When Will The Thai Economy Recover?

[george]

Guru Speak

By SETHAPUT SUTHIWARTNARUEPUT is executive vice president and chief economist of Siam Commercial Bank’s SCB Economic Intelligence Centre.

When will the Thai economy recover? The short answer is "not soon", as the global recovery is likely to be slow. The long answer is that it depends on one's definition of recovery: positive quarteronquarter growth (Q3 of 2009); positive year-on-year growth (Q4 of 2009 at the earliest); or return to the predownturn level of gross domestic product (Q4 of 2010 at the earliest).

The good news is that the economy probably hit bottom during the second quarter of this year. Based on the latest available data, our read is that GDP in the second quarter probably contracted by about 4.5 per cent year-on-year, less than the 7.1-percent contraction recorded during the first quarter.

While yearonyear growth could turn positive during the fourth quarter at the earliest, this does not mean that the economy has "recovered" in any meaningful sense given the unusually low base of GDP in the fourth quarter of 2008.

Under our baseline forecast of a contraction of over 4 per cent in 2009, recovery to 2007 GDP levels would require 2010 GDP growth of about 4 per cent, which seems too high in light of our expectation for a lacklustre global economic recovery.

Which sectors will recover first? Our baseline scenario that the recovery will be led by improving exports, with an additional but limited impetus provided by domestic fiscal stimulus, suggests sectors such as machinery and electronics and basic materials should recover and benefit most from the rebound in Chinese imports.

China is one of the few countries where the purchasingmanager index - a muchwatched, forwardlooking indicator - is above 50, indicating expansion.

Data show that China's imports from Thailand have rebounded faster than those from elsewhere, with machinery and electronics accounting for nearly 60 per cent of total Thai exports to China and Hong Kong.

As of May, total Thai exports of machinery and electronics had picked up from their trough in January by 27 per cent.

The basic-materials sector - notably iron, steel and cement - will benefit most from fiscal stimulus. The bulk of the Bt1.4trillion second stimulus package is for transportation and logistics (40 per cent) and irrigation (17 per cent).

While the fiscal stimulus will provide a welcome boost to the economy, the long lead time associated with this kind of spending, coupled with the usual implementation delays, suggests that the magnitude of the actual stimulus in 2009 and 2010 could be less than commonly expected.

The tourism sector is likely to lag the recovery and remains the largest downside risk for the economy in light of its linkage to the overall economy and its large employment footprint.

While we expect tourist arrivals and revenue to drop by as much as about 15 and 20 per cent this, respectively, growth in 2010 is unlikely to grow by enough to take us back to pre-downturn levels.

We expect tourism arrivals and revenue to grow by 6 per cent and 12 per cent in 2010, respectively, due largely to the slow economic recovery in many of Thailand's major tourist markets.

Sectors that cater to lowerincome workers will lag. While hardasset prices have generally held up well in Thailand, this downturn has hit lowerincome workers harder. Sectors hit by the export and tourism slowdown tend to pay lower wages on average, and workers in these sectors have also suffered declines in their wages.

Thailand's economy will recover, but it is likely to recover to a new and lower growth path than before. Why? Thailand has relied substantially and increasingly on exports. But going forward, exports will no longer be as effective an engine of growth as before.

The US household will no longer be able to play its longstarring role as the world's consumer of last resort, and the global econoฌmy has yet to find an effective replacement. China alone will not be able to do it.

Without significant structural change to build up domestic demand on a sustainable basis by improving wage and productivity growth, Thailand will end up relying on export demand by default yet again.

-- The Nation 2009-07-22

[glegolo]

When will the Thai economy recover? The short answer is "not soon",

---------------------------------------------------------------------

I am maybe a bad man, but I rather see my homecountry´s economy to recover first, so that my money will be worth more than now!!

It is shit to loose about 15.ooo baht/month compared with july 2008 and now!!!

