Thai Economy For The Next Year?

[Naam]

A deep recession in the west wil lead to a very deep recession in Thailand with exports falling sharply as well as thourism. That will lead to a falling Thai Baht.

Tourism will fall because

houseprices in the west have been supporting a boom in peoples private economy where they lended money every year when the house price had gone up, and then spend the money on new cars, travel, new clothes etc. The dropping house prices will lead to consumers saving and having enough problems with paying their mortgages.

Therefore travel to far destinations as Thailand will be hit very hard. That drop in foreign revenue will lead to a falling Thai Baht. All the words from the politicians are only to calm people a little for now. Just take a look at other currencies such as the Korean Won.

applies exclusively to the U.S. of A., definitely not to €urope. but i agree with you that tourism (not only in Thailand but worldwide) will suffer as we are facing a severe global recession which will last longer than some months.

What?!

Absolutely applies to Europe. During the 'boom' 16% of UK GDP came from mortgage equity withdrawal.

The British economy was almost exclusively based on house price inflation and unsustainable credit and now the biggest asset bubble in history has burst, well, the UK's finished.

Lot's of capital once flowed from the UK to Thailand . . . lot's. Not any more and, with the Baht being as strong as it is, I doubt this will pick up in the next decade.

The materialist Thai is massively dependent on western capital. More than they could ever realise.

I agree the farming families will be relatively better off, but only because everyone else's standard of living is going to drop through the floor.

The one thing Thailand has going for it is it's sufficiency economy.

when i talk about Europe i mean r€al €urope, i.e. the contin€ntal one and not an insignificant island with an antiquated currency

[henryalleman]

First of all.... what the heck does LOS mean? Ladies Of Silom? (HA!) Seriously, I would like to know.

The economy in Spain is tanking beyond belief and next year looks grim. Thailand is similar in that tourism counts for a large part of the economy.... and with political tensions and bombs going off ... that will kill Thailand tourism even more. To devalue the baht sounds like an option considering the low dollar boosted European tourism to the US massively. Plus Thai exports have to have an excellent price or forget it. The dollar used to be 40+ baht and now it's much less. The countries that position themselves well for 2009 will come out okay... those that do nothing will be screwed.

1. LOS means: Land Of Smiles = Thailand.

2. Don't compare Thailand with Spain for many reasons. One of them is that Spain received 60 Million tourists in 2007. Thailand some 13,5 million.

Thailand has a population of around 65 million people, mostly still poor people. Spain has 40 million people and is a highly developed country.

Spain, of course, is suffering badly from it's over-development in real estate.

In 2006 Spain built more houses than the U.K. and Germany combined in the past five years...(think of it, realizing that the UK has some 60 million people and Germany some 82 million; that's a total of 140 million people and Spain has a mere 40 million).

On the other hand: some 2 million foreigners OWN a house in Spain but demand dropped severely in the past 2 years but construction of developments was still underway leaving the country in the real estate mess it's in right now (also due to dramatic rising of mortgage interest percentages).

LaoPo

one of the biggest problem with real estate in Spain is that may foreigners buy a house that is build in on land that have no building permission. Their is a big scandal going on in Spain about it. many of them even have to brake down their house. especially in the Marbella area. And the one who escape from braking down can't sell their property anymore. Also the many rip offs and scams by fraudulous real estate company's is an old problem, especially in sharing projects.

[henryalleman]

First of all.... what the heck does LOS mean? Ladies Of Silom? (HA!) Seriously, I would like to know.

The economy in Spain is tanking beyond belief and next year looks grim. Thailand is similar in that tourism counts for a large part of the economy.... and with political tensions and bombs going off ... that will kill Thailand tourism even more. To devalue the baht sounds like an option considering the low dollar boosted European tourism to the US massively. Plus Thai exports have to have an excellent price or forget it. The dollar used to be 40+ baht and now it's much less. The countries that position themselves well for 2009 will come out okay... those that do nothing will be screwed.

LOS= land of smiles but some, but some people call LOS= land of stupids,

[LaoPo]

First of all.... what the heck does LOS mean? Ladies Of Silom? (HA!) Seriously, I would like to know.

