Economic Conditions Still Not Worrying: Finance Minister

[george]

Economic conditions still not worrying, says finance minister

BANGKOK, March 20 (TNA) – Carrying portfolios both as Deputy Prime Minister and Finance Minister, Surapong Suebwonglee on Wednesday reiterated that Thailand's economic conditions demonstrated noi cause for alarm, although the economic crisis in the United States needed to be closely monitored.

Speaking of the global financial situation, Mr. Surapong said the BoT and the Finance Ministry had jointly kept a close watch on the stability of financial institutions in the United States, the Federal Reserve's sharp interest cut and the oil price movement.

He said the BoT and its Monetary Policy Committee had closely monitored local interest trends in Thailand and were of the opinion that the current situation was not worrying.

Mr. Surapong said he was confident that the BoT would be able to cope with any financial problems which might occur under the current circumstance.

He said he saw no need to restore the 30 per cent withholding measure, because the current situation does not warrant it for now.

Regarding the economic woes in the United States, he said that Thai government agencies continue to closely monitor the situation there.

The minister added that in his opinion othe current baht value situation was still of no concern, nor was the movement of local oil prices of signifcant concern.

--TNA 2008-03-20

[Big A]

Economic conditions still not worrying, says finance minister

What's he been smoking??!!

[Martin]

"Economic conditions still not worrying"

This is not surprising, when he is Finance Minister of a country that is one of the top exporters of food, and one of the least importers of it, on a day when I read:

" Rice shot up to a 34-year high this morning. Thai rice, largely considered the global standard, has risen 72% in the last three months to $640 per tonne this morning. Rice in the Philippines is selling for $702, up 50% in a little over a month.

“Some of this is weather related,” explains Chris Mayer, “but it also speaks to the larger issues of increasing resource scarcity. We see it in the energy markets; we see it in food prices. Rice is particularly important because of its central role in the diets so many people. And for many of them, a doubling in price since January is keenly felt. It’s also a potential source of social unrest.

“There is no easy way out of this. It’s going to take time and a lot more investment in agriculture. All of this spells opportunity for the number of agricultural plays out there.” "

Basically, Thailand is recession proof.

As the possibilities for manufacture-for-export shrink, or even disappear, it can shut down its industrial sector and its employees can go to the agriculture sector from which industry started to draw its recruits some forty years ago.

Thailand is fortunate that its rural villages have survived. Although they have suffered from the drain of human capital and a resulting diminution in their social capital, they are still in adequate shape to re-vitalise.

It is going to be much harder for longer-industrialised countries to 'get back to basics'.

[Prakanong]

Martin - no-one is going to de-industrialise - we are not going to un-invent anything and replacements for oil etc will come along when required.

We are not going back to basics or back to the land and the "glory" of subsistence farming - not going to happen unless we have some world wide nuclear conflageration.

As for Thailand being recession proof you know as well as I that is nonesense. Technically a recession is two quateres of negative growth in GDP - easily achievalble in Thailand like anywhere else given the right conditions.

[cclub75]

Basically, Thailand is recession proof.

As the possibilities for manufacture-for-export shrink, or even disappear, it can shut down its industrial sector and its employees can go to the agriculture sector from which industry started to draw its recruits some forty years ago.

Thailand is fortunate that its rural villages have survived. Although they have suffered from the drain of human capital and a resulting diminution in their social capital, they are still in adequate shape to re-vitalise.

It is going to be much harder for longer-industrialised countries to 'get back to basics'.

Sweet.

Too bad that Agriculture + fishery + forestry + mining = 13 % of the total of thai exports in value (january, datas from BOT).

And too bad too that with an income of farmer is difficult to buy a new Nokia, a new condo, a new pick up truck, and to buy services, all those little things that make a good GDP growth...

So recession proof ? Far from it.

However, in the case of an EOTFWAWKI event (End of the financial world as we know it), you've have a point : thailand will be able to feed its population.

[younghusband]

Basically, Thailand is recession proof.

