Prolonged Ukraine war to see Thai inflation at 6.3%, a stalled economy and a possible downgrade

[webfact]

Senior Vice President at Siam Commercial Bank, Yanyong Thaicharoen, this week, revealed that the bank’s Economic Intelligence Centre predicts inflation in Thailand to reach 6.3% this year if the war in Ukraine is prolonged, driven by heightened crude oil prices. The bank predicts the economy to grow by 2.7% although economic uncertainty is growing. Downside risks are also manifesting with a dip in consumer expenditure and private investment in February as well as a flight of capital from the kingdom’s bond market.

 

by Joseph O' Connor

 

Vice President at Siam Commercial Bank Yanyong Thaicharoen shared an economic assessment from the bank’s Economic Intelligence Centre this week. He predicted growth this year of 6.3% and inflation at 4.9% provided the conflict concludes in the short term.

 

The key thing that all forecasters agree upon is that the ongoing war following the Russian invasion of Ukraine is sparking unprecedented global economic uncertainty and downside risks as western nations wage an increasingly no-holds-barred economic war against Russia that both sides dare not lose. This is highly damaging for Thailand’s prospects as government and business leaders battle to drive the economy forward in 2022 with higher exports and foreign tourism arrivals. The war has already seen ฿124 billion fly out of Thailand’s bond market to March 28th last.

 

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Thailand could see inflation reach 6.3% this year if the war in Ukraine is prolonged, forecasted a senior bank vice president this week as the Thai bond market revealed that capital outflow from Thailand to dollar-denominated assets took off after the conflict broke out on February 24th last.

 

Full story: https://www.thaiexaminer.com/thai-news-foreigners/2022/04/02/prolonged-ukraine-war-to-see-thai-inflation-at-over-6-per-cent/

 

-- © Copyright Thai Examiner 2022-04-02

 

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[Jingthing]

More likely than not this insane war of choice by Russia will be very prolonged.

 

STARTING a war is the easy part.

[ozzydon]

They are looking for excuses for their own inept failures blame the war blame covid anything but the government

[ThailandRyan]

The truth of the matter is that Thailand's GDP has shrunk year on year, even though they say it grew in a few quarters, the issue is how much it actually contracted in 2020, and 2021. To wit, If I lost 70% of my money but then the next year gained 10% back and so on the next year I am still down 50% when I look at the totality, my money did not grow 20% it just recovered some of the losses.  The economy is far, very far from having any true growth, and unless they start to raise the interest rates the inflation is going to continue to grow.  The bankers all have posted so many different reports and estimations over the past year or so and have any of them ever come to fruition?  What is the actual currency reserve sitting at now, and has any of it been used to prop up the civilians?

Edited April 2, 2022 by ThailandRyan

[Adumbration]

Possible downgrade?  How do you downgrade a third world country?

[John Drake]

Don't worry. The people that matter are doing just fine. Better off overall, in fact.

[sammieuk1]

All good news for the Teflon Baht so only the poor will be affected have a look again next year ????

[Jingthing]

7 minutes ago, Adumbration said:

Possible downgrade?  How do you downgrade a third world country?

That's a passe label and doesn't really describe Thailand even if it wasn't.

[RichardColeman]

22 minutes ago, webfact said:

if the war in Ukraine is prolonged,

The guy seems to missing the huge point that the West and other countries are not going to forgive and forget Russia's invasion and murder of thousands of Europeans and go back to normal or as before. The Russian economy will be hit for decades - especially if the Ukranians want justifiable reparations. Steps have now been made to isolate the Russian economy and buy elsewhere, that is ongoing and will NOT be reversed. The ending of the war probably wont help Russia in the slightest economically, they are going to be paying war debt for decades and isolation will stay until it is all paid.. 

[ThailandRyan]

Just now, Adumbration said:

Possible downgrade?  How do you downgrade a third world country?

Thailand is not as you call it a third world country, they are a developing nation who has more millionaires and billionaires than some bigger economy countries.  The issue is that they are also loosing more to deaths then they are gaining in new births which creates a stability and income issue.