Glegolo

[Naam]

I am maybe a bad man, but I rather see my homecountry´s economy to recover first, so that my money will be worth more than now!! It is shit to loose about 15.ooo baht/month compared with july 2008 and now!!!

nobody forces you to live in Thailand. why not return to the paradise of your homecountry?

[verydumbubba]

Yeah really!! Go home Hombre! Other than ya miserable whine - nothing.

One wonders what/how China, as the largest Asia engine, will do to promote growth.

Its internal growth engine has some very serious issues, and might not be sustainable for long.

It is also interesting to note that after the BRIC conflab, China is in favor of a strong Dollar - again!!

Effectively we lost 10 years of lard - simply hope none of the heavies take their eye off the ball.

Good news is the Federal Reserve might put a short leash on all the Wall St Madoffs soon.

ubba

[glegolo]

I am maybe a bad man, but I rather see my homecountry´s economy to recover first, so that my money will be worth more than now!! It is shit to loose about 15.ooo baht/month compared with july 2008 and now!!!

nobody forces you to live in Thailand. why not return to the paradise of your homecountry?

----------------------------------------

Interesting angle my friend!! rather jump on the guy that wants the bath to weaken down to the level it was before.

Than wish for something else constructive...

Thanks

glegolo

[mallen]

It might be selfish to hope other countries economies recover before Thailands and the Bhat loses value against other curriences, but, it would be one of the best things that could happen to the Thai economy.

Viz :- Thai exports would be cheaper = more demand for Thai products and more employment.

Cheaper holidays for overseas visitors = more visitors to Thailand.

I do not understand why the Thai government does not de-value the Bhat.

Can anybody explain why the Bhat is not being de-valued ?

Thanks

Mallen

[verydumbubba]

The short answer is that it is only a ratio, nothing else, and I agree with with most economists & you, vis-a-vis a 'weak' currency as it induces exports & tourism, both are flat right now, so the upside is minimal. It would also escalate deflation, place wage pressures on a weakened currency, and make imports - oil, machinery, etc - more expensive.

To this end we are starting to see real improvements in the USA in housing, banks, autos, etc, which sentiments

hopefully have a knockon effect on other economies, soon.

Bubba

[Naam]

I am maybe a bad man, but I rather see my homecountry´s economy to recover first, so that my money will be worth more than now!! It is shit to loose about 15.ooo baht/month compared with july 2008 and now!!!

nobody forces you to live in Thailand. why not return to the paradise of your homecountry?

----------------------------------------

Interesting angle my friend!! rather jump on the guy that wants the bath to weaken down to the level it was before.

Than wish for something else constructive... Thanks

your angle, respectively assumption, that a stronger economy of your home country will cause a strengthening of its currency vs. THB is naive and proves that you haven't done your homework in this respect. although you did not mention your country i assume you are either an Aussie or a Kiwi.

[LaoPo]

Yeah really!! Go home Hombre! Other than ya miserable whine - nothing.

One wonders what/how China, as the largest Asia engine, will do to promote growth.

Its internal growth engine has some very serious issues, and might not be sustainable for long.

It is also interesting to note that after the BRIC conflab, China is in favor of a strong Dollar - again!!

Effectively we lost 10 years of lard - simply hope none of the heavies take their eye off the ball.

Good news is the Federal Reserve might put a short leash on all the Wall St Madoffs soon.

ubba

Really ?

.....Is that why Morgan Stanley raises it's bonuses and "has set aside an unprecedented 72 per cent of its revenues from the past three months to pay bonuses for staff?"

We're talking: "Compensation expenses were $3.9bn in the three months to 30 June, compared to $3.1bn in the same period last year, despite the fact that net revenues dropped to $5.4bn from $6.1bn"

And is your "good news" also related to Morgan Stanley's raise in salaries "of mid-level staff called managing director from $300,000 to $400,000, in common with some other banks who are trying to make bonuses a less important part of overall pay."

Wall Street didn't learn anything...NO...they just continue as if nothing happened.

The FED putting a short leash ?