As the possibilities for manufacture-for-export shrink, or even disappear, it can shut down its industrial sector and its employees can go to the agriculture sector from which industry started to draw its recruits some forty years ago.

Thailand is fortunate that its rural villages have survived. Although they have suffered from the drain of human capital and a resulting diminution in their social capital, they are still in adequate shape to re-vitalise.

It is going to be much harder for longer-industrialised countries to 'get back to basics'.

Good thinking.I think most of us know that Thailand is not subject to the normal rules of market economics.Of course a recession can never happen here.It would furthermore be very straight forward to "shut down" the industrial sector without serious dislocation even though manafacturing is now far more of a contributor to GDP than the agricultural sector.Furthermore most Thais would just love to relocate to rural villages:if a few took a different view we could hire some consultants from Cambodia, though a bit long in the tooth now, since their political leadership had much the same ideas 30 years ago.

Joking apart has there been a more ludicrous post on Thai Visa this year? I suggest he take his "settakit por phiang" gobblededook and stick it up his junta.

[Plus]

Martin's views have nothing to do with sufficiency economy, but you found a quick link from "back to basics" to "stick it to the junta".

Well done.

[younghusband]

Martin's views have nothing to do with sufficiency economy, but you found a quick link from "back to basics" to "stick it to the junta".

Well done.

Many thanks.Just couldn't resist the pun.

As to Martin's post what makes you think it has nothing to do with the sufficiency economy? It has some of the elements and certainly the same patronising tone.Somehow I don't think this back to the villages fantasy would involve the Bangkok fatcats.

[cclub75]

I think the party is over...

Look at the first datas for exports in february... down plus trade deficit.

The Finance Minister should be really, really more cautious...

[wintermute]

Martin's views have nothing to do with sufficiency economy, but you found a quick link from "back to basics" to "stick it to the junta".

Well done.

I think he was paraphrasing the lead elements of sufficiency economy pretty well. What happened to this theory anyways? It was all the rage months ago with every media figure, junta apologist, junior thaivisa economist, and "academic" in Thailand saying this was a breakthrough in international economics and would lead to a new and revitalized thailand. Has anything else been released pertaining to this or has it become a cliffhanger theory?

[Prakanong]

Martin's views have nothing to do with sufficiency economy, but you found a quick link from "back to basics" to "stick it to the junta".

Well done.

I think he was paraphrasing the lead elements of sufficiency economy pretty well. What happened to this theory anyways? It was all the rage months ago with every media figure, junta apologist, junior thaivisa economist, and "academic" in Thailand saying this was a breakthrough in international economics and would lead to a new and revitalized thailand. Has anything else been released pertaining to this or has it become a cliffhanger theory?

It did not even make it to the serious rebuttals from serious economists that "Asian Values" did

[Ricardo]

The minister added that in his opinion othe current baht value situation was still of no concern, nor was the movement of local oil prices of signifcant concern.

--TNA 2008-03-20

In which case, why have the government been talking about a return of the subsidy, on diesel, or reducing the fuel-levy intended to repay the debt run-up under Dr T. ?

[raybingham]

As one who can only spend half his time in Thailand I am a little concerned about the impact of the strength of the Baht on tourism.

One can argue that Thailand might be better off without a lot of it but then 90% of correspondents on this forum may not be here !

I agree that Thailand has the ability to withstand the financial armageddon scenario (because of it's largely subsistence economy). However, with tourism accounting for such a large proportion of GDP I can see a danger for the Thai middle classes - and many daughters of Isaan.

Too many tourists that I come across are only interested in the cheapness (sic) of LoS and if they feel that they are being "priced up" they could well turn to less developed countries.

[Plus]

Martin's views have nothing to do with sufficiency economy, but you found a quick link from "back to basics" to "stick it to the junta".

Well done.

I think he was paraphrasing the lead elements of sufficiency economy pretty well. What happened to this theory anyways? It was all the rage months ago with every media figure, junta apologist, junior thaivisa economist, and "academic" in Thailand saying this was a breakthrough in international economics and would lead to a new and revitalized thailand. Has anything else been released pertaining to this or has it become a cliffhanger theory?

