Thailand Posts Current-account Deficit; Exports Fall

[LaoPo]

Thailand Posts Current-Account Deficit; Exports Fall (Update2)

By Anuchit Nguyen and Rattaphol Onsanit; Last Updated: December 30, 2008 04:13 EST

Dec. 30 (Bloomberg) -- Thailand posted a current-account deficit in November for the fifth straight month as the global economic slowdown cooled exports and a blockade of the country’s main airports hurt tourism, the central bank said.

The shortfall was $935 million last month compared with $1.13 billion in October, Amara Sriphayak, a Bank of Thailand official, said today in Bangkok. The median estimate of 11 economists in a Bloomberg survey was for a $1.4 billion deficit.

“The current-account deficit will widen in 2009 as a global recession cuts demand for automobiles, electronics and other goods from Thailand,” said Usara Wilaipich, an economist at Standard Chartered Bank in Bangkok. “Foreign tourists will also drop by as much as half next year because of street protests and the economic slowdown.”

Prime Minister Abhisit Vejjajiva said today that boosting economic growth and restoring investors’ confidence was among his top priorities as he delivered his maiden policy address. The speech was delayed by a day after protesters loyal to ousted leader Thaksin Shinawatra yesterday blocked parliament.

Political confrontations between the country’s rural majority and urban and royalist elites are stalling efforts to shield Southeast Asia’s second-biggest economy from the global slump. Thailand may fall into a recession for the first time since 1999 next quarter, according to the finance ministry.

Thousands from Bangkok’s middle class who accused Thaksin of corruption forced the city’s two main airports to close for eight days in late November to demand the resignation of then premier Somchai Wongsawat, Thaksin’s brother-in-law. Abhisit replaced Somchai as leader this month in a lawmakers’ vote.

Pressure on Baht

A persistent current-account deficit may raise pressure on the currency, which has lost 15 percent this year. The baht rose 0.6 percent to 34.80 to the dollar as of 4:06 p.m. in Bangkok.

The current account comprises the difference between exports and imports of goods, services, investment income and remittances. Trade makes up about 70 percent of the current account, and tourism contributes most of the service industry’s 30 percent component.

The trade deficit in November was $896 million, compared with a $964 million shortfall in October, the central bank said.

Exports dropped 18 percent from a year earlier to $11.8 billion last month, the central bank said. That was the first contraction since March 2002, and the biggest decline since January 1992, when Bloomberg began tracking the data. Imports grew 0.2 percent to $12.7 billion, slowing from a 23.5 percent expansion in October.

Tourist Arrivals

Tourist arrivals tumbled 22 percent to 1.1 million in November as the Bangkok airport seizures that ended Dec. 3 prompted travelers to cancel airline and hotel bookings.

A measure of manufacturing output contracted 6.6 percent in November, from a revised 2.3 percent gain a month earlier. That’s the biggest drop since November 1998, according to Bloomberg data.

“There’s a sharp drop in tourism. This is because of political concerns and the airport closure,” said Amara. “The weakening exports also caused the decline in production of electronics products such as computer hard-disk drives.”

-Bloomberg

LaoPo

[stoneman]

Thailand Posts Current-Account Deficit; Exports Fall (Update2)

By Anuchit Nguyen and Rattaphol Onsanit; Last Updated: December 30, 2008 04:13 EST

Dec. 30 (Bloomberg) -- Thailand posted a current-account deficit in November for the fifth straight month as the global economic slowdown cooled exports and a blockade of the country’s main airports hurt tourism, the central bank said.

The shortfall was $935 million last month compared with $1.13 billion in October, Amara Sriphayak, a Bank of Thailand official, said today in Bangkok. The median estimate of 11 economists in a Bloomberg survey was for a $1.4 billion deficit.

“The current-account deficit will widen in 2009 as a global recession cuts demand for automobiles, electronics and other goods from Thailand,” said Usara Wilaipich, an economist at Standard Chartered Bank in Bangkok. “Foreign tourists will also drop by as much as half next year because of street protests and the economic slowdown.”

LaoPo

The rest of the world has seen this freight train coming and Thailand has been so busy with their yellow vs red protests that they have not focused on this incoming problem... and the comments from this week's "new" govt is that they will have proposals to consider next month and that they will get them implemented by Apr/May...That may be much too late..

Stoneman

[sorensen]

I agree that the future is not looking all bright for Thailand, but the country is still holding up pretty well considering the political chaos and global economic melt down. With a currency reserve of $100 billion and a trade deficit of roughly $1 billion, Thailand still have a far better savings/deficit ratio than most readers on this forum.

That said, I also think 2009 will be a very tough year for Thailand.

[QED]

Thailand Posts Current-Account Deficit; Exports Fall (Update2)

By Anuchit Nguyen and Rattaphol Onsanit; Last Updated: December 30, 2008 04:13 EST

Dec. 30 (Bloomberg) -- Thailand posted a current-account deficit in November for the fifth straight month as the global economic slowdown cooled exports and a blockade of the country's main airports hurt tourism, the central bank said.

The shortfall was $935 million last month compared with $1.13 billion in October, Amara Sriphayak, a Bank of Thailand official, said today in Bangkok. The median estimate of 11 economists in a Bloomberg survey was for a $1.4 billion deficit.