Morgan Stanley raises bonuses amid Wall Street 'war for staff'

http://www.independent.co.uk/news/business...ff-1757507.html

LaoPo

[glegolo]

I am maybe a bad man, but I rather see my homecountry´s economy to recover first, so that my money will be worth more than now!! It is shit to loose about 15.ooo baht/month compared with july 2008 and now!!!

nobody forces you to live in Thailand. why not return to the paradise of your homecountry?

----------------------------------------

Interesting angle my friend!! rather jump on the guy that wants the bath to weaken down to the level it was before.

Than wish for something else constructive... Thanks

your angle, respectively assumption, that a stronger economy of your home country will cause a strengthening of its currency vs. THB is naive and proves that you haven't done your homework in this respect. although you did not mention your country i assume you are either an Aussie or a Kiwi.

------------------------------------

Naam. your assumption is totally wrong, but you are not a such bad guy after all. But homework??? If my country (Sweden) economy get stronger, their rate of their currency will be stronger, and that my friend causes a difference IN Sweden between the two currencies in favour of the Swedish crona...

I do not need any more homework about that.

Glegolo

Edited July 24, 2009 by glegolo

[Naam]

Naam. your assumption is totally wrong, but you are not a such bad guy after all. But homework??? If my country (Sweden) economy get stronger, their rate of their currency will be stronger, and that my friend causes a difference IN Sweden between the two currencies in favour of the Swedish crona...

I do not need any more homework about that.

Glegolo

i think quite some homework is required Glegolo. as i already mentioned it's your assumption that is "totally wrong"

[chiangmaibruce]

And this news just in today. Both articles about the same ADB report but seeingly rather different findings... one for the glass half full crew and one for the glass half-empty team ... choose which-ever view suits best ...

ADB: Thai recovery to be tepid for years -Export dependence slows any rebound

Writer: PARISTA YUTHAMANOP (Bangkok Post)Published: 24/07/2009 at 12:00 AM The Thai economy has begun to recover but growth will be anaemic over the next several years, the Asian Development Bank says...

OR

Thailand likely heads for rapid turnaround : ADB

By Wichit Chaitrong

The Nation

Published on July 24, 2009

The Asian Development Bank yesterday expressed optimism that Thailand's economy was heading for a speedy turnaround, while Prime Minister Abhisit Vejjajiva voiced confidence that growth would surely return late this year, thanks to the second economic stimulus package.

[thaihome]

That’s why they’re called economist, witch doctor was already taken.

TH

[glegolo]

Naam. your assumption is totally wrong, but you are not a such bad guy after all. But homework??? If my country (Sweden) economy get stronger, their rate of their currency will be stronger, and that my friend causes a difference IN Sweden between the two currencies in favour of the Swedish crona...

I do not need any more homework about that.

Glegolo

i think quite some homework is required Glegolo. as i already mentioned it's your assumption that is "totally wrong"

-------------------------------------------

What????? sober up Naam..... you assume I was an Aussie or Kiwi, I am not, you red it .. I am Swedish.....

I can repeat it for you again.... If Swedens economy get stronger in Sweden, the "crona" will growe stronger towards the

Thai bath.....

Glegolo

[george]

Thailand Revises Economic Forecast Downward

http://www.thaivisa.com/forum/Thailand-Rev...st-t283178.html

[ScienceGuy]

I'm giving it 2 years. The US and Europe haven't even started their recovery. Unemployment is just now peaking. Once the recovery is underway elsewhere, all the Asian countries will fight for export dollars by lowering their currencies. So probably this time next year, the baht will go down and the economy will worsen due to the reasons other posters have mentioned. Then it will take another year after that to make up in exports what was lost in baht devaluation. They could just devalue now and get it over with but...

[Naam]

I'm giving it 2 years. The US and Europe haven't even started their recovery. Unemployment is just now peaking. Once the recovery is underway elsewhere, all the Asian countries will fight for export dollars by lowering their currencies. So probably this time next year, the baht will go down and the economy will worsen due to the reasons other posters have mentioned. Then it will take another year after that to make up in exports what was lost in baht devaluation. They could just devalue now and get it over with but...