He was talking about self-sufficient farming, not sufficiency economy. These are two entirely different things.

Suffiency economy is close to UN Sustainable Development, it's not about farming techiniques and you certainly won't hear anything about sustainable development from the current government. They will soon start throwing money out of helicopters to boost grass roots consumption. Borrow and spend today, don't even think about tomorrow - that's their main economic policy.

Do I need to explain that in the long term it will bring disastrous results not only to the poor themselves but to the country as a whole?

[highdiver]

Wow.... this couls be the begining of the "thailand economy in crisis 2008" thread...

Cclub is here and we just need to get Bingo and his sole mate MId that is still looking for phuket on the map aand the dooms day brigade will be back in action....

[Tony Clifton]

Economic conditions still not worrying, says finance minister.

Have no financial fear, the finance doctor is here!

[Ricardo]

Suffiency economy is close to UN Sustainable Development, it's not about farming techiniques and you certainly won't hear anything about sustainable development from the current government. They will soon start throwing money out of helicopters to boost grass roots consumption. Borrow and spend today, don't even think about tomorrow - that's their main economic policy.

Do I need to explain that in the long term it will bring disastrous results not only to the poor themselves but to the country as a whole?

Are the helicopters no-longer assigned to mushroom-hunting duties then ?

[Martin]

Hi, 'prak' et al.

Sorry to be slow to come back to this thread. For some reason, the e-mail-notification-of-replies hasn't been doing its job, so it was only when I was spring-cleaning my Subscriptons list that I noticed that there had been some activity in this thread.

You said, 'Prakanong':

" Martin - no-one is going to de-industrialise - we are not going to un-invent anything and replacements for oil etc will come along when required.

We are not going back to basics or back to the land and the "glory" of subsistence farming - not going to happen unless we have some world wide nuclear conflageration.

As for Thailand being recession proof you know as well as I that is nonesense. Technically a recession is two quateres of negative growth in GDP - easily achievalble in Thailand like anywhere else given the right conditions. "

Well, I thought I verged towards extreme optimism, but you sure have me beaten hollow with: " replacements for oil etc will come along when required."

In a working life spent in and around electrical generation (including 11 years as a nuclear power station reactor controller), I have watched the search for anything that can 'come along' and match oil. Nothing comes anywhere near it. It is outstandingly energy-dense, transportable and combustible.

So I think that it is time to be realistic and look at where we go from the situation of living on an industrialised economy based on a resource that is now getting harder-and-harder to win.

Even allowing for all the future discoveries within the realms of Geology (and some of them may be uneconomic to recover), we are somewhere near having used half of all that will ever be available to be used.

OK, that means that theoretically we could go on for forty years as we are doing now. But, as a greatgrandfather, I look at my greatgrandchildren and think about what they may feel in retirement about the behaviour of the adults that they knew in their youth.

I have to disagree with you about subsistence farming, too. My experiences of it have never revealed to me that there is any glory in it. (And, when kicked on the knee by a Welsh Black bullock, my language may well have indicated that I felt it to be the very opposite of glorious.)

What subsistence farming has in it, though, is security from food-poverty, no matter how high the price of inorganic fertiliser (made fom natural gas, and distributed by oil) and of 'shop-bought' food.

When I wrote "recession proof", I didn't mean to imply that I thought that Thailand couldn't have two successive quarters of negative growth of GDP (for which I like the bacronym of Grossly Delusional Parameter). What I meant was that Thailand can survive it. Maybe I should have said 'recession resilient'.

I have to get out in the garden and attend to my beehives now, but I will reply to my other correspondents when time permits.

Cheers, Martin.