The economy in Spain is tanking beyond belief and next year looks grim. Thailand is similar in that tourism counts for a large part of the economy.... and with political tensions and bombs going off ... that will kill Thailand tourism even more. To devalue the baht sounds like an option considering the low dollar boosted European tourism to the US massively. Plus Thai exports have to have an excellent price or forget it. The dollar used to be 40+ baht and now it's much less. The countries that position themselves well for 2009 will come out okay... those that do nothing will be screwed.

1. LOS means: Land Of Smiles = Thailand.

2. Don't compare Thailand with Spain for many reasons. One of them is that Spain received 60 Million tourists in 2007. Thailand some 13,5 million.

Thailand has a population of around 65 million people, mostly still poor people. Spain has 40 million people and is a highly developed country.

Spain, of course, is suffering badly from it's over-development in real estate.

In 2006 Spain built more houses than the U.K. and Germany combined in the past five years...(think of it, realizing that the UK has some 60 million people and Germany some 82 million; that's a total of 140 million people and Spain has a mere 40 million).

On the other hand: some 2 million foreigners OWN a house in Spain but demand dropped severely in the past 2 years but construction of developments was still underway leaving the country in the real estate mess it's in right now (also due to dramatic rising of mortgage interest percentages).

LaoPo

one of the biggest problem with real estate in Spain is that may foreigners buy a house that is build in on land that have no building permission. Their is a big scandal going on in Spain about it. many of them even have to brake down their house. especially in the Marbella area. And the one who escape from braking down can't sell their property anymore. Also the many rip offs and scams by fraudulous real estate company's is an old problem, especially in sharing projects.

The situation you describe is a problem indeed but by far not "one of the biggest problems with real estate" as you put it.

The major problems in Spain are in the building and construction sector DUE to an oversupply of houses as described in my earlier message.

Here's enough to study for you

http://search.bloomberg.com/search?q=spain...te%3AD%3AS%3Ad1

LaoPo

[tijnebijn]

A deep recession in the west wil lead to a very deep recession in Thailand with exports falling sharply as well as thourism. That will lead to a falling Thai Baht.

Tourism will fall because

houseprices in the west have been supporting a boom in peoples private economy where they lended money every year when the house price had gone up, and then spend the money on new cars, travel, new clothes etc. The dropping house prices will lead to consumers saving and having enough problems with paying their mortgages.

Therefore travel to far destinations as Thailand will be hit very hard. That drop in foreign revenue will lead to a falling Thai Baht. All the words from the politicians are only to calm people a little for now. Just take a look at other currencies such as the Korean Won.

applies exclusively to the U.S. of A., definitely not to €urope. but i agree with you that tourism (not only in Thailand but worldwide) will suffer as we are facing a severe global recession which will last longer than some months.

What?!

Absolutely applies to Europe. During the 'boom' 16% of UK GDP came from mortgage equity withdrawal.

The British economy was almost exclusively based on house price inflation and unsustainable credit and now the biggest asset bubble in history has burst, well, the UK's finished.

Lot's of capital once flowed from the UK to Thailand . . . lot's. Not any more and, with the Baht being as strong as it is, I doubt this will pick up in the next decade.

The materialist Thai is massively dependent on western capital. More than they could ever realise.

I agree the farming families will be relatively better off, but only because everyone else's standard of living is going to drop through the floor.

The one thing Thailand has going for it is it's sufficiency economy.

when i talk about Europe i mean r€al €urope, i.e. the contin€ntal one and not an insignificant island with an antiquated currency

Up early today Naam , to protect the mainland from drunk invaders ?

Edited November 2, 2008 by tijnebijn

[Naam]

when i talk about Europe i mean r€al €urope, i.e. the contin€ntal one and not an insignificant island with an antiquated currency

-----

Up early today Naam, to protect the mainland from drunk invaders ?

i am always up early Tijnebijn.

early to bed and early to rise

makes a young Klingon boy wealthy and wise.

[ray23]

ECONOMY

Slowdown signals strong in September

POST REPORTERS

The Thai economy showed signs of a clear slowdown in September, with exports and manufacturing production both down from the previous month, according to data released by the Bank of Thailand yesterday.

Amara Sriphayak, a senior director for the central bank's domestic economy department, said the US and global economic slowdown had a clear impact on Thailand, with third-quarter export figures clearly down from the first half.

Manufacturing production slowed as a result, while tourism revenues sunk due to domestic political instability.