...they refuse to make your wet dreams come true

[flying]

I'm giving it 2 years. The US and Europe haven't even started their recovery. Unemployment is just now peaking.

Just curious what make you think so?

Peaking would indicate it has stopped rising.

I have no idea if it will end in 2 years or 2 months but I know it has not peaked.

slowed yes but also their numbers are softer than reality

Here in this part of the US we are well over 10% now

Year 2009

Jan =7.6

Feb =8.1

Mar=8.5

Apr=8.9

May=9.4

Jun=9.5

Edited July 26, 2009 by flying

[ScienceGuy]

I'm giving it 2 years. The US and Europe haven't even started their recovery. Unemployment is just now peaking.

Just curious what make you think so?

Peaking would indicate it has stopped rising.

I have no idea if it will end in 2 years or 2 months but I know it has not peaked.

slowed yes but also their numbers are softer than reality

Here in this part of the US we are well over 10% now

Year 2009

Jan =7.6

Feb =8.1

Mar=8.5

Apr=8.9

May=9.4

Jun=9.5

I believe it's peaked because there simply aren't many people left that can be laid off and many companies have stopped losing money. The stimulus money should start having some effects throughout the rest of the year as well(jobs). The net result will be either: a.)countering any more job losses or b.)decreasing unemployment.

Given the paradigm shift of the US to clean energy, transparent government, social medicine, education reform, fiscal reform, and hopefully an end to the war of terror, there's a strong possibility the US could emerge from the depression stronger, leaner, and more advanced than other nations(sort of like Japan).

I'm guessing mid-2010 because the housing "correction" is still underway and it will take at least 1 year for housing to reach affordable prices, for new buyers to come onto the market, and for banks to start lending correctly. I do think the worst is over because most of the defaults have already happened, the insolvent banks are gone or nationalized, etc.

There are still a few potential problems that could prolong the depression: deflation and rising tax-payer burdens. Oil volatility may play a role but won't be as bad if people switch to electric cars sooner rather than later. I don't know what they're going to do about the national debt. Sooner or later they'll have to deflate the dollar to account for the extra money in circulation.

[ScienceGuy]

Oh and one more thing, I believe Thailand has a real-estate bubble and it's worse in Bangkok, Phuket, Pattaya, and Chiang Mai. I don't know when it will burst but it will probably be about the same time the banks here start failing. The US bubble went on and on for almost 10 years.

[flying]

I believe it's peaked because there simply aren't many people left that can be laid off and many companies have stopped losing money. The stimulus money should start having some effects throughout the rest of the year as well(jobs). The net result will be either: a.)countering any more job losses or b.)decreasing unemployment.

Given the paradigm shift of the US to clean energy, transparent government, social medicine, education reform, fiscal reform, and hopefully an end to the war of terror, there's a strong possibility the US could emerge from the depression stronger, leaner, and more advanced than other nations(sort of like Japan).

I'm guessing mid-2010 because the housing "correction" is still underway and it will take at least 1 year for housing to reach affordable prices, for new buyers to come onto the market, and for banks to start lending correctly. I do think the worst is over because most of the defaults have already happened, the insolvent banks are gone or nationalized, etc.

There are still a few potential problems that could prolong the depression: deflation and rising tax-payer burdens. Oil volatility may play a role but won't be as bad if people switch to electric cars sooner rather than later. I don't know what they're going to do about the national debt. Sooner or later they'll have to deflate the dollar to account for the extra money in circulation.

Not sure if your still in the USA

I am back here now & it is not slowing at all.

Folks not only still losing jobs but those with jobs are being asked to accept cut backs from 10-20% per week in less hours. Most union based workers from teachers to govt workers are having the same as their contracts come up for renewal. Along with lay-offs more cuts in pay. I know many have exhausted their 26 weeks & automatically got 33 more in UE benefits.

That only happens during times of high UE. Many more jobs to be lost here in both retail & tourism. Building trades are already dead but could drop further if the small amounts of remodeling & commercial repairs continue to slow.