The trade deficit in November was $896 million, compared with a $964 million shortfall in October, the central bank said.

Reliable article then

[LaoPo]

I agree that the future is not looking all bright for Thailand, but the country is still holding up pretty well considering the political chaos and global economic melt down. With a currency reserve of $100 billion and a trade deficit of roughly $1 billion, Thailand still have a far better savings/deficit ratio than most readers on this forum.

That said, I also think 2009 will be a very tough year for Thailand.

1. I don't have the numbers at hand but the $ 100 billion reserves is/was declining...fast, the past few weeks, keeping up the Baht...

2. what about the 65 million Thai...do they have a far better savings/deficit ratio also ?

LaoPo

[midas]

I agree that the future is not looking all bright for Thailand, but the country is still holding up pretty well considering the political chaos and global economic melt down. With a currency reserve of $100 billion and a trade deficit of roughly $1 billion, Thailand still have a far better savings/deficit ratio than most readers on this forum.

That said, I also think 2009 will be a very tough year for Thailand.

1. I don't have the numbers at hand but the $ 100 billion reserves is/was declining...fast, the past few weeks, keeping up the Baht...

2. what about the 65 million Thai...do they have a far better savings/deficit ratio also ?

LaoPo

I know many Thai's who have borrowed money to buy a wide range of consumer

goods and others who would like to if they could get the credit - but i dont know of many

who actually have savings in their accounts

[henryalleman]

I agree that the future is not looking all bright for Thailand, but the country is still holding up pretty well considering the political chaos and global economic melt down. With a currency reserve of $100 billion and a trade deficit of roughly $1 billion, Thailand still have a far better savings/deficit ratio than most readers on this forum.

That said, I also think 2009 will be a very tough year for Thailand.

1. I don't have the numbers at hand but the $ 100 billion reserves is/was declining...fast, the past few weeks, keeping up the Baht...

2. what about the 65 million Thai...do they have a far better savings/deficit ratio also ?

LaoPo

I know many Thai's who have borrowed money to buy a wide range of consumer

goods and others who would like to if they could get the credit - but i dont know of many

who actually have savings in their accounts

I know this statistics about earnings and debt of Civil Servants are outdated but you can make an extrapolation to today. Strange that Civil servants in the North and NE have the highest debt ratio of civil Servants in Thailand, while the ones in Bangkok the lowest.

http://web.nso.go.th/eng/en/stat/office/tab6_44.htm

http://web.nso.go.th/eng/en/stat/office/tab2_44.htm

http://web.nso.go.th/eng/en/stat/office/tab3_44.htm

this statistics is worth to study them, because if there is already an high debt rate amongst civil servants I wonder about the debt rate amongst people who work in the private sector who can not rely on a steady income or job security.

In my country the medium debt rate is 25% .So if Thailand will start to feel the worldwide recession, the results will be dramatic.

Some statistics about household spendings

http://web.nso.go.th/eng/en/stat/socio/socio00.htm

[sorensen]

I know this statistics about earnings and debt of Civil Servants are outdated but you can make an extrapolation to today. Strange that Civil servants in the North and NE have the highest debt ratio of civil Servants in Thailand, while the ones in Bangkok the lowest.

http://web.nso.go.th/eng/en/stat/office/tab6_44.htm

http://web.nso.go.th/eng/en/stat/office/tab2_44.htm

http://web.nso.go.th/eng/en/stat/office/tab3_44.htm

this statistics is worth to study them, because if there is already an high debt rate amongst civil servants I wonder about the debt rate amongst people who work in the private sector who can not rely on a steady income or job security.

In my country the medium debt rate is 25% .So if Thailand will start to feel the worldwide recession, the results will be dramatic.

Some statistics about household spendings

http://web.nso.go.th/eng/en/stat/socio/socio00.htm

Good statistic and while personal debt is an entirely different discussion than foreign reserves, it could be the source of Thailands problem in 2009. How did the US credit crises start? Personal debt in the form of sub-prime loans. Deshavou maybe?

Thailand has some 20+ banks, but "interesting" enough not one of them have failed yet. Makes you wonder which one will be left standing when the music stops in 2009.

[OlRedEyes]

The economy is going to feed back into the political instability, which will feed back into the economy. There's the makings here of a deadly spiral.

[12DrinkMore]

Apart from the reliability of any stats at all, and in particular stats in Thailand generated almost a decade ago, unless they are related to disposable household income and cost of servicing the debts it is impossible to draw any conclusions.

A lot of these debts will be for housing, with two wage earners and granny at home to look after the kids. The figures of around 300,000 to 400,000 Baht don't look immense, as they will be paying maybe 6% on the mortgage or less and very little tax on their incomes. The typical Thai property prices also are not massively out of proportion the the actual cost of land and construction, unlike the Western prices.

What will get hurt are the vastly overpriced Farang properties in the places like Phuket and condos in Bangkok. but, similar to the crisis in 1997 where everybody forecast huge falls in the prices and easing of land ownership for foreigners, it never actually happened. The prices are very sticky, as the Chinese hate to take a capital loss, and the ownership laws never changes because it would and will never get through parliament.

Edited January 2, 2009 by 12DrinkMore