Thailand's Economy Declines 7.1 Per Cent In First Quarter

[Priceless]

Cannot understand why you say it is near impossible to get citizenship - I have Thai residency (was very easy to get) and am thinking to get Thai nationality. The only thing holding me back is my poor Thai, which I am working on now.

Supposedly there is a limit of 100 Permanent Residencies issued per year per nationality. If you happen to come from Andorra, then that's no problem On the other hand, there are 41,000 UK citizens resident in Thailand. If they were all to apply for PR it would take 410 years to clear the queue

/ Priceless

[Robert44]

Supposedly there is a limit of 100 Permanent Residencies issued per year per nationality. If you happen to come from Andorra, then that's no problem On the other hand, there are 41,000 UK citizens resident in Thailand. If they were all to apply for PR it would take 410 years to clear the queue

/ Priceless

Do 100 people from the UK try each year?

I applied in Nov (Dec being the close) and was accepted same year so do not think many people actually apply, also never heard of anyone being knocked back because their country's quota was full - not saying it doesn't happen just never heard of it.

[Priceless]

[...]

I dunno. My head hurts trying to do them figures

However, what's your take on the impact of such a trend on inflation? Unlike western economies that have seen declining prices, particularly those where oil is a factor, I don't think or at least haven't seen Thai prices decrease in the same way. Sure, Thailand is agrarian driven and the export price of rice has fallen, but domestic prices haven't. No discountng as in the west. What do you think?

It's been many years since I studied macroeconomics, and in those days inflation was the word of the day, not deflation Consequently I can't claim to understand the relationships between e.g. GDP, price levels and rates of exchange.

To add to my lack of general understanding, the Thai situation has a number of quirks that make it even harder to understand. There are a number of different government interventions in the form of price controls, guaranteed minimum prices for certain agricultural products, subsidies and so on. These tend to obscure what is happening in the underlying reality. One of my personal favourites at the moment is the increase in fuel taxes. So as not to hit people too hard through price increases, this is supposed to (at least initially) be covered by the (government) Oil Fund. In what way the government is supposed to become better off by moving money from one pocket to another (i.e. moving money from the Oil Fund to the tax department), is rather beyond me.

One factor that does influence both GDP and inflation is the fact that imports have contracted even more quickly than exports. In effect, the Thai current account surplus has increased, partly because there is such a high import content in its exports, partly because of the fall in oil prices. This, I am sure, is part of the explanation for the high THB rate of exchange.

Finally, your statement that "Thailand is agrarian driven" is not quite true. To be sure, a very high percentage of the Thai population are employed in the agriculture sector, but the sector's contribution to GDP is fairly limited (11.4% in 2007, according to Wikipedia http://en.wikipedia.org/wiki/Economy_of_Thailand ). The explanation is of course that agrarian productivity is very low, compared to e.g. manufacturing.

I'm afraid that this became a long post without answering your question. The reason is simple: I don't know the answer

/ Priceless

[Journalist]

Plenty of other more welcoming destinations where you can stay without your visa issues and land ownership issues.

Such as?...

[Abrak]

Supposedly there is a limit of 100 Permanent Residencies issued per year per nationality. If you happen to come from Andorra, then that's no problem On the other hand, there are 41,000 UK citizens resident in Thailand. If they were all to apply for PR it would take 410 years to clear the queue

/ Priceless

Do 100 people from the UK try each year?

I applied in Nov (Dec being the close) and was accepted same year so do not think many people actually apply, also never heard of anyone being knocked back because their country's quota was full - not saying it doesn't happen just never heard of it.

Yes I wonder about this limit and how 'flexible' it is. When I applied for PR I was about 350th in the queue from the UK and was bloody upset with the law firm I had hired to get me PR in the first place. Now assuming it was on a first come, first served basis, that would mean they had weeded out 250 others before selecting me which is highly unlikely because I wasnt exactly setting the bar too high. (In particular, I dont have any Thai wife or family, dependents etc.) So my guess is that this limit is discretionary and also the perfect excuse for rejecting someone rather than telling him they are turning him down because he is a scumbag. (Incidentally, before anyone gets too carried away by that comment, I do know of people infinitely more qualified than I to be rejected for no apparent reason.)

[Scott]

I am having trouble following this thread. Perhaps there is a hidden meaning. If the economy declines enough in the next 3 quarters we all get to stay?

[madforit]

[...]

I dunno. My head hurts trying to do them figures

However, what's your take on the impact of such a trend on inflation? Unlike western economies that have seen declining prices, particularly those where oil is a factor, I don't think or at least haven't seen Thai prices decrease in the same way. Sure, Thailand is agrarian driven and the export price of rice has fallen, but domestic prices haven't. No discountng as in the west. What do you think?

