IMF hails Thai economy 10 years after Asian financial crisis

Posted: 28 July 2007 2127 hrs

BANGKOK: A decade after the 1997 Asian financial crisis, Thailand's economy looks strong with robust fundamentals, the International Monetary Fund said Saturday.

"Recent economic activity has moderated, but Thailand's macroeconomic fundamentals -- a current account surplus, a sustainable fiscal position and low inflation -- remain strong," IMF chief Rodrigo Rato told a news conference in Bangkok.

"We expect consumer and business confidence to strengthen and support domestic demand once elections take place at the end of this year," Rato said, adding a recent capital influx would unlikely bring another crisis.

Thailand's military-installed government, which came to power after last year's coup, has promised to hold elections later this year, following an August referendum to approve an army-backed constitution.

Rato said he had discussed recent financial volatilities with top officials here as the Thai bourse fell by more than two per cent Friday with the baht at 10-year highs against the US dollar due to large money inflows.

The kingdom had capital inflows worth more than one billion US dollars in July alone, the finance ministry said, adding that coping with volatile money inflows was among Thailand's major economic challenges.

But Rato said the recent money influx would unlikely bring a fresh crisis to Thailand due to the country's strong economic fundamentals, including robust exports.

"I don't think that right now Thailand or Southeast Asia has any reason to expect any crisis," the IMF chief said.

"Volatility is a problem, but it doesn't necessarily have to bring us to a crisis," he said.

In the wake of the 1997 meltdown, which started after Thailand was forced to float the baht, the IMF arranged a 17-billion-dollar rescue loan for the kingdom to avoid default.

While post-coup political uncertainty continued to pressure the Thai economy, the central bank on Friday slightly revised up its growth forecast this year to 4.0-5.0 per cent from 3.8-4.8 per cent, amid hopes for a consumer spending recovery. -

AFP/ac

http://www.channelnewsasia.com/stories/afp.../290932/1/.html

LaoPo

Everyone knows that the IMF are just a bunch of Thaksin cronies!

The reality is that performance or otherwise of the central bank is fairly irrelevant when adjudged from an international perspective {not just in Thailand's case}. The IMF is all too aware of how events seemingly unrelated can and do have effects which are virtually impossible to predict. Discussions herein are always curtailed since trying to identify fitness functions based on non-Thai factors quickly become subject to 'not Thailand' or 'anti [insert country] rants'.

In my view, it would be more realistic for a country to say in good times 'the market has been good to us' and in bad 'the market has been bad for us'. However, presently the fig leaf of control is used, and so the two lines above are replaced with in the first self congratulatory nonsenses and in the second 'speculators'.

Regards

/edit clarification//

Edited July 29, 200718 yr by A_Traveller

The Economist also has a fairly positive outlook

http://www.economist.com/countries/Thailan...Economic%20Data

The Economist also has a fairly positive outlook

http://www.economist.com/countries/Thailan...Economic%20Data

"Positive"?? It reads more negative than positive to me.

eh?

Positive and stable GDP growth over the next 5 years, stable currency, low inflation, low interest rates.

Whatever the reports say, everyone knows the economy is destined to crash and burn

And the BKK Post is jumping in with their 'Breaking News':

IMF: Thailand not moving towards crisis

(BangkokPost.com) - The International Monetary Fund’s Managing Director has expressed optimism that Thailand will not face a second economic crisis similar to the one in 1997.

Speaking at a regional seminar amongst Federal Bank governors, Rodrigo de Rato said that the present Thai economy is different from 10 years ago in that it has been adjusting for the better. He also added that this positive factor, added with the volatile currency, will ensure that Thailand’s economy will not collapse.

He also suggested that the Bank of Thailand’s intervention of the Thai baht’s movement, which resulted in a deficit of 170 billion baht, should not be the factor used to calibrate the Central Bank’s capacity. He pointed out that the central bank should be praised for its transparency and also for the measures introduced to help exporters survive the baht’s sharp rise.

Responding to criticism that the BOT should have lowered interest rates further than just 25 basis points to stem the baht’s strength, Mr. de Rato said lowering interest rates too dramatically would result in investors losing faith in the Bank of Thailand.

LaoPo

eh?

Positive and stable GDP growth over the next 5 years, stable currency, low inflation, low interest rates.

Ah well, if you're going to quote selectively, then so will I:

public opposition to the military's hold on power is growing, and this could provoke the military into taking repressive action and prolonging its hold on power.

if there are signs of slippage in the military's schedule for returning power to democratically elected politicians, relations with the US, the EU and Australia could turn frosty.

this concept centres on moderate consumption, sustainable investment and the bolstering of the economy's resilience to external shocks, it remains unclear how it will be implemented. Moreover, there is no certainty that the next government will continue with this policy approach.

the bank's recent efforts to reduce upward pressure on the baht by imposing draconian capital controls have damaged its reputation.

The current account will move into deficit in 2008, and will remain in negative territory for the remainder of the forecast period.

The strength of the baht vis-a-vis the US dollar will also hamper export-competitiveness.

I guess it all depends if you're a "glass half empty" vs. "glass half full" person.

eh?

Positive and stable GDP growth over the next 5 years, stable currency, low inflation, low interest rates.

Ah well, if you're going to quote selectively, then so will I:

public opposition to the military's hold on power is growing, and this could provoke the military into taking repressive action and prolonging its hold on power.

if there are signs of slippage in the military's schedule for returning power to democratically elected politicians, relations with the US, the EU and Australia could turn frosty.

this concept centres on moderate consumption, sustainable investment and the bolstering of the economy's resilience to external shocks, it remains unclear how it will be implemented. Moreover, there is no certainty that the next government will continue with this policy approach.

the bank's recent efforts to reduce upward pressure on the baht by imposing draconian capital controls have damaged its reputation.

The current account will move into deficit in 2008, and will remain in negative territory for the remainder of the forecast period.

The strength of the baht vis-a-vis the US dollar will also hamper export-competitiveness.

I guess it all depends if you're a "glass half empty" vs. "glass half full" person.

nice!

As I read it that article is actually mostly negative.

Edited July 30, 200718 yr by womble

"I guess it all depends if you're a "glass half empty" vs. "glass half full" person."

In the longer term (like 10 years on from now), I am a "glass three-quarters full" person as far as Thailand is concerned; and a "glass three-quarters empty" person as far as the heavily-industrialised countries are concerned.

Thailand, as a country that has a clement climate and enough productive land to feed and house its populace, come what may, is greatly blessed.

Those words "come what may" are crucial. Some things that may well come may give Thailand some temporary difficulties, but nothing like the longer-lived troubles they will give to some of the other countries.

Thailand will be coping, at least adequately, when the IMF is long gone.