Recession fears rise as growth projections are cut and export output continues to decline in 2023

[webfact]

Chaichan Chareonsuk the Chairman of the Thai National Shippers’ Council has confirmed that exports will contract by approximately 10% in the opening 3 months of 2023 and a further 5% in the second quarter as the upturn expected in the Chinese market has failed to materialise. In a separate development, Fitch Ratings has downgraded projected Thai GDP growth for 2023 to 3% and this will be dependent on the country attracting 27 million foreign tourists for the year.

 

by Joseph O' Connor

Thailand’s current account in the last three years tells the story of an economy that has seen a structural change since the closure of the kingdom in April 2020. This week the Tourism Authority of Thailand (TAT) predicted that this summer Thailand would enjoy 57,000 more flight slots to boost the number of incoming tourists as the kingdom seeks to attract 27 million visitors in 2023, an economic imperative given the continued fall in exports since the end of 2022 and into the current year.

Growth prospects for the Thai economy have been downgraded as the country’s leading export body, this week, warned of a 10% decline in the opening quarter of the year with weaker demand from Western markets suffering from tightened liquidity due to concern within the banking system and rising interest rates. The promised upturn in demand from China has also failed to materialise with exports to that market down 7.8% in February, the ninth month in a row when output to the communist country has fallen. The situation leaves the Thailand facing the rising prospect of a technical recession.

Thailand faces another quarter of GDP contraction despite a rebound in foreign tourism which would technically leave the economy in a recession after a seasonally adjusted 1.5% GDP contraction in the last quarter of 2022.

 

Full story: https://www.thaiexaminer.com/thai-news-foreigners/2023/04/05/recession-fears-with-gdp-growth-forecast-cut/

 

-- © Copyright Thai Examiner 2023-04-06

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

The most versatile and flexible rental investment and holiday home solution in Thailand - click for more information.

[dinsdale]

And the Thai baht will strengthen.

[smedly]

you need a customer in sales (exports)  Thailand is not immune to the world retraction and economic decline, maybe delayed by a few months but in a country so dependent on exports it will hit hard, tourism is a sort of export, it involves foreign currency buying stuff in Thailand

[StayinThailand2much]

Recession declared in Thailand? - Won't happen!

[StayinThailand2much]

8 minutes ago, smedly said:

you need a customer in sales (exports)  Thailand is not immune to the world retraction and economic decline, maybe delayed by a few months but in a country so dependent on exports it will hit hard, tourism is a sort of export, it involves foreign currency buying stuff in Thailand

Strong baht, rising wages/production costs, lower growth in China and other export markets... Thailand can't escape the downturn.

[ThailandRyan]

2 hours ago, webfact said:

Thailand’s current account in the last three years tells the story of an economy that has seen a structural change since the closure of the kingdom in April 2020. This week the Tourism Authority of Thailand (TAT) predicted that this summer Thailand would enjoy 57,000 more flight slots to boost the number of incoming tourists as the kingdom seeks to attract 27 million visitors in 2023, an economic imperative given the continued fall in exports since the end of 2022 and into the current year.

 

We have discussed certain aspects of this in many different OP's over a wide time frame.  I have always believed that the economy is the worse for wear and the fact that tourism is seen as an economic windfall is a far reach.  I can not believe that folks believe that Tourism will lift Thailand out from the abyss they have created.

 

Exports are in dire straights and the reported expected GDP growth in the 3% range many banks have forecasted is seeing the flip side and an actual decrease. I also fail to see how, unless the new government can help bail out the economy here like the west and Europe are doing that Thailand will move out from under the hit that is sure to be coming.  

 

TAT, The current folks in power, and those who run the country are and have been way overly optimistic.  No one has ever discussed openly what can happen if things drop like its looking like it will.  Somebodies going to be running around like a chicken with their head cut off when they realize how bad they missed what is actually happening globally is just around the bend for Thailand.  

[John Drake]

Just cancel everybody's debts, especially my wife's.

[StayinThailand2much]

2 hours ago, ThailandRyan said:

Somebodies going to be running around like a chicken with their head cut off when they realize how bad they missed what is actually happening globally is just around the bend for Thailand.  

Fair analysis. However, the top 100 families will always do well, and 'the rest' will just return to farming upcountry if there is a recession (unless, of course, they don't own any farmland anymore). Nationalism and stricter foreign labour regulations can, as always, help to hide rampant corruption, and permanent structural problems in Thailand. - Yes, less families live under the poverty line than 20 or 30 years ago, but has people's life really improved that much (esp. compared to other countries)? Things will never really 'change' in Thailand, certainly not for another generation or two...

