Worst Over For Thai Economy But Recovery Not Visible

[george]

EXCLUSIVE INTERVIEW

'Worst over for economy but recovery not visible'

BOT chief Tarisa says she is opposed to using foreign-exchange reserves to stimulate growth.

The economy has seen through the worst but a recovery has not yet come to pass, the Bank of Thailand governor said.

In a special interview, Tarisa Watanagase said, "The Thai economy has bottomed out but signs of an economic recovery are not apparent yet. This broad outlook is a result of our discussion with the private sector. We still need to take a look at the July figures first."

Still, Tarisa said the global economic conditions have begun to improve, compared with the turmoil in late 2008. Interest-rate spreads have started to return to normal because deep-seated problems in the US financial system have been tackled to a certain level following a recapitalisation of five to six financial institutions.

In Asia, Tarisa added, the situation is also getting better, with China mounting a massive fiscal stimulus package to address its unemployment. Exports of Asian countries are still in negative territory, but the conditions are beginning to stabilise, particularly for Thai exports. The electronics sector, for instance, has begun to hire again.

Recently, Dr Narongchai Arkasanee, a well-known economist, and other academics, called on the central bank to use US$200 million (Bt6.82 billion) to $300 million of its international reserves of $120 billion to help stimulate the sagging economy as the government is cash-strapped.

Tarisa vigorously defended

the central bank's international reserves management, saying that in economic theory it is not an appropriate policy

to use international reserves to prop up the economy.

"We have already talked it out with the prime minister and the finance minister that using international reserves to stimulate the economy is not a good option.

Apart from the US dollar, there are other currencies in the reserves. If we sell the dollar from the reserves, the value of the baht will jump, which would complicate the problems. And if the Bank of Thailand were to push out the baht by converting the US dollar in its own account, this would also amount to printing money," Tarisa said.

"No country in the world is spending money from its international reserves directly. If we were to use the reserves to buy up some oil reserves, then this matter can be put to rest because it would not affect the domestic economy."

With the staunch stand of the central bank against using the foreign exchange reserves, the Abhisit government has no other choice but to raise Bt800 billion via two bills from the financial markets to fill up the hole in its budget and to also stimulate the economy.

The House of Representatives has passed the Bt400-billion borrowing package introduced as an executive decree, and the Senate would deliberate this bill today. The other Bt400 billion borrowing package has also been passed by the House of Representatives, but it would be deliberated by the Senate probably in August.

Tarisa said the amount of US$120 billion in international reserves is actually not high because it is derived from export earnings, from foreign investors' portfolio investment in the stock market and from foreign borrowings of Thai firms and from foreign direct investment.

As for calls for the central bank to keep the baht weaker to boost exports, Tarisa said the central bank is managing the baht through a nominal effective exchange-rate system by weighing the Thai currencies with those of other trading partners, not only the US dollar.

In January, the baht stood at Bt34.92 to the US dollar, compared to Bt34.57 in May this year. This, Tarisa said, represents the baht's appreciation of only 1 per cent during the first five months of this year based on the nominal effective exchange rate mechanism.

-- The Nation 2009-06-22

[tigerbalm]

EXCLUSIVE INTERVIEW

'Worst over for economy but recovery not visible'

BOT chief Tarisa says she is opposed to using foreign-exchange reserves to stimulate growth.

The economy has seen through the worst but a recovery has not yet come to pass, the Bank of Thailand governor said.

In a special interview, Tarisa Watanagase said, "The Thai economy has bottomed out but signs of an economic recovery are not apparent yet. This broad outlook is a result of our discussion with the private sector. We still need to take a look at the July figures first."

Still, Tarisa said the global economic conditions have begun to improve, compared with the turmoil in late 2008. Interest-rate spreads have started to return to normal because deep-seated problems in the US financial system have been tackled to a certain level following a recapitalisation of five to six financial institutions.

In Asia, Tarisa added, the situation is also getting better, with China mounting a massive fiscal stimulus package to address its unemployment. Exports of Asian countries are still in negative territory, but the conditions are beginning to stabilise, particularly for Thai exports. The electronics sector, for instance, has begun to hire again.

Recently, Dr Narongchai Arkasanee, a well-known economist, and other academics, called on the central bank to use US$200 million (Bt6.82 billion) to $300 million of its international reserves of $120 billion to help stimulate the sagging economy as the government is cash-strapped.

Tarisa vigorously defended

the central bank's international reserves management, saying that in economic theory it is not an appropriate policy

to use international reserves to prop up the economy.