 

https://www.investopedia.com/updates/top-developing-countries/

Thailand

• GDP (2019): $543.55 billion21
• Population (2019): 69.62 million16
• GDP per Capita (2019): $7,806.717
• HDI (2020): 0.77718

 

Thailand is a developing country.12

 

The Kingdom of Thailand is the second-largest economy in Southeast Asia.121 Thailand has a free-market economy, with a relatively well-developed infrastructure. About two-thirds of the country's GDP is derived from exports of electronics, agricultural commodities, automobiles and parts, processed foods, and other goods.122 Over the last four decades, the country has moved from a low-income to an upper-income country by making substantial progress in social and economic development.123 Since becoming a constitutional monarchy in 1932, it has experienced 19 military coups. More recently, pro-democracy protests have been ongoing since Feb. 2020.122

 



[billd766]

26 minutes ago, Jingthing said:

More likely than not this insane war of choice by Russia will be very prolonged.

 

STARTING a war is the easy part.

And as usual the war was started by a politician and was supposedly to be quickly ended by a Russian military victory.

 

https://quoteinvestigator.com/2021/05/04/no-plan/

 

No Plan Survives First Contact With the Enemy.

 

 

 

quote 

[Jingthing]

18 minutes ago, RichardColeman said:

The guy seems to missing the huge point that the West and other countries are not going to forgive and forget Russia's invasion and murder of thousands of Europeans and go back to normal or as before. The Russian economy will be hit for decades - especially if the Ukranians want justifiable reparations. Steps have now been made to isolate the Russian economy and buy elsewhere, that is ongoing and will NOT be reversed. The ending of the war probably wont help Russia in the slightest economically, they are going to be paying war debt for decades and isolation will stay until it is all paid.. 

Yes the statement reflects a very simplistic understanding of f-rang foreign affairs and doesn't inspire confidence that Thailand is ready for the realities.

Edited April 2, 2022 by Jingthing

[RafPinto]

They should increase interest rate but this is NOT going to happen.

Plenty of people would go under. You don't read anything about negative equity as this would make many borrowers unable to keep up with payments.
Banks keep their "bad loans" on the books and keep their "dream valuations".

 

People borrowed up to their throat. An increase in interest is not going to happen at all.

[simple1]

13 minutes ago, RichardColeman said:

The guy seems to missing the huge point that the West and other countries are not going to forgive and forget Russia's invasion and murder of thousands of Europeans and go back to normal or as before. The Russian economy will be hit for decades - especially if the Ukranians want justifiable reparations. Steps have now been made to isolate the Russian economy and buy elsewhere, that is ongoing and will NOT be reversed. The ending of the war probably wont help Russia in the slightest economically, they are going to be paying war debt for decades and isolation will stay until it is all paid.. 

Personally I'm not so sure your opinion holds up. The rouble has aready recovered fom the 30% dip after the invasion commenced. EU countries are paying one billion dollars a day for Russian energy. US is unable to fulfill sufficeint EU energy if needs to replace Russian supply.

 

https://www.cnbc.com/2022/03/28/us-eu-gas-deal-wont-make-up-shortfall-from-russia-dan-brouillette.html

 

Trade compromises go on during conflict - not that many countries are willing for damage to their economy, self interest being a driving factor. Perhaps I'm incorrect, but believe it's too early to make any medium term calls.

[Guderian]

Over 120 billion Baht has fled the Thai bond markets for safer dollar-denominated investments since the war started, yet the Baht has hardly budged. Perhaps the headline to this article should be modified to read:

 

Prolonged Ukraine war to see Thai inflation at 6.3%, a stalled economy and a possible downgrade, but the Thai Baht will continue to ride high

Edited April 2, 2022 by Guderian

[ThailandRyan]

14 minutes ago, simple1 said:

Personally I'm not so sure your opinion holds up. The rouble has aready recovered fom the 30% dip after the invasion commenced. EU countries are paying one billion dollars a day for Russian energy. US is unable to fulfill sufficeint EU energy if needs to replace Russian supply.