[hotchilli]

5 hours ago, webfact said:

Thailand faces another quarter of GDP contraction despite a rebound in foreign tourism which would technically leave the economy in a recession after a seasonally adjusted 1.5% GDP contraction in the last quarter of 2022

All those far reaching predictions late last year are bearing no fruit.

[zzaa09]

3 hours ago, ThailandRyan said:

We have discussed certain aspects of this in many different OP's over a wide time frame.  I have always believed that the economy is the worse for wear and the fact that tourism is seen as an economic windfall is a far reach.  I can not believe that folks believe that Tourism will lift Thailand out from the abyss they have created.

 

 

Indeed. This dreamy state that tourism and associated will be, or always has been, the unlikely saviour for the broader economy to flourish is terribly dangerous and deluded. The repeated dogma becomes quite stale.

 

Sad to say that a clear diversity within the economic sectors is quite vacant......and dependency on tourism doesn't guarantee or support any such trickle down/spreading the wealth theories. Even though the continued and made up stories might tell us otherwise. Pushing tourism does little or nothing for the betterment of the economic commons nor does it reflect any such fanciful ideals on the GNP and the false security.

 

The diverse economic possibilities are endless here - yet, the visions are terribly blind by way of government control and manipulation of the broader places........all of which, appear to be the issues most everywhere. 

[connda]

The world needs a recession to reset the bubbles blown by central banks.

[Pink Mist]

A post using a partial portion of a posters full post has been removed.

 

Forim Rule 28. You will not make changes to messages quoted from other members posts, except for purposes of shortening the quoted post. Do not shorten any post in a way that alters the context of the original post. Do not change the formatting of the post you are quoting.

[Srikcir]

6 hours ago, smedly said:

you need a customer in sales (exports)  Thailand is not immune to the world retraction and economic decline, maybe delayed by a few months but in a country so dependent on exports it will hit hard, tourism is a sort of export, it involves foreign currency buying stuff in Thailand

Since the 2014 to date my perception is that there was a reprioritization from exports to tourism, the latter focused mostly on the military loyal partner China. Agricultural exports may have remained relatively unchanged but they're low value products compared to high value industrial exports.

In the interim the government seemed to increase construction of infrastructures (highways, light rail, high speed rail) part of which was foreign financed. Good for foreign financing partners getting annual fixed returns on investment and return of capital but poor for Thailand GDP growth that is long term with annual risk to service loans without raising fares beyond what is affordable to Thais.

A new economic flexible strategy is needed.

Unfortunately, the junta's 20-year natiobal economic plan memorialized in the Constitution is a likely barrier to change regardless of any new Parliament support.

The government has essentially "trapped" the economy and I don't expect that to change from the next election even with a progressive landslide in the House.

[spidermike007]

We are likely to see a worldwide recession soon. And there is no way Thailand can avoid the hurt. Such an infinite amount of sabotage and destruction was done by Cha Cha, Prawit, Anutin, Phiphat, and Co. There is no escaping the effect of that now. They are just beginning to realize how much more difficult the tourism restart is going to be, and much of the "nightlife and the industry" remains devastated. Millions of jobs were lost. What is real unemployment here, now? 

 

There is a huge price for allowing dinosaurs to stand in as leaders. 

 

 

 

 

 

[markclover]

The world no longer needs elephant pattern trousers and useless baskets.

[nigelforbes]

7 hours ago, smedly said:

you need a customer in sales (exports)  Thailand is not immune to the world retraction and economic decline, maybe delayed by a few months but in a country so dependent on exports it will hit hard, tourism is a sort of export, it involves foreign currency buying stuff in Thailand

That, and spending money here that comes from overseas and the holiday experience is then exported when the tourist returns home.

[nigelforbes]

28 minutes ago, Srikcir said:

Since the 2014 to date my perception is that there was a reprioritization from exports to tourism, the latter focused mostly on the military loyal partner China. Agricultural exports may have remained relatively unchanged but they're low value products compared to high value industrial exports.

In the interim the government seemed to increase construction of infrastructures (highways, light rail, high speed rail) part of which was foreign financed. Good for foreign financing partners getting annual fixed returns on investment and return of capital but poor for Thailand GDP growth that is long term with annual risk to service loans without raising fares beyond what is affordable to Thais.

A new economic flexible strategy is needed.

Unfortunately, the junta's 20-year natiobal economic plan memorialized in the Constitution is a likely barrier to change regardless of any new Parliament support.

The government has essentially "trapped" the economy and I don't expect that to change from the next election even with a progressive landslide in the House.

International tourism is an export, which is an invisible export, compared to the export of goods which is described as a Customs export.