But farm prices remained relatively strong, helping support rural incomes and economic activity.

Mrs Amara said the economy slowed in September from August, adding that the central bank now projected third-quarter growth to drop to 4% and fall even further in the fourth quarter.

The National Economic and Social Development Board is scheduled to release third-quarter growth figures on Nov 24. The economy slowed to 5.3% year-on-year growth in the second quarter from 6.1% in the first.

September economic figures showed declines across a number of areas, with the manufacturing production index slowing to 4.6% growth from 7.6% the previous month. Industrial capacity utilisation also dropped to 68.2% in September from 70% the previous month.

Export-oriented industries posted a sharp slowdown in activity, with growth of 8.8% year-on-year in September compared with 16.4% the previous month.

The decline was in line with the overall slowdown in exports, which totalled $15.6 billion for the month, up 19.5% year-on-year but down from $15.78 billion the previous month.

Imports also fell to $15.5 billion in September, up 38.6% year-on-year, from $16.46 billion the previous month. The trade account returned to a surplus of $142 million in September compared with deficits the two previous months, although the current account remained in deficit overall at $703 million.

"The greatest concern for the economy right now is the fact that export shipments in the third quarter fell to 9.1% growth compared with 12.1% in the previous quarter," Mrs Amara said.

"The slowdown should be even faster in the fourth quarter, and this is a clear sign that the global crisis is having an impact on overseas orders."

Inbound tourists totalled just 900,000 in September, a 16.5% decline from the year before, as foreigners cancelled trips as headlines centred on the seizure of Government House by the People's Alliance for Democracy and the temporary closure of provincial airports.

Farm income also dropped to 45.5% growth year-on-year in September from 57.5% the previous month. Mrs Amara said high farm incomes supported rural consumption as motorcycle sales grew.

But private investment remained weak, with growth of just 0.5% in September from the previous month.

Fiscal spending had less of an impact on growth than earlier forecast, with disbursements for the fiscal year ending September reaching just 92.3% of the budget compared with a target of 94%.

[ray23]

Interesting didn't see this coming at all, thought it would be just the opposite:

Trade concerns

Web www.bangkokpost.com

By Phusadee Arunmas and Parista Yuthamanop

Thai exporters do not share the worldwide enthusiasm for US presidential hopeful Barack Obama, fearing his US trade policies will hurt Thai exports to the American market. They believe that a Democratic government could pose more difficulties for Thai exports than a Republican administration.

Mr Obama has been leading his Republican rival John McCain in most opinion polls ahead of the election, although Mr McCain has vowed to fight to the end to win the White House.

Under Republican President George W Bush, the US has been pushing for a free trade agreement with Thailand and strongly criticised Thailand over intellectual property rights violations, which eventually led to Washington's decision to put Thailand on the Priority Watch List (PWL).

Deputy secretary-general of the Thai Chamber of Commerce Pornsil Patchrintanakul expected a tougher stance from Washington if Mr Obama wins the election.

Under Mr Obama, labour standards, environmental issues and the violation of intellectual property rights would be increasingly brought into focus when the US does business with other countries, Mr Pornsil said.

Thailand would remain on the PWL and would stand little chance of upgrading to a better trade status with the US, he added.

He also expected the talks on the Thai-US free trade agreement to have a very bumpy ride ahead, given that Mr Obama appears reluctant to support the free trade idea.

Mr Pornsil pointed to the North America Free Trade Agreement (Nafta) which has been blamed for large numbers of job losses in the US.

Chairman of the Food Processing Industry Club Paiboon Ponsuwanna said that since the US economy was in bad shape, Mr Obama wanted to ensure more exports to boost revenues and, at the same time, try to curb foreign imports into the country.

The US is a major export destination for Thailand, in addition to the European Union, Japan and markets in the Association of Southeast Asian Nations.

In the food sector alone, Thailand's exports to the US account for 15% of the total food export value of about 600 billion baht.

Mr Paiboon said the US might come up with aggressive measures to export more of its products to other countries. But the key battle for the two candidates has focused on attempts to bring the US out of its present economic slump and financial crisis, according to Teerana Bhongmakapat, dean of Chulalongkorn University's economics faculty.

Mr Teerana said the policy platforms of the two candidates to restore confidence and their tax policies were the priorities for US voters in picking the next president to succeed Mr Bush.