 

https://www.cnbc.com/2022/03/28/us-eu-gas-deal-wont-make-up-shortfall-from-russia-dan-brouillette.html

 

Trade compromises go on during conflict - not that many countries are willing for damage to their economy, self interest being a driving factor. Perhaps I'm incorrect, but believe it's too early to make any medium term calls.

Opinions are like...well everyone has them.  I pulled out of my investments that were alligned with Russia, moved the money to Gas and Oil ETF's as well as LNG ETF's and they have doubled in the past month.  I took the gains and reinvested in other commodities which are also growing.  Had I stayed in the previous instruments my portfolio right now would be severely hit.  Sure the US can not make up all of the energy needs that Russia supplied but between the US, Canada, and a few other countries ship loads of fuel types have been arranged.

 

You better look again as the Rouble is not bouncing back as you say

https://www.yahoo.com/now/analysis-russias-rouble-rebound-not-093329809.html

 

The currency is also being artificially inflated by capital controls and, with the country's gross domestic product predicted to shrink 10%-15% this year, Russians are quickly getting poorer as soaring inflation devours their earnings.

"This (rouble recovery) shouldn't be taken to be the market's view on the medium to longer-term outlook for Russia," said Ulrich Leuchtmann, an analyst at Commerzbank.

 

"Market forces cannot drive the rouble in the way they can the euro or dollar," he added, noting that while Russian demand for foreign exchange was falling, speculators who use currencies to bet on a country were now absent.

Since the war started, the rouble has split into an onshore market for local institutions, and an offshore one for Western banks and investors to trade with each other and entities not subject to sanctions. Trading volumes have dried up on both.

Edited April 2, 2022 by ThailandRyan

[vukovar77]

16 minutes ago, simple1 said:

Personally I'm not so sure your opinion holds up. The rouble has aready recovered fom the 30% dip after the invasion commenced. EU countries are paying one billion dollars a day for Russian energy. US is unable to fulfill sufficeint EU energy if needs to replace Russian supply.

 

https://www.cnbc.com/2022/03/28/us-eu-gas-deal-wont-make-up-shortfall-from-russia-dan-brouillette.html

 

Trade compromises go on during conflict - not that many countries are willing for damage to their economy, self interest being a driving factor. Perhaps I'm incorrect, but believe it's too early to make any medium term calls.

I think it is true.Unfortunately!

 

[JimHuaHin]

6.3% inflation?   Surely a typo.  It is probably closer to 16.3%.

[John Drake]

58 minutes ago, billd766 said:

And as usual the war was started by a politician and was supposedly to be quickly ended by a Russian military victory.

 

https://quoteinvestigator.com/2021/05/04/no-plan/

 

No Plan Survives First Contact With the Enemy.

 

 

 

quote 

People are likely to be familiar with the Schlieffen Plan but may not be aware of France's Plan XVII. Had both plans played out as intended, the Germans would have wheeled through Belgium and northern France until occupying Paris. Meanwhile, to the south, the French would have plowed through Luxembourg and the Saarland on their way to Berlin. Wha appened?

Edited April 2, 2022 by John Drake

[Saanim]

14 minutes ago, JimHuaHin said:

6.3% inflation?   Surely a typo.  It is probably closer to 16.3%.

In Hua Hin it looks not so bright as others see it: 

 

The Thai economy will continue to recover from last year, but is yet to reach its pre-Covid level. In 2022, economic growth is expected to be 3.0-3.5%, against 0.8% last year and -6.1% in 2020.

https://tdri.or.th/en/2022/01/thai-economy-to-see-uptick-in-2022/

 

Thailand’s economy is forecasted a gradual recovery owing to domestic spending and higher foreign tourists. KKP Research predicted that the economy will grow at 3.2% for 2022. 

https://www2.deloitte.com/th/en/pages/about-deloitte/articles/thailand-economic-outlook.html

[Lingba]

and what will it be after the war ends?

[wombat]

the joke of the day by an expert?
with treasury buying baht with foreign currency reserves it aint gunna happen. seems like every country has a new thing to blame, not long ago it was covid now its a war...what comes next?