 

Infrastructure build out of Belt and Road initiatives was mostly financed domestically, the Asian Development Bank provided additional finances which involved currency swaps.

 

The high speed rail project did not involve overseas financing, CP Group was the consortium lead.

 

 

[Cake Monster]

This headline comes as no surprise to me.

The parameters for a large decline have been evident now for over 6 Months, and the Gov,t themselves stated just a short while ago, that the rise in Tourist arrivals and revenue, was not offsetting the decline in Export and Manufacturing GDP.

With the end of the Tourist high season now rapidly approaching, the decline is only going to accelerate.

Fitch being the first Credit Rating Agency to start making noises about the Thai GDP, and the others will surely follow.

One of the major concerns of these Agencies is the amount of Household unsecured Loans ( 20 % only secured in Thailand ), and roughly 94 % of Thai GDP , and if things worsen only slightly, I can foresee serious issues for the Thai Economy going forward

[nigelforbes]

27 minutes ago, Cake Monster said:

This headline comes as no surprise to me.

The parameters for a large decline have been evident now for over 6 Months, and the Gov,t themselves stated just a short while ago, that the rise in Tourist arrivals and revenue, was not offsetting the decline in Export and Manufacturing GDP.

With the end of the Tourist high season now rapidly approaching, the decline is only going to accelerate.

Fitch being the first Credit Rating Agency to start making noises about the Thai GDP, and the others will surely follow.

One of the major concerns of these Agencies is the amount of Household unsecured Loans ( 20 % only secured in Thailand ), and roughly 94 % of Thai GDP , and if things worsen only slightly, I can foresee serious issues for the Thai Economy going forward

A few points:

 

57.2% of household debt or Consumer Loans is not collateralized or secured on real assets, not 80%.

 

Consumer Loans is private lending and does not form a part of GDP. Consumer Consumption IS part of GDP which is buoyed by International Tourism and present, that's the real benefit of tourism to the economy.

 

Fitch reported positively on the Thai economy in December (below) and two days ago revised down/agreed with BOT their GDP growth forecast....that was all they did! Fitch didn't raise doubts over Thailand's credit rating nor their prospect for growth, see the Bangkok Post article dated 4 April containing Fitch in the headline.

https://www.fitchratings.com/research/sovereigns/thailand-28-12-2022

 

Lastly, Public borrowing remains under 60% of GDP, that is one of the lowest of any developing or mature economies.

 

 

 

[whiteman]

the sky is falling at last in Thailand  hope the Bhat fallows

[sammieuk1]

Some eyewatering big price rises in Tops and Vila market HH I noticed today it looks like they are trying to recover the economy from a single can of Off ???? 

[Mad mick]

Gotta hand to Jaunta ???? more restrictions less long-term tourist visa only way out of this Thailand tourist country more than exporting nation always has been , Rertun back to easy visa access Vn eating them up on export soon will back to multiple re-entry land or air in June no limits no need place money into Vietnam Bank account not that have one as tourist,  still great infrastructure,  exceptional , food ., cheap rent  & hotel accommodation think Thailand restrictions on expats  for non communists country makes me wonder ???? military governance non stop coup d'etat, Government dislike of farang in general , l gave up Thailand 2018 , easy go live Philippines or Vn bonus Philippines is renew tourist visa upto 3 years inside  any local immigration office.  Vn been great & multiple re-entry come soon ! bit late for me made my arrangements  go back Phili =$30 US per month as agianst right now via visa run company $127 per month approx HCMC to Moc Bai & rtn , only found out this week changes in June long term visa no limits air or land New cost 3 x 3 monthly unsure cost? ! have heard price will be bit up  , still better than monthly visa runs l have currently been doing bonus no restrictions on entry out & into Vietnam land or air make sure have your evisa before entry & keep your evisa when you depart by land or air regardless have visa stsmp in passport ! unfortunately for myself will come into effect to.late for me. Still just happy go  Philippines again English language is big + & visa easy to extend at local immigration Phili " if that's help to anyone considering looking  go to another Asian country for change  Philippines 7000+ Islands ???? 

[kwak250]

On 4/6/2023 at 8:24 AM, dinsdale said:

And the Thai baht will strengthen.

Baht will be strengthening as you read this.

[kinyara]

On 4/6/2023 at 10:52 AM, ThailandRyan said:

We have discussed certain aspects of this in many different OP's over a wide time frame.  I have always believed that the economy is the worse for wear and the fact that tourism is seen as an economic windfall is a far reach.  I can not believe that folks believe that Tourism will lift Thailand out from the abyss they have created.

 

Exports are in dire straights and the reported expected GDP growth in the 3% range many banks have forecasted is seeing the flip side and an actual decrease. I also fail to see how, unless the new government can help bail out the economy here like the west and Europe are doing that Thailand will move out from under the hit that is sure to be coming.  