[johnwills]

With the baht strengthening quite dramatically against the dollar and the pound over the the last few months, this surely must have an effect on the local economy at some point. Example if I have 1000 pounds to spend whilst on my holiday, at the end of last year I could get 70,000 baht now approximately 62,000. Thats 8,000 baht gone from what I could spend. This must really start to add up when you look at the millions of tourists Thailand gets a year

[samran]

With the baht strengthening quite dramatically against the dollar and the pound over the the last few months, this surely must have an effect on the local economy at some point. Example if I have 1000 pounds to spend whilst on my holiday, at the end of last year I could get 70,000 baht now approximately 62,000. Thats 8,000 baht gone from what I could spend. This must really start to add up when you look at the millions of tourists Thailand gets a year

swings and roundabouts, John. Tourism, while important, isn't the be all and end all.

A stronger baht can be good. With oil prices at $100++ a stronger baht helps dampen energy costs in Thai baht terms. For Thai's closer to the breadline than you and me, this means alot.

A strong baht means other imports are cheaper as well. Capital equipment, the stuff that will be used to build the underground extensions, will be cheaper in Thai baht terms. A better transport system will unlock Bangkoks potential further. That it can be done 10-20% cheaper than 18 months ago, is a good thing.

[plachon]

With the baht strengthening quite dramatically against the dollar and the pound over the the last few months, this surely must have an effect on the local economy at some point. Example if I have 1000 pounds to spend whilst on my holiday, at the end of last year I could get 70,000 baht now approximately 62,000. Thats 8,000 baht gone from what I could spend. This must really start to add up when you look at the millions of tourists Thailand gets a year

It's not Thailand's loss per se, but your own loss you're actually complaining about here.

Last year you bring 1,000 quid to spend and this year you still bring 1,000 quid to spend. Thailand's economy gains by 1,000 quid both last year and this. Zero change, no matter the exchange rate.

BUT, if this year you bring less money to spend OR you decide the exchange rate is too poor and go somewhere else, THEN Thailand has lost that 1,000 or the difference. However, the reality is that for some people they may actually bring more money than they would last year, when they see the crappier exchange rate and thereby it gains by the extra money brought in. It's only when people vote with their feet and don't go to Thailand that the economy suffers.

However, there are also such factors as inflation, GNP and consumer preferences to take into account when talking about the "local" economy (not national), when deciding if your 62,000 baht (with its increased face value against foreign currencies) is actually worth more or less than last year. In summary, your example cannot be used as proof of anything. Which "local" economy were you referring to?

[johnwills]

With the baht strengthening quite dramatically against the dollar and the pound over the the last few months, this surely must have an effect on the local economy at some point. Example if I have 1000 pounds to spend whilst on my holiday, at the end of last year I could get 70,000 baht now approximately 62,000. Thats 8,000 baht gone from what I could spend. This must really start to add up when you look at the millions of tourists Thailand gets a year

It's not Thailand's loss per se, but your own loss you're actually complaining about here.

Last year you bring 1,000 quid to spend and this year you still bring 1,000 quid to spend. Thailand's economy gains by 1,000 quid both last year and this. Zero change, no matter the exchange rate.

BUT, if this year you bring less money to spend OR you decide the exchange rate is too poor and go somewhere else, THEN Thailand has lost that 1,000 or the difference. However, the reality is that for some people they may actually bring more money than they would last year, when they see the crappier exchange rate and thereby it gains by the extra money brought in. It's only when people vote with their feet and don't go to Thailand that the economy suffers.

However, there are also such factors as inflation, GNP and consumer preferences to take into account when talking about the "local" economy (not national), when deciding if your 62,000 baht (with its increased face value against foreign currencies) is actually worth more or less than last year. In summary, your example cannot be used as proof of anything. Which "local" economy were you referring to?

Actually, what I was trying to get across was the fact that 8,000 baht would not be going into the hands of restaurant/bar owners, shops, street sellers etc , rather than large businesses being able to take advantage of better exchange rates for importing goods. Wasn't actually complaining as I am resident here and my Wife's business in reality are earning more against the value of the pound then last year, so doesn't really affect me, I just used the figures as an example.

Edited March 24, 2008 by johnwills