[wombat]

4 minutes ago, Lingba said:

and what will it be after the war ends?

back to covid and those dirty farangs?

[Cake Monster]

I really can see Thailand taking a huge hit over the Russian invasion of Ukraine.

The hits will come in the form of massive Commodity rises that are going to affect the manufacturing Market and Exports

Commodities such as Palladium - used in Cat Converters in Vehicle Manufacture,

Platinum - Ditto

Nickel, used in Stainless Steel mainly

Wheat 

Fertilisers

To name just a few Commodities that are supplied in huge amounts by either Russia or Ukraine.

And then of course there is the cost of Oil and Gas, of which Thailand uses a lot of Gas for Electricity Production

All of the above mentioned have risen dramatically in price since the conflict started, and they are not going to reduce any time soon.

With Exports being the main driver of the Thai Economy since the start of the Covid Pandemic, Thailand which has already lost approximately 25 % GDP Per Annum from Tourism over the last 2 Years or so, cannot afford to have the Export Sector and Agri Sector burdened with these huge price rises of raw Materials.

These are the reasons that I believe have led to the large amount of Capitol Outflows from the Country since the start of the year, and the lack of Liquidity in Thai Banks adding to the problems will lead to a downgrade for sure.

[TheScience]

But the war in Iraq, Yemen, Libya, Syria and instability in three dozens countries has had zero bearing.

 

How patently absurd.

 

These shortages are all engineered.

 

Prices are rising because fiat currency is worthless.

Edited April 2, 2022 by TheScience

[ThailandRyan]

33 minutes ago, TheScience said:

But the war in Iraq, Yemen, Libya, Syria and instability in three dozens countries has had zero bearing.

 

How patently absurd.

 

These shortages are all engineered.

 

Prices are rising because fiat currency is worthless.

Wow, do you believe this is a worldwide conspiracy?, The great Reset?......your listening to the tinfoil hat wearers again...be strong and fight the urge.

[hotchilli]

2 hours ago, Adumbration said:

Possible downgrade?  How do you downgrade a third world country?

When a military government forces itself into government and bankrupts it?

Just a guess.

 

[Excel]

3 hours ago, ThailandRyan said:

What is the actual currency reserve sitting at now

Or possibly where is it ?

[TheScience]

30 minutes ago, ThailandRyan said:

Wow, do you believe this is a worldwide conspiracy?, The great Reset?......your listening to the tinfoil hat wearers again...be strong and fight the urge.

Oooh wooow...oooooh...

I picture a pudgy child with it's face mashed against a store window looking at baked goods

 

*It's you're or you are.

 

Where in what I had written did I state that I believe in worldwide conspiracy?

 

The world is absolutely flooded with worthless money. Look at Japan in just the last week the yen hit record lows.

 

China has been strategically hoarding oil, working with Russia and Iran. China's rare earth minerals are being weaponized.

 

Saudi and most of UAE are turning backflips of joy over high oil prices. The oil crises (this particular one) could easily be averted by flipping back on EU nuclear, drilling in US and CA , sorting out longstanding and childish disputes with Venezuela.

 

Everywhere in the west I see supply chain stupidity. It was always about profit and now the chain has fallen apart.

 

Stupid de facto proxy war with Russia. The west understood what Russia was providing but decided to jump in the middle of a largely internal affair. This could be seen in 2014 loss if Crimea and back to Oblahma administration.

 

It's not a conspiracy per SE but rather all these parties leveraging their commodities when the west is weak.

 

We can also blame the Green (bowel) movement as well. Forced insistence on expensive, tenuous technologies.

 

More like a perfect storm - of stupidity.

Edited April 2, 2022 by TheScience

[zzaa09]

3 hours ago, ozzydon said:

They are looking for excuses for their own inept failures blame the war blame covid anything but the government

This strategy appears to be particular among selected circles worldwide.

An easy, made up and convenient option - covid, any war or anything else that comes to mind. 

 

The real heartbreak is that intelligent folks and populations, in general, buy into what is thrown their way - repeatedly.