Both candidates had similar frameworks to address the financial crisis as they believed in the need to increase taxes and domestic demand. But the difference was in their target groups, the academic said. Mr Obama wanted to increase tax on the high-end income group while Mr McCain's tax increases focus on the middle class, he added.

Mr Teerana said Mr Obama generally had shown more readiness over economic issues than Mr McCain.

The candidate who can effectively solve the confidence problems in the US would benefit the Thai economy, he added.

"The key is who can restore confidence in the financial sector most effectively. Consumers want to see someone who can implement economic policy fast and seriously," he said.

[henryalleman]

Well the spin doctors got busy today

BREAKING NEWS >> Saturday November 01, 2008 15:06

Minister: Thai textile exports still promising

Web www.bangkokpost.com

Thailand's textile exports, particularly to ASEAN member countries, still have room for growth despite the global economic crisis, according to Commerce Minister Chaiya Sasomsap.

Speaking after opening the 23rd Export Clothes Trade Fair being held October 31 to November 9, the minister said he received a report that China would speed up production of textiles and garment for domestic consumption and would compete less with other countries in the export market.

Thailand's textile and garment exports will not be affected by the global economic upheaval, he said confidently.

Mr Chaiya said he believed the country's exports this year would grow more than 15 per cent.

He said the Thai private sector had already adjusted itself in preparation for impacts of the global economic turmoil.

Thai commercial counselors around the world had been instructed to monitor trade data of each country closely so that they could bring the information for international trade.

Thai Clothing Industry Association president Dej Pattanasetpong said several think tanks projected that one million Thais could lose the jobs next year due to the impact of the global economic downturn.

However, in his opinion, Thais employed in the clothing industry will be less affected because many other countries now facing economic difficulties, such as the United States, Europe, Japan, and China, might reduce the number of workers in their textile and garment industries.

So, Thailand should turn this crisis into an opportunity for export expansion because Thai products of quality remain in great demand in the world market, he said. (TNA)

Picanol a world leader in manufacturing weaving machinery saw a dramatic cancellation of orders by China and other Asian countries. So saying that the Thai textile and garment industry will be affected by the global financial crisis is way too optimistic.

[henryalleman]

Well the spin doctors got busy today

BREAKING NEWS >> Saturday November 01, 2008 15:06

Minister: Thai textile exports still promising

Web www.bangkokpost.com

Thailand's textile exports, particularly to ASEAN member countries, still have room for growth despite the global economic crisis, according to Commerce Minister Chaiya Sasomsap.

Speaking after opening the 23rd Export Clothes Trade Fair being held October 31 to November 9, the minister said he received a report that China would speed up production of textiles and garment for domestic consumption and would compete less with other countries in the export market.

Thailand's textile and garment exports will not be affected by the global economic upheaval, he said confidently.

Mr Chaiya said he believed the country's exports this year would grow more than 15 per cent.

He said the Thai private sector had already adjusted itself in preparation for impacts of the global economic turmoil.

Thai commercial counselors around the world had been instructed to monitor trade data of each country closely so that they could bring the information for international trade.

Thai Clothing Industry Association president Dej Pattanasetpong said several think tanks projected that one million Thais could lose the jobs next year due to the impact of the global economic downturn.

However, in his opinion, Thais employed in the clothing industry will be less affected because many other countries now facing economic difficulties, such as the United States, Europe, Japan, and China, might reduce the number of workers in their textile and garment industries.

So, Thailand should turn this crisis into an opportunity for export expansion because Thai products of quality remain in great demand in the world market, he said. (TNA)

Picanol a world leader in manufacturing weaving machinery saw a dramatic cancellation of orders by China and other Asian countries. So saying that the Thai textile and garment industry will be affected by the global financial crisis is way too optimistic.

[ray23]

This was surprising worried about free trade agreements how about we make an even trading field, remove the 200% import fee on large motorcycles, grant ownership rights on a equal basis. Thn there might omethinto talk about. I'm afraid our hosts at times juswant to tke and give very little in return.

"Trade concerns

Web www.bangkokpost.com

By Phusadee Arunmas and Parista Yuthamanop

Thai exporters do not share the worldwide enthusiasm for US presidential hopeful Barack Obama, fearing his US trade policies will hurt Thai exports to the American market.