It's been many years since I studied macroeconomics, and in those days inflation was the word of the day, not deflation Consequently I can't claim to understand the relationships between e.g. GDP, price levels and rates of exchange.

To add to my lack of general understanding, the Thai situation has a number of quirks that make it even harder to understand. There are a number of different government interventions in the form of price controls, guaranteed minimum prices for certain agricultural products, subsidies and so on. These tend to obscure what is happening in the underlying reality. One of my personal favourites at the moment is the increase in fuel taxes. So as not to hit people too hard through price increases, this is supposed to (at least initially) be covered by the (government) Oil Fund. In what way the government is supposed to become better off by moving money from one pocket to another (i.e. moving money from the Oil Fund to the tax department), is rather beyond me.

One factor that does influence both GDP and inflation is the fact that imports have contracted even more quickly than exports. In effect, the Thai current account surplus has increased, partly because there is such a high import content in its exports, partly because of the fall in oil prices. This, I am sure, is part of the explanation for the high THB rate of exchange.

Finally, your statement that "Thailand is agrarian driven" is not quite true. To be sure, a very high percentage of the Thai population are employed in the agriculture sector, but the sector's contribution to GDP is fairly limited (11.4% in 2007, according to Wikipedia http://en.wikipedia.org/wiki/Economy_of_Thailand ). The explanation is of course that agrarian productivity is very low, compared to e.g. manufacturing.

I'm afraid that this became a long post without answering your question. The reason is simple: I don't know the answer

/ Priceless

Gotta say priceless.....you make interesting reading mate. I'd reckon you've hit the nail on the head reading the high THB exchnage rate at the moment....I must admit I hadn't thought of it that way.

Cheers

[EmU]

If you qualify to stay here then you shouldn't have to do visa runs.

Plenty more places to emigrate to if you don't like the rules.

You sound like a prize wanke_r -

Just pointing out the reality.

Another potless visa runner who thinks he has a God-given right to remain indefinitely in Thailand I take it?

Did you get out of the wrong side of bed this morning Ober, or are you always like this ???? No need to be so unpleasant is there. Now I have no idea about the status of Hanzkneez but if you were referring to me as 'a potless visa runner' then perhaps you should bother finding out some facts before you cast aspersions. I don't see why I should tell you anything of myself, but suffice to say that at aged 40 I could retire should I so wish......in the UK as well as Thailand. And no, I have never inherited anything, its through sheer bl**dy hard work, 7 days a week, for years.

I don't think I have a God-given right to remain indefinitely in Thailand.....far from it......my point was (as I sure you would have seen had you bothered to read my posts) that it WOULD BE NICE if I could stay permanently in Thailand without all the current hoops you have to jump through. I know I do not have the right. Yes there are many other places I could choose to go, but Thailand is my second home at the moment, and I very much love the country and people, and I would like it to be my first. Sorry if that doesn't fit in with your "if you don't like it you can <deleted> off" mentality.

I'm just suprised and saddened that there are people on here who feel so superior to others that they come out with comments such as you have.

Anyway, I'm refusing to come down to that level so I shall sign off from this post by saying that I hope you continue to have a good life in the LOS and i hope that you manage to avoid the problems that will inevitably arise for you given your attitude.

Best of luck

well said

[STEELINOX]

Not that I would be as optimistic as the NESDB, I dont think there will be much further contraction for exactly the reason that Priceless mentions. As an export driven economy Thailand is presumably suffering a lot due to the inventory cycle which should bottom out soon (although there isnt much sign) at which point orders and exports should rebound.

To me the economy is more likely to bottom (and potentially recover) than the US whose 6% decline was supported by a 2% rise in consumer demand, a rise that might not continue.

LOL !

nothing like being an optimist !

[Abrak]

Not that I would be as optimistic as the NESDB, I dont think there will be much further contraction for exactly the reason that Priceless mentions. As an export driven economy Thailand is presumably suffering a lot due to the inventory cycle which should bottom out soon (although there isnt much sign) at which point orders and exports should rebound.

To me the economy is more likely to bottom (and potentially recover) than the US whose 6% decline was supported by a 2% rise in consumer demand, a rise that might not continue.

LOL !

nothing like being an optimist !

So i dont get it? I make a perfectally rational comment that any recovery in Thailand will be more robust than in the US and your reaction is 'Lol! nothing like an optimist!!' which in my view says absolutely nothing apart from that you believe the US fundamentals for recovery are a whole lot better soundly based than Thailand's. Now if you really believe that, and it may be true, at least base it up with an argument.

