Positives, Negatives To Thai Economy Expected To Balance Out

[webfact]

Positives, negatives to Thai economy expected to balance out

By Wichit Chaitrong

The Nation

While some industries will suffer, others will reap a windfall from the biggest earthquake and tsunami in Japanese history, leaving the net effect on the Thai economy limited to a possible shaving of 0.1 percentage point off growth this year, Naris Chaiyasoot, director-general of the Fiscal Policy Office (FP0), said yesterday.

However, Finance Minister Korn Chatikavanij said: "It is too early to judge the net effect on our economy due to both positive and negative impacts."

Soraphol Tulayasathien, director of the FPO's Economic Stability Analysis Division, played down the actual impact on gross domestic product from the disaster in Japan.

Based on a preliminary assessment, "its effect on our economy may not be much because of the possibility of both positive and negative impacts", he said.

Japanese firms may delay some investment projects here and some industries such as automobiles could be hit, while Japanese consumers may spend less, which could set back Thai exports, he said.

Japan is Thailand's second-largest foreign customer after China.

However, Japan will need to import building materials to reconstruct devastated northeastern coastal cities and buy more food for people.

The tourism industry will not feel much of a difference, as Thailand now depends on Chinese and European tourists.

"Japan is not a locomotive of the world economy now. If its economy slows down, that will not give us much trouble," Soraphol said. Thailand relies much more on the Chinese economy.

A weaker baht is likely as Japanese companies remit more funds back to Japan.

"Usually, Japanese firms repatriate profits back to Japan in March, the closing month of Japan's accounting year, but this year they may send more funds back home because of the disaster," he said.

The Bank of Japan is injecting ฅ15 trillion (Bt5.5 trillion) to stabilise financial markets, but that may not lead to inflation because Japan still faces deflationary pressure, he said.

The FPO is examining four issues that could affect Thailand - trade, investment, tourism, and capital flows, he said.

Finance permanent secretary Areepong Bhoocha-oom said he believed that Japanese firms would not run into cash-flow problems, as they usually use their own capital for investment.

The private sector also expects limited impacts from the earthquake disaster in Japan on the economy and exports.

Thailand's shipments to Japan could remain unchanged despite the temporary disruption of trade, as Japan's higher demand for consumer goods could offset the drop in other goods, Kasikorn Research Centre said.

The research house estimates that exports to Japan will expand 10-15 per cent and is maintaining its estimate of Thailand's economic growth this year.

SCB Economic Intelligence Centre expects limited impact on exports because of the Japanese government's likely acceleration of restoration of utility systems, residences and industries.

Thailand could see orders surge for food, construction materials and machinery as Japan seeks to repair the tremendous damage, KResearch said.

The disaster may disrupt exports and imports to Japan, especially of automobiles and electronic parts, the two biggest categories, for a short period because of the temporary closures of ports and airports, both research houses said.

However, after the disaster, demand for automobiles, electronics and electric products may rise as such items damaged in the disaster are replaced. Automotive and electronic products amount to 37 per cent of Thai exports to Japan, KResearch said.

While KResearch expects no significant slowdown in Japanese investment, as Japanese companies follow a long-term strategy, SCB urges the public sector to launch stimulus measures for domestic investment to replace a possible decline in Japanese investment.

Tourism in Thailand may suffer somewhat from a drop-off in Japanese tourists, both research houses said.

The yen will likely strengthen, as Japanese companies might bring money home and Japan might sell its financial assets overseas to pay for the colossal restoration bill, possibly pressuring the US dollar and the baht, KResearch said.

-- The Nation 2011-03-15

[timekeeper]

easy:

positives-Korn and the democrats in government

negatives- the red revolutionary rabble

[bangon04]

Just reading the headline gives me a warm fuzzy feeling of gratitude that I live in such a well-balanced country and everything in the economy is actually OK so I don't need to worry. Put this on the "Good News" pile.