 3%, BOT reports them across all lenders every month.

 

The thing with NPL's is the banks in Thailand have very healthy balance sheets and whilst they don't really want to own distressed assets (repo's) they are in a financial position to do so. In a worst case scenario those assets sit on their books for a long time, are depreciated and then sold at a loss later. For NPL's to have an adverse effect on Thai bank s balance sheets they would have to be incredibly high and that has never happened before and seems improbable going forward. 

 

But assuming the banks did take a hit of an unimaginable propoortion, what sort of impact would that have on GDP or THB? Well I can imagine GDP being lower as a result because it would be indicative of a poorly performing economy but I can't see any reason why there would be a direct impact on the value of THB, why would there be?

 

 

 

 

 

[Vacuum]

21 hours ago, webfact said:

However, the lowered price is a negative factor for those countries whose economy depends on oil, such as Russia and those in the Middle East

Who cares, this is Thailand.

[saengd]

2 minutes ago, Vacuum said:

Who cares, this is Thailand.

Thailand cares because there is an impact on the Thai economy, as the article says:

 

"During 2015-16, the lowered oil price decreased tourists from Russia and the Middle East in Thailand. Also, the lower price would decrease revenue earnings from exports, as well as from agricultural products".

[rickudon]

Getting back to the original claim of 0.8% growth, that seems totally unrealistic. Tourism is 'about' 12% of GDP (a wide range of figures depending on who gives it!). so if we take that figure then every month tourism represents 1% of annual GDP. But since February, tourism is down 50% (and will probably fall further). So by end of March GDP will already have fallen 1% below annual expectation. Tisco seem to  be assuming that everything will be back to normal by April? Any even half cocked guesstimate will tell you that their will be no significant improvement before the second half of the year, and as Europe and USA will probably be deep into their covid-19 epidemics by then, probably tourism will be even worse. More likely is that tourism will still be well down until the end of the year - so i would say GDP will fall by 5%.  And that's just the effect of covid-19 on tourism, nothing else.

 

Those Tisco experts should be fired immediately!

[saengd]

48 minutes ago, rickudon said:

Getting back to the original claim of 0.8% growth, that seems totally unrealistic. Tourism is 'about' 12% of GDP (a wide range of figures depending on who gives it!). so if we take that figure then every month tourism represents 1% of annual GDP. But since February, tourism is down 50% (and will probably fall further). So by end of March GDP will already have fallen 1% below annual expectation. Tisco seem to  be assuming that everything will be back to normal by April? Any even half cocked guesstimate will tell you that their will be no significant improvement before the second half of the year, and as Europe and USA will probably be deep into their covid-19 epidemics by then, probably tourism will be even worse. More likely is that tourism will still be well down until the end of the year - so i would say GDP will fall by 5%.  And that's just the effect of covid-19 on tourism, nothing else.

 

Those Tisco experts should be fired immediately!

It might be that Tisco is assuming GDP will fall in value as a result of reduced exports hence the 12% that is Tourism (which I agree) is already 12% of a reduced amount, make sense?

 

FWIW I think Tourism could recover fairly quickly or at least not be as bad for as long as people think. China is showing signs of recovery already and we're now into low season. By the time high season comes along we could easily see the Chinese tourist segment, the most important to Thai tourist numbers, fully recovered. The other aspect to consider is that the flu seems to have minimal impact on younger people, it's really only the over 50's who are threatened and at significant risk. I can see two quarters of really poor performance but then by September/October it could be BAU once again.

[saengd]

Regarding the FOREX market...there's a good all inclusive guide to how the system works here and it's quite comprehensive, if anyone wants to read a bottom up guide, this is a god read: 

 

https://www.investopedia.com/articles/forex/11/why-trade-forex.asp

 

The key point to remember with FOREX and Thailand is that the Baht is not fully convertible, it can't be exported as Baht and it can't be stored in any quantity outside Thailand.....THB is a restricted currency and many people don't appreciate this. The implications are that nobody can take a position against THB to force a change in it's value, people can deal in THB offshore but only on account, not for delivery of the actual currency. That means the supply side is strictly controlled, an extremely important consideration. The other consideration is that THB is a very small currency, it doesn't take much to move its value either way. Indeed there are times at the end of the month when US social security checks are cashed, USD is sold and THB is purchased, that the value of the Baht increases slightly before returning to the norm.

[saengd]

Foe anyone who is interested there's another link below which explains different aspects of the FOREX market, the section on how USD is valued is worth reading because it may help explain THB value. It covers the relationship between USD and Treasury Bonds, a relationship not dissimilar to Thailand. It also explains how USD is valued against a basket of five major currencies and that this forms the basis of the US Dollar Index, the starting point for all other FOREX transactions. Once the base value of USD is established other currencies are measured against it. Both halves of each currency pair is constantly reviewed and updated and as factors occur on either side that affect the value of one or the other, adjustments are made. A change made in the value of one currency is relayed to all related currency pairs by way of a formula so that no one currency has an advantage over another when values change. For example, if USD/GBP changes because GBP weakens, that weakening is reflected in the value of GBP/THB and other currency pairs containing GBP.