 

TAT, The current folks in power, and those who run the country are and have been way overly optimistic.  No one has ever discussed openly what can happen if things drop like its looking like it will.  Somebodies going to be running around like a chicken with their head cut off when they realize how bad they missed what is actually happening globally is just around the bend for Thailand.  

TAT haven't been way overly optimistic is forecasting the recovery, they predicted 10 million last year which was actually exceeded, and this year they have a perfectly reasonable range of between 24 million to 30 million due to the uncertainty of exactly how well the Chinese market recovers. 

[nigelforbes]

On 4/6/2023 at 10:52 AM, ThailandRyan said:

We have discussed certain aspects of this in many different OP's over a wide time frame.  I have always believed that the economy is the worse for wear and the fact that tourism is seen as an economic windfall is a far reach.  I can not believe that folks believe that Tourism will lift Thailand out from the abyss they have created.

 

Exports are in dire straights and the reported expected GDP growth in the 3% range many banks have forecasted is seeing the flip side and an actual decrease. I also fail to see how, unless the new government can help bail out the economy here like the west and Europe are doing that Thailand will move out from under the hit that is sure to be coming.  

 

TAT, The current folks in power, and those who run the country are and have been way overly optimistic.  No one has ever discussed openly what can happen if things drop like its looking like it will.  Somebodies going to be running around like a chicken with their head cut off when they realize how bad they missed what is actually happening globally is just around the bend for Thailand.  

Anti-government hyperbole without the benefit of consideration of any facts!

 

"I can not believe that folks believe that Tourism will lift Thailand out from the abyss they have created".

 

Tourism is an export, it feeds consumer consumption. Consumer spending led recoveries are very common in every economy globally.

 

 

"Exports are in dire straights and the reported expected GDP growth in the 3% range many banks have forecasted is seeing the flip side and an actual decrease".

Exports vary month on month, depending on the economies of the trading partners, that is the sole criteria.

"Exports in Thailand increased to 22376.20 USD Million in February 2023 from 20249.50 USD Million in January. The government set export growth of just 1% to 2% this year, after a 5.5% rise in 2022". source: Ministry of Commerce, Thailand https://tradingeconomics.com/thailand/exports

 

 

"TAT, The current folks in power, and those who run the country are and have been way overly optimistic". 

 

https://www.bloomberg.com/news/articles/2022-12-10/thailand-hits-tourism-goal-as-foreign-arrivals-top-10-million#xj4y7vzkg

 

 

[Adumbration]

On 4/6/2023 at 1:11 PM, StayinThailand2much said:

Fair analysis. However, the top 100 families will always do well, and 'the rest' will just return to farming upcountry if there is a recession (unless, of course, they don't own any farmland anymore). 

Two key issues you are overlooking here.  First is that in just a few years the top 100 families, and the Chinese who use them as proxies, will own the bulk of all arable land in Thailand.

 

Second is that Thailand's primary crop is rice.  It requires massive amounts of fertilizer, and supply of key ingredients to make that fertilizer has collapsed by 60%.

 

No fertilizer means no crops.

[vandeventer]

With the price of gold going up you would think a lot more goldsmith's would carry silver so a lot more Thai's could can buy silver that is used everywhere.

[StayinThailand2much]

4 hours ago, Adumbration said:

Two key issues you are overlooking here.  First is that in just a few years the top 100 families, and the Chinese who use them as proxies, will own the bulk of all arable land in Thailand.

So, you're saying there will be huge unemployment in a few years?

[billd766]

On 4/6/2023 at 1:11 PM, StayinThailand2much said:

Fair analysis. However, the top 100 families will always do well, and 'the rest' will just return to farming upcountry if there is a recession (unless, of course, they don't own any farmland anymore). Nationalism and stricter foreign labour regulations can, as always, help to hide rampant corruption, and permanent structural problems in Thailand. - Yes, less families live under the poverty line than 20 or 30 years ago, but has people's life really improved that much (esp. compared to other countries)? Things will never really 'change' in Thailand, certainly not for another generation or two...

The current new generation are IMO the start of the change. They are smarter, more savvy and less willing to live under the jackboot, than the generations before them.

[zzaa09]

2 hours ago, billd766 said:

The current new generation are IMO the start of the change. They are smarter, more savvy and less willing to live under the jackboot, than the generations before them.

Doesn't matter the generation [and their supposed insight]. 

Things will never change unless a full-scale and collective revolution comes about. 

 

Speaking of which.......have you truly observed or understand this current new generation? 

Personally, I'm rather suspect.