Thai Economy Not In Crisis Now, Says Bot

[george]

Thai economy not in crisis now, says BoT

BANGKOK: -- The Thai economy in the first half of 2008 is not in crisis as it was in 1997 although it had experienced difficulties from surging oil prices, global economic slowdown, and political uncertainties, according to the Bank of Thailand (BoT).

Speaking at a seminar on "Views on Ways to Solve Thai Economic Woes," held by the Federation of Thai Industries, BoT deputy governor Atchana Waiquamdee said the country's economy managed to grow 6 per cent in the first half of the year amid the fuel price surge, world economic sluggishness and political turmoil.

But the bank expected the economy in the second half of the year would expand slightly less than that in the first half.

"Many view the economy as being in crisis now because they feel prices of oil and consumer products have risen so sharply that they do not have money left to buy other products.

"Also, they are unsure whether the government will be able to steer the country ahead amid the economic and political storm. So, they feel bad about the economy," she said.

Asked whether the bank would raise the policy interest rate further following the rate hike by 25 basis points at the last meeting of the Monetary Policy Committee, she said the bank served like a doctor who prescribed a first set of medications for patients suffering from the inflation surge by increasing the interest rate.

However, the treatment must have side effects. That meant the economy could grow at a slower pace. Whether a new regimen of medications would be prescribed depended on the health conditions of patients, which need to be monitored.

"Normally, no doctors want to prescribe strong medicines to patients. Additionally, they have to consider the possible side effects. In economic theory, should we take serious action to cope with an ailing economy with major inflation, it may lead to stagnation."

She conceded the global interest rate is now in an upward trend. But should the economy be adversely affected until it is so weak, it is likely the bank would maintain the interest rate at 3.50 per cent.

-- TNA 2008-07-25

[george]

Foreign investors still confident in Thailand, says industry minister

BANGKOK: -- Industry and Deputy Prime Minister Suwit Khunkitti on Thursday said foreign investors are still confident about investing in Thailand despite risk factors from global economic uncertainties and local political disturbances.

He said the foreign investors wanted to invest in the development of various industries, particularly the auto parts industry, which has significant growth potential. For instance, APICO Hitech Plc continues to expand its investment in Thailand.

Mr. Suwit advised investors to cash in on the free trade area (FTA) agreements Thailand had made with its trading partners for a maximum benefit of their investment.

Yeb Su Chuan, president of APICO Hitech, said that although Thailand's domestic auto market had expanded at a slower pace, the company enjoyed sound first-quarter operating results because of increased exports.

He said he is confident that the company's revenue this year would increase 15 per cent with a 10 per cent net profit growth.

-- TNA 2008-07-25

[Los78]

Foreign investors still confident in Thailand, says industry minister

BANGKOK: -- Industry and Deputy Prime Minister Suwit Khunkitti on Thursday said foreign investors are still confident about investing in Thailand despite risk factors from global economic uncertainties and local political disturbances.

He said the foreign investors wanted to invest in the development of various industries, particularly the auto parts industry, which has significant growth potential. For instance, APICO Hitech Plc continues to expand its investment in Thailand.

Mr. Suwit advised investors to cash in on the free trade area (FTA) agreements Thailand had made with its trading partners for a maximum benefit of their investment.

Yeb Su Chuan, president of APICO Hitech, said that although Thailand's domestic auto market had expanded at a slower pace, the company enjoyed sound first-quarter operating results because of increased exports.

He said he is confident that the company's revenue this year would increase 15 per cent with a 10 per cent net profit growth.

-- TNA 2008-07-25

Thats good news and I hope it continues to prosper and not be affected PADs disruptive antics.

[Scott]

I have to take what they say with a grain of salt. I know a factory that made it through 1997 without ever stopping operations. It has now closed down operations (temporarily). It has run continuously since WWII. That is a little scary.

I notice places that I go shopping have a lot fewer customers. Normally crowded shopping centers are half-empty (and much more pleasant, I might add).

I think we are only hearing one side of the story, but then what I see is based on observation, not on data.

[cloudhopper]

I have to take what they say with a grain of salt.

More like a dune.