 

https://www.thebalance.com/value-of-us-dollar-3306268

[morrobay]

So the baht is all about the current account surplus. Now with tourism/exports /GDP down. And now Thai QE. All debts up. Why isn't baht devaluing. 

[saengd]

3 hours ago, morrobay said:

So the baht is all about the current account surplus. Now with tourism/exports /GDP down. And now Thai QE. All debts up. Why isn't baht devaluing. 

The last set of figures I read on export were for January, they were published mid February, they said exports were up by 3.2% on the back of gold exports....I don't believe there's anything more current, do you?

 

Ditto the volume of imports which I can easily imagine are down. 

 

The current account is made up of exports (including tourism) less inbound goods and services. The surplus in January was USD 3.4 bill. whilst the forecast for February WAS USD 3.6 bill., we'll have to wait and see what February actuals are.

 

https://tradingeconomics.com/thailand/current-account

 

I don't know what you mean by Thai QE so I'll pass on that, I don't believe BOT is increasing the availability of credit, do you?

 

Tourism based on USD isn't a big contributor to the current account so there's probably very little USD selling going on by tourists, I also haven't seen the up to date tourist numbers so it's hard to comment further.

 

So why isn't THB devaluing you ask. The answer is that the trade surplus still exists, albeit probably at lower levels than a couple of months earlier plus exporters are still exporting. also at lower levels. Perhaps it will help if you read the following:

 

https://www.investing.com/economic-calendar/thai-current-account-(usd)-1239

 

 

 

 

Edited March 12, 2020 by saengd

[saengd]

 "There are three main components of a balance of payments: - current account - capital account - financial account Either a surplus or a deficit can be shown in any of these components. Current account records the values of the following: - trade balance exports and imports of goods and services - income payments and expenditure interest, dividends, salaries - unilateral transfers aid, taxes, one-way gifts It shows how a country deals with the global economy on a non-investment basis. Balance of payments shows strengths ans weaknesses in a country's economy and therefore helps to achieve balanced economic growth. The release of a balance of payments can have a significant effect on the exchange rate of a national currency against other currencies.  Positive current account balance is when inflows from its components into the country exceed outflows of the capital leaving the country. Current account surplus may strengthen the demand for local currency. Persistent deficit may lead to a depreciation of a currency".

 

https://www.investing.com/economic-calendar/thai-current-account-(usd)-1239

 

Think of the balance of trade as being two lines on a graph, the upper one is the value of exports, the lower one is the value of imports, the space in between is the trade gap, in this example it's a trade surplus, the value of exports is higher than the value of imports. If the lines were the opposite way around it would be a trade deficit. As the economy slows both lines fall in value but the gap can remain the same if they both fall in tandem, which is often the case.

 

 

 

 

 

[saengd]

I read that the economic hit of the virus has been about THB 750 billion, THB 400 billion of that in lost tourism receipts, almost 2.5 million jobs have been affected (not lost).

 

Despite those things and assuming a small upturn by May, the forecast is for USD/THB around 31.

 

The Dollar Index continues to rise which means USD is getting stronger, since the Baht follows USD I would expect is to strengthen also - the Pound is sinking badly, I expect to see 38. We really need to see some Thai trade figures for February.

 

Most important I think, the Thai consumer confidence index is down yet again, from 80 to 65 over the past year, things could get ugly at this rate.

 

https://www.ceicdata.com/en/thailand/consumer-confidence-index-chamber-of-commerce/consumer-confidence-index

Edited March 12, 2020 by saengd

[Grumpy John]

I may not know as much about finance as some of you but I do know from History the disruptive effects of a pandemic.  Given the current environment it may be 2 years before everything settles down again...besides we will not know how bad it will get until we see things start to improve at some future date.

[saengd]

Here's Kasikorn Research's view of the virus and exports etc., the main report is here:  https://kasikornresearch.com/en/analysis/k-econ/business

 

They look at three different scenario's for the impact of the flu virus on Chinese tourism and conclude:

 

 "In summary, KResearch views that the impact of the n-CoV outbreak in China will have a limited impact on Thailand's tourism activities in 2020". https://kasikornresearch.com/en/analysis/k-econ/business/Pages/z3077.aspx

 

Looking at exports in 2020 they say:

 

"We at KResearch maintain our growth projection for the 2020 export value at (-)1.0 percent, representing a contraction for the two consecutive year, due primarily to the slowing global economy and strong Baht against currencies of our trade rivals. Although the US-China trade war has eased after the two countries reached the first phase of a broader trade pact, global trade overall may not change significantly because the initial trade deal entails tariff cuts on some Chinese imports, meaning that most of Chinese goods sent to the US will be subject to the same tariffs in 2020".  https://kasikornresearch.com/en/analysis/k-econ/business/Pages/y3845.aspx

[christophe75]

Talks about "balances" are pointless at this time.