At least, someone like Priceless has the decency to give a good argument why this might not be the case (namely that he thinks the inventory cycle might have been neutrual or negative to Thailand (personally I dont agree with this - countries that are dependent on high net imports to derive their exports, usually suffer in the inventory downturn, and I suspect that Thailand will be a net beneficiary (due overstocking of inputs and inventory) and that imports will prove a laggard in the accounts.)

You havent presented an argument at all apart from 'lol' which would imply that I am incredibly naive and you expect a sharp rebound in the US (presumably due to consumption) or a sharp deterioration in Thai fundamentals. As I think Priceless was suggesting in his numbers, given qoq 4 2008 numbers we should assume that 7% decline in q1oq1 is close to the bottom unless you are forecasting financial armeggedon in which case US numbers will be substantially worse. At the end of the day I see about a 4-5% decline in the US as likely but it is based on consumer spending remaining really high and a v.large fiscal deficit being fully implemented. In Thailand, I expect a 5-5.5% decline but that is based on poor consumer spending (relative to the US (where they have no wa y to maintain/recover consumer spending long term)), achieving its deficit forecast (which looks a bit optimistic) and, as I say a degree of recovery in NX.

Assuming those numbers are right, then Thailand is almost certain to have a much bigger bounce in GDP next year, than the US (which might see none at all.)

Personally if you want to go ahead and argue that the US will lead us out of these problems I dont have a problem (afterall it is the Fed's and CBO's underlying assumptions) but please justify it. You dont have to be an optimist to say that Thailand's GDP growth rate will exceed that of the US next year. Merely, in my view, rational.

[Priceless]

So i dont get it? I make a perfectally rational comment that any recovery in Thailand will be more robust than in the US and your reaction is 'Lol! nothing like an optimist!!' which in my view says absolutely nothing apart from that you believe the US fundamentals for recovery are a whole lot better soundly based than Thailand's. Now if you really believe that, and it may be true, at least base it up with an argument.

At least, someone like Priceless has the decency to give a good argument why this might not be the case (namely that he thinks the inventory cycle might have been neutrual or negative to Thailand (personally I dont agree with this - countries that are dependent on high net imports to derive their exports, usually suffer in the inventory downturn, and I suspect that Thailand will be a net beneficiary (due overstocking of inputs and inventory) and that imports will prove a laggard in the accounts.)

You havent presented an argument at all apart from 'lol' which would imply that I am incredibly naive and you expect a sharp rebound in the US (presumably due to consumption) or a sharp deterioration in Thai fundamentals. As I think Priceless was suggesting in his numbers, given qoq 4 2008 numbers we should assume that 7% decline in q1oq1 is close to the bottom unless you are forecasting financial armeggedon in which case US numbers will be substantially worse. At the end of the day I see about a 4-5% decline in the US as likely but it is based on consumer spending remaining really high and a v.large fiscal deficit being fully implemented. In Thailand, I expect a 5-5.5% decline but that is based on poor consumer spending (relative to the US (where they have no wa y to maintain/recover consumer spending long term)), achieving its deficit forecast (which looks a bit optimistic) and, as I say a degree of recovery in NX.

Assuming those numbers are right, then Thailand is almost certain to have a much bigger bounce in GDP next year, than the US (which might see none at all.)

Personally if you want to go ahead and argue that the US will lead us out of these problems I dont have a problem (afterall it is the Fed's and CBO's underlying assumptions) but please justify it. You dont have to be an optimist to say that Thailand's GDP growth rate will exceed that of the US next year. Merely, in my view, rational.

I actually agree with your point about inventory decreases. There are however other points that should be considered. One of these is the fact that the export component of GDP is net exports. These were 6.0 billion THB for the full year 2008 ( http://www.bot.or.th/English/Statistics/In...ocs/tab07-1.pdf ). For the first quarter of 2009 they were 275.5 billion THB. Unfortunately I haven't found any quarterly figures for 2008 or 2007, but it still seems that net exports have been bolstering Q1 GDP (due to the rapidly decreasing imports). First quarter GDP is normally around 2,000 billion THB ( http://www.aseansec.org/18135.htm ), so net exports for Q1/08 would be in the region of 13-14% of GDP.

This might indicate that the rest of the economy (i.e. excluding net exports) has contracted even more than 7.1%. Even if we have a pick up in inventory building, the GDP could still be deep in negative territory due to a decreasing current account surplus.

Any opinions?

/ Priceless

[JR Texas]

On a purely selfish view, if they would devalue the baht back to 65 or so to the GBP, and relax the immigration and property ownership laws then I (and I suspect a lot of others) would be very happy indeed..........then again I can always dream huh! Never in a million years As Thailand has such a large tourist economy surely a de-valuation of the Baht would bring in more money to the country.....or am I just being incredibly naiive ??