The end of the supposed war on terror is nothing more than a giant vacuum for money. As for coming out of it leaner? I guess that is a sure bet....but maybe we are not thinking along the same lines there.

I am also guessing 2010 but unlike you I see it as the beginning of the harder not softer times. Hate to be a wet blanket but I am a building contractor & can safely say that at least in this part of the USA it will take much much longer than a year to clear the glut of over speced & foreclosed houses.These will not even start to evaporate till the prices drop to a point that the monthly payment is less than what they can be rented for. Even then I would not want to be a landlord during times of disgruntled evicted/foreclosed upon folks looking for housing.

I agree with you about the problems ahead with tax payer burdens. No matter how much they would like to tax it will be hard to do if folks have no income.

I am not worried about oil volatility at all & think it is a storm in a tea cup.

National Debt?....Oh boy

Edited July 26, 2009 by flying

[AlexLah]

Quote:

Given the paradigm shift of the US to clean energy, transparent government, social medicine, education reform, fiscal reform, and hopefully an end to the war of terror, there's a strong possibility the US could emerge from the depression stronger, leaner, and more advanced than other nations(sort of like Japan).

Have you considered working as a stand up comedian?

[midas]

I believe it's peaked because there simply aren't many people left that can be laid off and many companies have stopped losing money. The stimulus money should start having some effects throughout the rest of the year as well(jobs). The net result will be either: a.)countering any more job losses or b.)decreasing unemployment.

what makes you assume the job lay offs will necessarily stop at 10 percent? And where do you see the reemployment opportunities

are ( forgetting about the estimated extra 300,000 that will lose their jobs because of the new minimum wage standards introduced last week )

[sukeroku]

Quote:

Given the paradigm shift of the US to clean energy, transparent government, social medicine, education reform, fiscal reform, and hopefully an end to the war of terror, there's a strong possibility the US could emerge from the depression stronger, leaner, and more advanced than other nations(sort of like Japan).

Have you considered working as a stand up comedian?

That is a pretty funny viewpoint! Should be "given the paradigm shift from the Bush administration's obsession with an unwinable war in Iraq to Obama's obsession with an unwinable war in Afghanistan, we should expect the US to continue its deterioration.

[mark5335]

Naam. your assumption is totally wrong, but you are not a such bad guy after all. But homework??? If my country (Sweden) economy get stronger, their rate of their currency will be stronger, and that my friend causes a difference IN Sweden between the two currencies in favour of the Swedish crona...

I do not need any more homework about that.

Glegolo

i think quite some homework is required Glegolo. as i already mentioned it's your assumption that is "totally wrong"

-------------------------------------------

What????? sober up Naam..... you assume I was an Aussie or Kiwi, I am not, you red it .. I am Swedish.....

I can repeat it for you again.... If Swedens economy get stronger in Sweden, the "crona" will growe stronger towards the

Thai bath.....

Glegolo

The Thailand current account surplus and foreign reserves remain relatively strong and are contributing to the stability of the currency, particularly when compared with the anglo-western economies.

[Kaks]

I am maybe a bad man, but I rather see my homecountry´s economy to recover first, so that my money will be worth more than now!! It is shit to loose about 15.ooo baht/month compared with july 2008 and now!!!

nobody forces you to live in Thailand. why not return to the paradise of your homecountry?

The typical response that is present on every discussion on every topic in this forum.

[ScienceGuy]

I believe it's peaked because there simply aren't many people left that can be laid off and many companies have stopped losing money. The stimulus money should start having some effects throughout the rest of the year as well(jobs). The net result will be either: a.)countering any more job losses or b.)decreasing unemployment.

Given the paradigm shift of the US to clean energy, transparent government, social medicine, education reform, fiscal reform, and hopefully an end to the war of terror, there's a strong possibility the US could emerge from the depression stronger, leaner, and more advanced than other nations(sort of like Japan).