[Old Man River]

I notice places that I go shopping have a lot fewer customers. Normally crowded shopping centers are half-empty (and much more pleasant, I might add).

I think we are only hearing one side of the story, but then what I see is based on observation, not on data.

Your observation on shopping centers is correct and will be reflected in the data in the form of lower consumer spending. However, net exports are strong and this is the main driver of the growth that Atchana was referring to.

[VegasVic]

I have to take what they say with a grain of salt. I know a factory that made it through 1997 without ever stopping operations. It has now closed down operations (temporarily). It has run continuously since WWII. That is a little scary.

I notice places that I go shopping have a lot fewer customers. Normally crowded shopping centers are half-empty (and much more pleasant, I might add).

I think we are only hearing one side of the story, but then what I see is based on observation, not on data.

I think that the key line in this article is " The thai economy in the first half of 2008 is not in crisis as it was in 1997". Thats kind of like saying that the housing downturn in the U.S. in the first half of 2008 is not in crisis as it was in 1931! Granted there is an entirely different dynamic at work in Thailand now as compared to 1997 , but make no mistake the Thai economy is on shakey ground, especially if oil remains in the $100+/bbl area and the baht does not depreciate further vs. major world currencies. Your point about getting only half the story is spot on, if you remember a couple of months ago there was another article put out by the BOT predicting that inflation should not rise more than 4% for all of 2008. Since then they have backed off those rosey inflations numbers and more than doubled their forcast for 2008 (which still seems very optimistic from all of the friends and family that I keep in cantact with in the LOS). I use to think that places like Phuket were recession resistant, but just reading the posts here on TV about all the cutbacks in flights to Phuket and the realestate developements that were started and then put on hold or planned and then cancelled, tells me that even Phuket is subject to this economic downturn.

[Plus]

BOI numbers on investment show serious decline this year, something like 20%, and that's comparing to a year under military junta.

I'm too lazy to dig up the online article, it was a couple of days ago.

Ok, though with numbers you can spin them either way, these two lines stand out:

"The number of approved applications dropped from 659 projects worth Bt352.6 billion in the first six months of 2007 to 555 projects worth Bt185.7 billion in first half of this year."

and

"Thailand, rated the sixth most attractive emerging market for investment in manufacturing last year, has fallen to 11th place this year."

All hopes are pinned on the upcoming mega-projects, however, I read somewhere that the recent tax reduction on diesel and gasohol is bigger than the price of the entire "purple line", which is one of the first to come online, I believe.

Re. fuel subsidies:

"But Bt46 billion? That is much higher than the entire investment budget for the purple Line urban-train project. This amazes me. How can the government easily spend a huge sum like that in only six months but be so slow in allocating a budget for projects that really could save energy in the long run?"

http://www.nationmultimedia.com/search/rea...newsid=30078659

http://www.nationmultimedia.com/search/rea...newsid=30078543

http://www.nationmultimedia.com/search/rea...newsid=30078764

Edited July 27, 2008 by Plus

[Old Man River]

Your point about getting only half the story is spot on, if you remember a couple of months ago there was another article put out by the BOT predicting that inflation should not rise more than 4% for all of 2008. Since then they have backed off those rosey inflations numbers and more than doubled their forcast for 2008 (which still seems very optimistic from all of the friends and family that I keep in cantact with in the LOS).

VegasVic, the Bot's comment that inflation won't rise to more than 4% for all of 2008 is still correct. You are confusing the difference between core inflation which does not include oil and food prices and is what central banks control via monetary policies, with headline inflation which does include oil and food prices and is what governments control via fiscal policies. These are not one in the same.

[Chang_paarp]

This reminds me of the statement from the head of the army a few years ago, "There will not be a coup."

[VegasVic]

This reminds me of the statement from the head of the army a few years ago, "There will not be a coup."

Or better yet the statement by the leading government hydrologist that expressed the view that even if the worlds ocean levels were to rise it would not effect the gulf of Thailand It appears that there are a few here that believe these fairy tales, they must think that Thailand exists in some sort of cacoon where it remains virtually unaffected by what is happening in the rest of the world! Anyone living in Thailand knows firsthand that the inflation rate thus far this year is already in double digits, but to those who choose to believe in fairy tales that 4% number sounds about right