I predict 80thb to the GBP by next May. This government's incompetence should be a factor. It's already on the slide at 54thb today. Long way to go though.

They will never relax the foreign land ownership laws while the biggest landowner in the country still has a say so you can forget about that and as for relaxing the immigration laws that is pie in the sky considering the mere handful of Westerners that are allowed to become Thai citizens every year.

Remembering of course there is a quota of 100 per qualifying nation for permanent residency (Immigrant visa) in the first place so citizenship for a Westerner is near impossible unless very wealthy and connected.

Quite why you'd want to Emigrate here is beyond me but each to their own.

Fair comment mate...I know absolutely that land ownership / immigration will never change for the better....I lived in Thailand long enough for that to become pretty obvious (about 3 years).

Why would I want to emigrate.......well, have you seen the UK lately ?????? But seriously, having lived in Thailand for a number of years I have friends out there and like the lifestyle, though the barely disguised xenophobic attitude towards farang from a lot of people (including offical government policy for example) is very hard to bear sometimes. Would it be too much to ask to be able to own a small house and the land it stands on without resorting to exploiting loopholes that could be closed at any minute, and to not to have to do ridiculous visa runs every few months???.....the answer to that question is of course unfortunately YES.

Totally agree.....crazy, xenophobic visa/business rules..........and no, I don't have any visa problem but can see that the bar will eventually reach everyone, even those who continue to fail to see the obvious.

[chrislarsson]

It's been many years since I studied macroeconomics, and in those days inflation was the word of the day, not deflation Consequently I can't claim to understand the relationships between e.g. GDP, price levels and rates of exchange.

To add to my lack of general understanding, the Thai situation has a number of quirks that make it even harder to understand. There are a number of different government interventions in the form of price controls, guaranteed minimum prices for certain agricultural products, subsidies and so on. These tend to obscure what is happening in the underlying reality. One of my personal favourites at the moment is the increase in fuel taxes. So as not to hit people too hard through price increases, this is supposed to (at least initially) be covered by the (government) Oil Fund. In what way the government is supposed to become better off by moving money from one pocket to another (i.e. moving money from the Oil Fund to the tax department), is rather beyond me.

One factor that does influence both GDP and inflation is the fact that imports have contracted even more quickly than exports. In effect, the Thai current account surplus has increased, partly because there is such a high import content in its exports, partly because of the fall in oil prices. This, I am sure, is part of the explanation for the high THB rate of exchange.

Finally, your statement that "Thailand is agrarian driven" is not quite true. To be sure, a very high percentage of the Thai population are employed in the agriculture sector, but the sector's contribution to GDP is fairly limited (11.4% in 2007, according to Wikipedia http://en.wikipedia.org/wiki/Economy_of_Thailand ). The explanation is of course that agrarian productivity is very low, compared to e.g. manufacturing.

I'm afraid that this became a long post without answering your question. The reason is simple: I don't know the answer

/ Priceless

There is a simple reason why you do not know the answer. There are not really any correlation between GDP numbers and inflation.

The purpose of government interventions on prices is to provide stability and predictability. Factors important in nurturing an environment where businesses can thrive. Of course, these always comes with pros and cons.

The Thai Baht is likely to continue to appreciate against the dollar. Not because the Thai economy is doing well, but because the US is bankrupt and is solving its problems by printing money.

Edited May 28, 2009 by chrislarsson

[Priceless]

[...]

There is a simple reason why you do not know the answer. There are not really any correlation between GDP numbers and inflation.

The purpose of government interventions on prices is to provide stability and predictability. Factors important in nurturing an environment where businesses can thrive. Of course, these always comes with pros and cons.

The Thai Baht is likely to continue to appreciate against the dollar. Not because the Thai economy is doing well, but because the US is bankrupt and is solving its problems by printing money.

I'd like to qualify your statement a bit.

Firstly, to the extent that as long as any numbers quoted are in nominal prices the GDP figure will be directly influenced by inflation.

Secondly, inflation as well as GDP are aspects of the real economy and as such (indirectly) influence each other. Many years ago I was involved in the building of an econometric model of an European economy (not as an economist, I was involved in the software implementation). It was quite a large model with 362 endogenous variables. Quite a few of these, several dozens at least, were concerned with prices. Obviously, GDP was one of the major "output" variables of the model and, for each iteration of the model, each variable influenced the others.

Conclusion: In any economy, most variables will influence each other, most often indirectly and frequently in less than obvious ways.

/ Priceless