Thai Economy In 2011 Projected To Grow At Lowest Level In Asia: World Bank

[webfact]

Thai economy in 2011 projected to grow at lowest level in Asia: World Bank

BANGKOK, Jan 13 – Thailand’s economy in 2011 is projected to expand by only 3.2 per cent, the lowest level in Asia in the past five years, dropping from last year’s economy, which grew by 7.5 per cent, Frederico Gil Sander, World Bank economist in Bangkok said on Thursday.

According to the World Bank’s latest ‘Global Economic Prospects 2011,’ Mr Sander said that last year’s Thai economic growth marked the highest level in Asia but the Gross Domestic Product (GDP) in the third and fourth quarters of 2010 gradually declined.

Meanwhile, the country’s tourism sector has not yet fully recovered due to the small number of tourist arrivals from US and Europe.

Owing to the economy in the last two quarters of 2010 and slow recovery of tourism industry, the World Bank forecast that the GDP in 2011 is unlikely to expand by 5 per cent in accordance with its potential growth rate, but will slow to 3.2 per cent, the lowest economic growth in Asian countries.

Mr Sander also said last year has seen the large and most volatile foreign capital flows. However, he expected that the US government will apply measures related to capital injection to boost its economy for gradual recovery. This will lead to a decline in foreign capital inflows in contrast with last year's surging capital flows and that will help stabilise currency exchange rates across Asia as well as for the Thai baht.

Regarding Thailand's political uncertainties persisting for years, the World Bank economist said the factor does not markedly impact on investor confidence. On the contrary, this year’s planned general election will likely encourage domestic consumption and the government’s ‘Pracha Wiwat’ (People’s Agenda) welfare scheme will stimulate domestic spending as well.

He also pointed out that a risk to Thai economy in 2011 is European debt crisis which remains unstable and fragile, adding that if the situation worsens, it will cause negative impact on Thailand’s economy.

Moreover, faster-than-expected high inflation rate should be concerned. If the central bank’s Monetary Policy Committee raises the policy interest rate too quickly, it may cause a stagnation in domestic demand and later may affect the overall economy.

However, if the political situation is more stable or otherwise sends a positive signal, the World Bank may raise Thailand’s economic growth in 2012 to 4.2 per cent, Mr Sander explained.

In addition, the World Bank’s latest ‘Global Economic Prospects 2011' also predicted that China's economy, the biggest emerging economy, is to grow 8.7 per cent this year, followed by Laos at 7.5 per cent, Mongolia at 7 per cent and Vietnam 6.5 per cent. (MCOT online news)

-- TNA 2011-01-13

[MaiChai]

Reality is Thailand is expensive for sourcing goods compared to Vietnam, China, Indonesia and even Malaysia. Also Vietnam and China are much more customer focused and interested in doing business. Malaysia, Indonesia and Vietnam have their own cheap oil, which affects the cost of everything. Only unique thing about Thailand is foodstuffs, however countries like Vietnam are undercutting here (eg rice/coffee/fresh vegetables). I believe Thailand has had an advantage so far in trading with the rest of the world because it has modernised earlier, but its going to have a hard time competing with cheaper neighbours.

Edited January 13, 2011 by MaiChai

[Pib]

Good lord!!! Has the Finance Ministry or Tourism Authority of Thailand (TAT) seen this article...it definitely does not have the positive spin that a similar government release would have. Oh, wait, I know why, it's just reporting the unbiased realities & projections versus political spin.

[ronz28]

Not to worry, Thailand's exchange traded fund THD has had a great run from $20 to $67+ since March 2008 even with all the unrest. Thailand's sovereign debt credit rating at aa is also very strong relative to the rest of the world.

http://www.cmavision.com/images/uploads/docs/CMA_Global_Sovereign_Credit_Risk_Report_Q4_2010.pdf

[roamer]

Reality is Thailand is expensive for sourcing goods compared to Vietnam, China, Indonesia and even Malaysia. Also Vietnam and China are much more customer focused and interested in doing business. Malaysia, Indonesia and Vietnam have their own cheap oil, which affects the cost of everything. Only unique thing about Thailand is foodstuffs, however countries like Vietnam are undercutting here (eg rice/coffee/fresh vegetables). I believe Thailand has had an advantage so far in trading with the rest of the world because it has modernised earlier, but its going to have a hard time competing with cheaper neighbours.

Agree entirely, bottom line is that for many companies that do business here there are now more players in the market. The great pity of this is that Thailand has not used its new found wealth to have invested in its future by improving its education system for example, or protected its tourist industry by curbing the development or corruption that plague it. IMHO the speed of Thailand's economic rise might only be matched by the gathering momentum of its descent.

[webfact]

Slowest growth among peer countries predicted for Thailand

By WICHIT CHAITRONG

THE NATION

The World Bank has forecast that Thailand's economy will grow by 3.2 per cent this year and by 4.2 per cent in 2012 - the slowest growth among its peer countries in Southeast Asia.

It said recovery of Thai economy was strong last year, with a real gross-domestic-product (GDP) growth rate estimated at 7.5 per cent year on year - the highest rate among its peers.