They believe that a Democratic government could pose more difficulties for Thai exports than a Republican administration.

Mr Obama has been leading his Republican rival John McCain in most opinion polls ahead of the election, although Mr McCain has vowed to fight to the end to win the White House.

Under Republican President George W Bush, the US has been pushing for a free trade agreement with Thailand and strongly criticised Thailand over intellectual property rights violations, which eventually led to Washington's decision to put Thailand on the Priority Watch List (PWL).

Deputy secretary-general of the Thai Chamber of Commerce Pornsil Patchrintanakul expected a tougher stance from Washington if Mr Obama wins the election.

Under Mr Obama, labour standards, environmental issues and the violation of intellectual property rights would be increasingly brought into focus when the US does business with other countries, Mr Pornsil said.

Thailand would remain on the PWL and would stand little chance of upgrading to a better trade status with the US, he added.

He also expected the talks on the Thai-US free trade agreement to have a very bumpy ride ahead, given that Mr Obama appears reluctant to support the free trade idea.

Mr Pornsil pointed to the North America Free Trade Agreement (Nafta) which has been blamed for large numbers of job losses in the US.

Chairman of the Food Processing Industry Club Paiboon Ponsuwanna said that since the US economy was in bad shape, Mr Obama wanted to ensure more exports to boost revenues and, at the same time, try to curb foreign imports into the country.

The US is a major export destination for Thailand, in addition to the European Union, Japan and markets in the Association of Southeast Asian Nations.

In the food sector alone, Thailand's exports to the US account for 15% of the total food export value of about 600 billion baht.

Mr Paiboon said the US might come up with aggressive measures to export more of its products to other countries.

But the key battle for the two candidates has focused on attempts to bring the US out of its present economic slump and financial crisis, according to Teerana Bhongmakapat, dean of Chulalongkorn University's economics faculty.

Mr Teerana said the policy platforms of the two candidates to restore confidence and their tax policies were the priorities for US voters in picking the next president to succeed Mr Bush.

Both candidates had similar frameworks to address the financial crisis as they believed in the need to increase taxes and domestic demand. But the difference was in their target groups, the academic said.

Mr Obama wanted to increase tax on the high-end income group while Mr McCain's tax increases focus on the middle class, he added.

Mr Teerana said Mr Obama generally had shown more readiness over economic issues than Mr McCain.

The candidate who can effectively solve the confidence problems in the US would benefit the Thai economy, he added.

"The key is who can restore confidence in the financial sector most effectively. Consumers want to see someone who can implement economic policy fast and seriously," he said."

[ray23]

Government forcing loans sounds familair hitting closer to home now.

Funding Drought Slams Chinese Plans as Banks Shun Plea to Lend

By Luo Jun

Nov. 5 (Bloomberg) -- Wang Yi, who employs 300 people making children's raincoats on China's east coast, is worried his company won't survive the next year as exports dry up.

The apparel manufacturer, which supplies European supermarket chains Tesco Plc and Aldi Group, needs a 600,000 yuan ($88,000) loan by Jan. 31 to stay afloat. China's state-owned banks rejected his previous applications.

``There's no point trying them again,'' says Wang, 40, standing in his two-story factory in Pinghu, about 90 kilometers (56 miles) southwest of Shanghai, where one floor is half empty. ``They prefer big customers.''

China's largest banks, with 4 trillion yuan of cash, are resisting government efforts to boost lending to 42 million small and medium-size companies that drove the economic boom of the past decade. On Nov. 2, the central bank scrapped curbs on loans after three interest rate cuts in seven weeks failed to revive economic growth that has sagged to its slowest in five years.

Half the nation's toy exporters have closed this year, and 67,000 smaller enterprises filed for bankruptcy in the first half, according to government statistics. Companies with assets of less than 40 million yuan provide three-quarters of urban jobs and 60 percent of China's gross domestic product.

``Their failure will lead to unemployment and may threaten social stability,'' says Frank Gong, JPMorgan Chase & Co.'s Hong Kong-based chief China economist.

Controls Scrapped

After five years of economic growth above 10 percent, the rate may slow to 5.8 percent this quarter, according to a Nov. 3 estimate by Credit Suisse Group AG. That would be the lowest rate since at least 1994, according to data compiled by Bloomberg.