 

What matters is : jobs, income

 

This will seal the fate of the THB, on the long run.

 

The whole "open economy" (well usually in one way only in Thailand !) linked to stupid "inflated assets"... this whole charade is crumbling.

 

Hence : we are going back to "normal", and long term trends. AKA : hardship for millions and millions Thais.

 

-The little car, built here, and bought on credit ? Terminated.

-The little condo shoe box bought on credit ? Terminated.

-All the local businesses and jobs linked to tourism ? Terminated.

-All the stupid "service" jobs (banks, offices etc.) ? Terminated.

-All the White elephant investments ? Terminated.

-Big governement ? Terminated.

 

Fear, everywhere.

 

People in Bangkok are going to suffer a lot. Upcountry ? Less.

 

But it's important to remember that the virus is just a pretext, a cover story... The crisis was there, under, since 2008 (well even 2000, or even 1987).

 

It's the end on a epoch.

[saengd]

2 minutes ago, christophe75 said:

Talks about "balances" are pointless at this time.

 

What matters is : jobs, income

 

This will seal the fate of the THB, on the long run.

 

The whole "open economy" (well usually in one way only in Thailand !) linked to stupid "inflated assets"... this whole charade is crumbling.

 

Hence : we are going back to "normal", and long term trends. AKA : hardship for millions and millions Thais.

 

-The little car, built here, and bought on credit ? Terminated.

-The little condo shoe box bought on credit ? Terminated.

-All the local businesses and jobs linked to tourism ? Terminated.

-All the stupid "service" jobs (banks, offices etc.) ? Terminated.

-All the White elephant investments ? Terminated.

-Big governement ? Terminated.

 

Fear, everywhere.

 

People in Bangkok are going to suffer a lot. Upcountry ? Less.

 

But it's important to remember that the virus is just a pretext, a cover story... The crisis was there, under, since 2008 (well even 2000, or even 1987).

 

It's the end on a epoch.

[morrobay]

On 3/11/2020 at 3:25 PM, robblok said:

 

 

 

 

. Also those bonds that saengd mentioned have a big influence. If you offer high interest rates on those people will buy them and the baht will go up. Now with the BOT having lowered the interest rates this year new bonds will probably have less people buying them. (as there is a connection between the rate of the central bank and the rates on bonds)

Oh really, in another thread I suggested that all the Chinese hot money into financials, bonds, was driving the baht up. Saengd then gave a convulated explanation of why that is not so. In seems these lines of disinformation from you two are crossing. 

[morrobay]

8 minutes ago, christophe75 said:

Talks about "balances" are pointless at this time.

 

What matters is : jobs, income

 

This will seal the fate of the THB, on the long run.

 

The whole "open economy" (well usually in one way only in Thailand !) linked to stupid "inflated assets"... this whole charade is crumbling.

 

Hence : we are going back to "normal", and long term trends. AKA : hardship for millions and millions Thais.

 

-The little car, built here, and bought on credit ? Terminated.

-The little condo shoe box bought on credit ? Terminated.

-All the local businesses and jobs linked to tourism ? Terminated.

-All the stupid "service" jobs (banks, offices etc.) ? Terminated.

-All the White elephant investments ? Terminated.

-Big governement ? Terminated.

 

Fear, everywhere.

 

People in Bangkok are going to suffer a lot. Upcountry ? Less.

 

But it's important to remember that the virus is just a pretext, a cover story... The crisis was there, under, since 2008 (well even 2000, or even 1987).

 

It's the end on a epoch.

Right, I'm not the only one around here getting weary of this constant stream of voodoo economics. 

[metisdead]

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[saengd]

1 hour ago, morrobay said:

Right, I'm not the only one around here getting weary of this constant stream of voodoo economics. 

Sorry you feel that way MB, I've gone out of my way to answer your questions....since you still don't understand it don't ask me any more!

[morrobay]

3 hours ago, morrobay said:

Oh really, in another thread I suggested that all the Chinese hot money into financials, bonds, was driving the baht up. Saengd then gave a convulated explanation of why that is not so. In seems these lines of disinformation from you two are crossing. 

Indeed this is certainly a convenient time to discontinue replies.  And the post by robblok 3/11/20 where he stated bond purchases strengthen the baht that the above quote is referring to has also been conveniently removed?? 

[saengd]

30 minutes ago, morrobay said:

Indeed this is certainly a convenient time to discontinue replies.  And the post by robblok 3/11/20 where he stated bond purchases strengthen the baht that the above quote is referring to has also been conveniently removed?? 

Well I've been paying pretty close attention to what has been said in this thread and I don't recall anyone saying that. But if it's convenient for you to think somebody did and that now the voodoo economics incorporates a conspiracy theory comprising the mods., well....!

[morrobay]

4 minutes ago, saengd said:

Well I've been paying pretty close attention to what has been said in this thread and I don't recall anyone saying that. 

See my post #54 with robblok post saying just that. To assist in your "recalling "