"We have already talked it out with the prime minister and the finance minister that using international reserves to stimulate the economy is not a good option.

Apart from the US dollar, there are other currencies in the reserves. If we sell the dollar from the reserves, the value of the baht will jump, which would complicate the problems. And if the Bank of Thailand were to push out the baht by converting the US dollar in its own account, this would also amount to printing money," Tarisa said.

"No country in the world is spending money from its international reserves directly. If we were to use the reserves to buy up some oil reserves, then this matter can be put to rest because it would not affect the domestic economy."

With the staunch stand of the central bank against using the foreign exchange reserves, the Abhisit government has no other choice but to raise Bt800 billion via two bills from the financial markets to fill up the hole in its budget and to also stimulate the economy.

The House of Representatives has passed the Bt400-billion borrowing package introduced as an executive decree, and the Senate would deliberate this bill today. The other Bt400 billion borrowing package has also been passed by the House of Representatives, but it would be deliberated by the Senate probably in August.

Tarisa said the amount of US$120 billion in international reserves is actually not high because it is derived from export earnings, from foreign investors' portfolio investment in the stock market and from foreign borrowings of Thai firms and from foreign direct investment.

As for calls for the central bank to keep the baht weaker to boost exports, Tarisa said the central bank is managing the baht through a nominal effective exchange-rate system by weighing the Thai currencies with those of other trading partners, not only the US dollar.

In January, the baht stood at Bt34.92 to the US dollar, compared to Bt34.57 in May this year. This, Tarisa said, represents the baht's appreciation of only 1 per cent during the first five months of this year based on the nominal effective exchange rate mechanism.

-- The Nation 2009-06-22

BANGKOK: -- More than 600,000 people across the country are now suffering from panic disorder, a study revealed yesterday.

600,001 if you include Tarisa Watanagase

[Chang_paarp]

EXCLUSIVE INTERVIEW

'Worst over for economy but recovery not visible'

-- The Nation 2009-06-22

I think Tarisa needs a more powerful telescope.

[MJP]

Oh Lordy these central bankers talk BS.

http://news.bbc.co.uk/2/hi/business/8108859.stm

60% of this country's entire economy is exports and that's down 26.6%. With no growth in sight.

The worst is not over.

[Shotime]

It's a confusing headline. Sort of, what's the word, contradictory? If there's no sign of recovery, then the worst is not over.

If the value of the baht rises any further, they will, once again, shoot themselves in the head this time.

[Seneque]

recovery not visible (agree with that part)

Who knows about worst ... until it gets worse.

[catmac]

Oh Lordy these central bankers talk BS.

http://news.bbc.co.uk/2/hi/business/8108859.stm

60% of this country's entire economy is exports and that's down 26.6%. With no growth in sight.

The worst is not over.

And 6% of GDP is from tourism - and that's rapidly going down the pan!

Only a Thai bureaucrat or politician could look at 2/3rds of a country's GDP heading south, and say the worst is over!

Anybody who takes the slightest assurance of anything they say must be mad. How many times this year have the BOT and Government ministers had to revise their forecasts down wards? The problem is that they just don't believe that basic laws of economics (e.g that price has any bearing on demand) apply to Thailand just the same as anywhere else.

[Losangels]

Should've wiped the crystal ball before making the statement

[MJP]

Oh Lordy these central bankers talk BS.

http://news.bbc.co.uk/2/hi/business/8108859.stm

60% of this country's entire economy is exports and that's down 26.6%. With no growth in sight.

The worst is not over.

And 6% of GDP is from tourism - and that's rapidly going down the pan!

Only a Thai bureaucrat or politician could look at 2/3rds of a country's GDP heading south, and say the worst is over!

Anybody who takes the slightest assurance of anything they say must be mad. How many times this year have the BOT and Government ministers had to revise their forecasts down wards? The problem is that they just don't believe that basic laws of economics (e.g that price has any bearing on demand) apply to Thailand just the same as anywhere else.

Same with the 'green shootists' in the UK/US.

[cloudhopper]

Only a Thai bureaucrat or politician could look at 2/3rds of a country's GDP heading south, and say the worst is over!

Not at all. Politicians, bureaucrats and economists all over the world are saying the same thing.

The latter are all wrong and the former are all lying.

[MJP]

Only a Thai bureaucrat or politician could look at 2/3rds of a country's GDP heading south, and say the worst is over!

Not at all. Politicians, bureaucrats and economists all over the world are saying the same thing.

The latter are all wrong and the former are all lying.