In its latest move to reverse that trend, China's central bank said Nov. 2 it would no longer cap commercial bank lending, state-owned Xinhua news agency reported, scrapping a limit imposed in 2007 to prevent the economy from overheating.

In August, the People's Bank of China raised the quota by 5 percent to 3.8 trillion yuan, directing lenders to funnel the additional funds to firms with assets of less than 10 million yuan and farmers.

Banks have so far turned a deaf ear. With delinquency rates on loans to small companies running almost four times those of other loans, they want to avoid the state-directed lending that led to a $500 billion government bailout over the past decade.

``It's wishful thinking for the government to try to talk banks into lending to stimulate the economy,'' says Li Qing, a Shanghai-based analyst at CSC Securities HK Ltd. ``Banks are holding onto their purse not because they are bound by the quota, but because they are expecting mounting defaults and failures.''

`Scaling Back'

Nationwide, loans to small businesses by China's 20 biggest lenders rose 6.2 percent to 3.2 trillion yuan in the first six months of 2008, less than half the 14.1 percent growth in overall lending, according to the China Banking Regulatory Commission.

In Zhejiang province, where Wang is based and 99 percent of companies are small and privately owned, loans are increasingly hard to come by. Industrial & Commercial Bank of China Ltd., the nation's largest, offered 5 billion yuan of new loans to small enterprises in the province during the first six months of 2008, less than half the year-earlier figure, according to the bank.

``Getting a loan takes longer and involves more procedures for small companies,'' says Wang, who is being squeezed by a 20 percent dip in sales as well as higher commodity prices and an appreciation of the yuan, which reduces revenue from exports.

``Every line of business I know is scaling back to preserve capital as survival is the most important thing,'' he says. ``The whole mess in the U.S. and Europe means 2009 will be worse.''

Goldman Sachs, Temasek

Banks are reluctant to reverse the tightening of risk management that was carried out with advice from foreign investors, including Goldman Sachs Group Inc., that have paid $21 billion for stakes in Chinese lenders since 2005.

``Chinese banks are getting smarter and they won't blindly follow lending directives from the top any more,'' says Leo Gao, who helps oversee the equivalent of $2.3 billion at APS Asset Management Ltd. in Shanghai. ``We've seen banks start to cut back loans to real estate and exporters since the second quarter as they know an outbreak of bad loans is on the horizon.''

Bank of China Ltd. reformed its credit policies with help from Temasek Holdings Pte, which owns a 4.1 percent stake.

The bank now asks borrowers for more documents to prove they have orders that will provide revenue to repay a loan, as well as more collateral and third-party guarantees. It also has moved decision-making from local branches to centralized units at provincial headquarters.

Bank `Dilemma'

Lending to smaller companies is ``challenging,'' because each loan uses the same resources as are required to serve bigger corporations, reducing returns on these higher-risk transactions, says Wang Zhaowen, a Beijing-based spokesman for the bank.

``It's a dilemma and we are trying to find a way out,'' he says. ``Never again will we lower lending standards to meet government directives. Otherwise, we just slip back to the old path.''

About 8.5 percent of the bank's advances to small and medium-size companies were at least 90 days overdue on June 30, compared with 2.6 percent of total lending.

Decades of state-directed lending left China's four biggest banks with bad loans equal to almost 40 percent of outstanding loans in 1998. They were still sitting on $171 billion of soured debt, or 6.1 percent of total advances, at the end of June, compared with 0.5 percent for international banks in China.

``Banks will pay a heavy price for being good corporate citizens,'' says Dorris Chen, a Shanghai-based analyst at BNP Paribas SA. ``And they alone can't keep these companies from failing.''

Some banks that specialize in dealing with smaller firms are already feeling the pinch. China Minsheng Banking Corp., the nation's first privately owned bank, said overdue loans increased 22 percent in the first half from the end of last year.

Factory owner Wang is now trying the Pinghu city cooperative bank, a regional lender whose interest rates are as much as 20 percent higher than state banks. He doesn't think he'll need to try the last resort, a loan shark who charges four times that.

``With all the policies on easing lending, I'm optimistic,'' he says. ``Even if I get it, next year is going to be tough.''