I'm guessing mid-2010 because the housing "correction" is still underway and it will take at least 1 year for housing to reach affordable prices, for new buyers to come onto the market, and for banks to start lending correctly. I do think the worst is over because most of the defaults have already happened, the insolvent banks are gone or nationalized, etc.

There are still a few potential problems that could prolong the depression: deflation and rising tax-payer burdens. Oil volatility may play a role but won't be as bad if people switch to electric cars sooner rather than later. I don't know what they're going to do about the national debt. Sooner or later they'll have to deflate the dollar to account for the extra money in circulation.

Not sure if your still in the USA

I am back here now & it is not slowing at all.

Folks not only still losing jobs but those with jobs are being asked to accept cut backs from 10-20% per week in less hours. Most union based workers from teachers to govt workers are having the same as their contracts come up for renewal. Along with lay-offs more cuts in pay. I know many have exhausted their 26 weeks & automatically got 33 more in UE benefits.

That only happens during times of high UE. Many more jobs to be lost here in both retail & tourism. Building trades are already dead but could drop further if the small amounts of remodeling & commercial repairs continue to slow.

The end of the supposed war on terror is nothing more than a giant vacuum for money. As for coming out of it leaner? I guess that is a sure bet....but maybe we are not thinking along the same lines there.

I am also guessing 2010 but unlike you I see it as the beginning of the harder not softer times. Hate to be a wet blanket but I am a building contractor & can safely say that at least in this part of the USA it will take much much longer than a year to clear the glut of over speced & foreclosed houses.These will not even start to evaporate till the prices drop to a point that the monthly payment is less than what they can be rented for. Even then I would not want to be a landlord during times of disgruntled evicted/foreclosed upon folks looking for housing.

I agree with you about the problems ahead with tax payer burdens. No matter how much they would like to tax it will be hard to do if folks have no income.

I am not worried about oil volatility at all & think it is a storm in a tea cup.

National Debt?....Oh boy

I'm talking about the US as a whole. I realize there are better and worse areas. Some cities have lost entire industries and may take many years to even resettle or re-employ those people. If you consider the big layoffs, like 30,000 people at a time, those have already happened. The only reason for this to continue would be if the companies are insolvent... Things that make ya go hmmm

[ScienceGuy]

Quote:

Given the paradigm shift of the US to clean energy, transparent government, social medicine, education reform, fiscal reform, and hopefully an end to the war of terror, there's a strong possibility the US could emerge from the depression stronger, leaner, and more advanced than other nations(sort of like Japan).

Have you considered working as a stand up comedian?

Yes, but teaching pays more and requires less planning.

[AlexLah]

I dunno about others here in Thailand, but the last 4-5 weeks I notice a big increase in commercial transport on the roads.

Other stuff like car dealers being stocked again with new cars, people in the big malls with their carts fully loaded with food and big items like flatscreens washing machines and that kinda stuff. There are no bank failures as I know off and it seems massive lay offs have decreased (maybe not reported).

House and condo prices seem stable or just a little down, new real estate being started to build and finishing existing, traffic jams are still as bad as they were 2 years ago.

The previous company I worked for the sales are up compared with last year. Some of the restaurants I visit still full every day.

So maybe the Thai economy was not that badly affected apart from the tourist sector and a few others like the automobile industry?

You know Thailand is still producing a lot of stuff and does not rely too much on "financial services".

[AlexLah]

I dunno about others here in Thailand, but the last 4-5 weeks I notice a big increase in commercial transport on the roads.

Other stuff like car dealers being stocked again with new cars, people in the big malls with their carts fully loaded with food and big items like flatscreens washing machines and that kinda stuff. There are no bank failures as I know off and it seems massive lay offs have decreased (maybe not reported).

House and condo prices seem stable or just a little down, new real estate being started to build and finishing existing, traffic jams are still as bad as they were 2 years ago.

The previous company I worked for the sales are up compared with last year. Some of the restaurants I visit still full every day.

So maybe the Thai economy was not that badly affected apart from the tourist sector and a few others like the automobile industry?

You know Thailand is still producing a lot of stuff and does not rely too much on "financial services".