However, the bank's lead economist for Southeast Asia Mathew Verghis said the effect of last year's higher base, combined with a projection of slower growth arising from the growth rate in the third and fourth quarters of 2010, led to the low forecast for 2011.

The bank believes Indonesia will achieve economic growth of 6.2 per cent this year, accelerating from an estimated rate of 5.9 per cent in 2010.

Malaysia is expected to grow by 4.8 per cent, compared with 7.4 per cent last year, and the bank says the Philippine economy should grow by 5 per cent this year, decelerating from 6.8 per cent last year.

The World Bank's forecast of 4.2-per-cent growth in Thailand in 2012 still leaves the country with the slowest economic-growth rate compared to Indonesia, Malaysia and the Philippines, the economies of which it forecasts will grow by 6.5 per cent, 5.7 per cent and 5.4 per cent respectively in 2012.

It said Thailand's "small and relatively open economy" depended heavily on export performance, and fragile recovery in advanced economies had adversely affected the country.

Investors still see political uncertainty remaining, as it has continued over the past few years.

"We do not expect a dramatic improvement or deterioration," Verghis said in response to questions on the political factor. The World Bank's economist in Bangkok, Frederico Gil Sander, said that if there was a large change either way, the bank would revise its projections for the Thai economy upward or downward.

An early election this year and government spending under nine recent measures should boost domestic demand, Sander said.

The two economists did not comment on whether the government spending - branded by some critics as populist - would become a threat to fiscal sustainability in the future. Verghis said the current level of Thai public debt - 42 per cent of GDP - was manageable, and components of the debt were largely baht-denominated and not foreign debts.

WORLD ECONOMY

The World Bank's Global Economic Prospects 2011 report, released yesterday in the United States, said the world economy was moving from a post-crisis bounce-back phase of recovery to slower, but still solid, growth this year and next, with developing countries contributing almost half of global growth.

The bank estimates that global GDP, which expanded by 3.9 per cent last year, will slow to 3.3-per-cent growth this year before reaching 3.6 per cent in 2012.

"On the upside, strong developing-country domestic-demand growth is leading the world economy, yet persistent financial-sector problems in some high-income countries are still a threat to growth and require urgent policy actions," said the World Bank's chief economist Justin Yifu Lin.

Contributing to the economic-outlook debate, Citi Asia Pacific said it believed there would be only slow recovery of the world economy this year because of concerns over fiscal issues, currency volatility, political uncertainty and potential inflationary pressure.

"As we look into 2011, the issues that dominated the economic landscape last year are probably going to continue resonating into the New Year. Uneven growth in the global economy, deflation and inflation debates and festering fears of currency and trade wars are likely to be punctuated by bouts of heightened political tension," said Citi Asia Pacific director and senior investment strategist for wealth management Haren Shah.

Some caution is warranted because the restructuring of global imbalances is likely to be a difficult process, fraught with risk, he said.

Global equity markets could be volatile as liquidity from developed economies continues to flood into emerging markets.

Shah said the first half of 2011 was likely to be dominated by the second round of the US quantitative easing, US political distractions and emerging markets' efforts to contain asset inflation.

"Emerging-market economies are expected to continue to perform well, with many, especially those in BRIC countries [brazil, Russia, India and China] now focused on driving growth from domestic consumption. Tactically, we think China's growth remains attractive and this could be best played through Hong Kong's equity market," he said.

Commodity-based markets such as Brazil and Russia could also perform better on strong commodity prices. Brazil is a leading agricultural producer and exporter, while Russia is one of the cheapest valuations among emerging markets and its equity market could be supported by rising oil prices, he said.

-- The Nation 2011-01-14

[007]

Congratulations - again, Thailand is number 1!! :lol:

So, how about making Thailand 'The Hub for...'

Erm, no!!

Edited January 14, 2011 by 007

[007]

The great pity of this is that Thailand has not used its new found wealth to have invested in its future by improving its education system for example, or protected its tourist industry by curbing the development or corruption that plague it. IMHO the speed of Thailand's economic rise might only be matched by the gathering momentum of its descent.

And the infrastructure.

[huskerpr]

Who didn't see this coming. Mafia corruption, drugs and inflated hotel prices, the devalue of the baht, why come to Thailand. Its not paradise any longer. Laws being made that I can stay home in AMerica and get the same thing for my dollar. Its no longer a happy fun place, but a greedy, filthy place ran by THUGs.

[BlackJack]

rule number 1 is

never forget why you came to THailand !!

[asiawatcher]

He also pointed out that a risk to Thai economy in 2011 is European debt crisis which remains unstable and fragile, adding that if the situation worsens, it will cause negative impact on Thailand’s economy.

If the Euro fails, which many believe will happen, Thailand will not even hit 3.2% growth.

[mommysboy]

He also pointed out that a risk to Thai economy in 2011 is European debt crisis which remains unstable and fragile, adding that if the situation worsens, it will cause negative impact on Thailand's economy.

If the Euro fails, which many believe will happen, Thailand will not even hit 3.2% growth.

Yes and that's just one factor, there are others too, both internal and external.

3.2% is enough to start a crisis, it's pitfully weak for an emerging nation.