To contact the reporters on this story: Luo Jun in Shanghai at [email protected]

Last Updated: November 4, 2008 20:21 EST

[MJP]

A deep recession in the west wil lead to a very deep recession in Thailand with exports falling sharply as well as thourism. That will lead to a falling Thai Baht.

Tourism will fall because

houseprices in the west have been supporting a boom in peoples private economy where they lended money every year when the house price had gone up, and then spend the money on new cars, travel, new clothes etc. The dropping house prices will lead to consumers saving and having enough problems with paying their mortgages.

Therefore travel to far destinations as Thailand will be hit very hard. That drop in foreign revenue will lead to a falling Thai Baht. All the words from the politicians are only to calm people a little for now. Just take a look at other currencies such as the Korean Won.

applies exclusively to the U.S. of A., definitely not to €urope. but i agree with you that tourism (not only in Thailand but worldwide) will suffer as we are facing a severe global recession which will last longer than some months.

What?!

Absolutely applies to Europe. During the 'boom' 16% of UK GDP came from mortgage equity withdrawal.

The British economy was almost exclusively based on house price inflation and unsustainable credit and now the biggest asset bubble in history has burst, well, the UK's finished.

Lot's of capital once flowed from the UK to Thailand . . . lot's. Not any more and, with the Baht being as strong as it is, I doubt this will pick up in the next decade.

The materialist Thai is massively dependent on western capital. More than they could ever realise.

I agree the farming families will be relatively better off, but only because everyone else's standard of living is going to drop through the floor.

The one thing Thailand has going for it is it's sufficiency economy.

when i talk about Europe i mean r€al €urope, i.e. the contin€ntal one and not an insignificant island with an antiquated currency

Couldn't agree more old chap.

[jts-khorat]

Maybe but when have the BOT or Ms. Tarisa been right about anything? They are beholden to economic forces greater than their attempts at control.

The Set is telling us something. We have to understand the Set reflects the thinking of the rich Thia's. Can someone thing me how much it decline in the last 12 months?

The SET over the past few months rather reflects foreign investors fleeing from the SET.

This has actually little to do with Thailand, but follows the trend of moving out of emerging markets and liquidating any and all assets to make them into cash, which is needed to cover other shortfalls those investors might have back at the homefront.

Getting them back after the current crisis is over with politial instability and inane economic policies in place will be the real problem for Thailand (and the rich Thais).

[LaoPo]

Maybe but when have the BOT or Ms. Tarisa been right about anything? They are beholden to economic forces greater than their attempts at control.

The Set is telling us something. We have to understand the Set reflects the thinking of the rich Thia's. Can someone thing me how much it decline in the last 12 months?

The SET over the past few months rather reflects foreign investors fleeing from the SET.

1. This has actually little to do with Thailand, but follows the trend of moving out of emerging markets and liquidating any and all assets to make them into cash, which is needed to cover other shortfalls those investors might have back at the homefront.

2. Getting them back after the current crisis is over with politial instability and inane economic policies in place will be the real problem for Thailand (and the rich Thais).

1. I second that.

2. They won't be back for a long time but that's not just limited to Thailand.

To jts-khorat: The SET doesn't -just- reflect the thinking of rich Thai; there's more than that.

And: the SET dropped some 47% in the past 12 months.

LaoPo

[jts-khorat]

Maybe but when have the BOT or Ms. Tarisa been right about anything? They are beholden to economic forces greater than their attempts at control.

The Set is telling us something. We have to understand the Set reflects the thinking of the rich Thia's. Can someone thing me how much it decline in the last 12 months?

The SET over the past few months rather reflects foreign investors fleeing from the SET.

1. This has actually little to do with Thailand, but follows the trend of moving out of emerging markets and liquidating any and all assets to make them into cash, which is needed to cover other shortfalls those investors might have back at the homefront.

2. Getting them back after the current crisis is over with politial instability and inane economic policies in place will be the real problem for Thailand (and the rich Thais).

1. I second that.

2. They won't be back for a long time but that's not just limited to Thailand.

To jts-khorat: The SET doesn't -just- reflect the thinking of rich Thai; there's more than that.

And: the SET dropped some 47% in the past 12 months.

LaoPo

LaoPo, I assume you really pointed your last remark to philstone, as I as fully aware of those facts as I wrote my answer :-)

[LaoPo]

Maybe but when have the BOT or Ms. Tarisa been right about anything? They are beholden to economic forces greater than their attempts at control.

The Set is telling us something. We have to understand the Set reflects the thinking of the rich Thia's. Can someone thing me how much it decline in the last 12 months?

The SET over the past few months rather reflects foreign investors fleeing from the SET.

1. This has actually little to do with Thailand, but follows the trend of moving out of emerging markets and liquidating any and all assets to make them into cash, which is needed to cover other shortfalls those investors might have back at the homefront.

2. Getting them back after the current crisis is over with politial instability and inane economic policies in place will be the real problem for Thailand (and the rich Thais).

1. I second that.

2. They won't be back for a long time but that's not just limited to Thailand.

To jts-khorat: The SET doesn't -just- reflect the thinking of rich Thai; there's more than that.

And: the SET dropped some 47% in the past 12 months.

LaoPo

LaoPo, I assume you really pointed your last remark to philstone, as I as fully aware of those facts as I wrote my answer :-)

..You're absolutely correct; I missed a line or 3..4.

Thanks for the correction !

LaoPo

[ray23]

Why is the BOT not lowering interst rates, my thought the blood is in the water now. A taste of the real world no matter where you are.

ECONOMY

Kongkiat critical of crisis response

Asia Plus chief calls for faster collective action

NAREERAT WIRIYAPONG

The government has been too slow to introduce collective efforts to counter the impact of the global financial meltdown, business leaders say, warning that the productive sector of the economy will be severely affected next year.

Kongkiat Opaswongkarn, chief executive of Asia Plus Securities, said Thailand should not be complacent about fallout from the global economic recession and that government agencies should speed up collaboration on measures to soothe economic shocks.

"Some measures, for example, relaxing rules for buying treasury stocks and regulations to facilitate mergers and acquisitions in the private sectors could be done immediately," Dr Kongkiat said at the CEO Vision forum organised by the Federation of Thai Industries.

"Compared to other governments in the US, Europe and Asia, Thailand has been quite slow in introducing effective measures. What they have said to date has yet to take effect or be implemented," he said. "Thailand is not ready to deal with economic hardships, which I would say are the worst in our lifetime globally. Policies regarding megaprojects and the SMEs are just the same as they did in the past."

After the Thai stock market collapsed by half from its peak this year, Dr Kongkiat said several industries would be hit hard, especially refineries and building materials. Exports and tourism also face a slump.

Exports of automobiles and electronic goods will decline in terms of value and volume while agricultural product prices are falling, he added.

"I cannot imagine how Thai exports could grow by 10% next year as government agencies forecast," said Dr Kongkiat.

Tight liquidity and higher competition in other markets mean that exports could fall in 2009, he added.

Some businessmen agree the government's slow reaction could worsen the crisis, but they also see the upside of the crisis by tapping into the windfall to acquire cheap assets.

Boonyasith Chokwattana, chairman of Saha Group, called on the government and related agencies to cut interest rates for deposits and lending. He also favoured cutting corporate income tax to 20-25% from the current 30%.

He also hopes the Bank of Thailand agrees with letting the baht weaken by about 10% relative to other currencies in the region to boost exports, he said.

"It is vital to make sure that Thai foreign exchange policy is line with that of other countries. Low interest rates would encourage the private sector to invest so they don't have to borrow money from abroad," he added.

Mr Boonyasith said that Saha Group, the country's biggest consumer-goods conglomerate, was ready to shop for ailing companies now for sale.

The group acquired shares of a Japanese joint venture named Bangkok Tokyo Socks, a local sock producer that failed to revive its exports to Japan because of the strong yen.

"We are ready to buy [companies] where opportunity arises and a reasonable price is offered," he said.

So far, the group has seen minimal impact from the slowdown as it focuses on domestic sales when export prospects are not promising. Sales are expected to increase 10% from last year, with 30-35% of that from exports.

In 2009, it forecasts slow sales growth of 5-6% compared to average annual growth of 10%, noted Mr Boonyasith.

Dr Kongkiat agrees now is the time for firms with cash to buy cheap assets.

"Usually new investments take time, and may not break even in the first two years, but I think buying assets now that are cheap and ready to make a profit makes sense," he said.

"I think financially strong companies should look at mid-sized or even large firms having financial and marketing problems."