Bleak Outlook For Thai Economy Due To Risk Factors

[george]

Bleak outlook for Thai economy due to many risk factors

BANGKOK: -- The outlook for the Thai economy next year is not good, according to the kingdom's top economic think tank.

2006 is projected to be plagued with many risky variables -- the potential spread of bird flu, persistent violence in the south, inflation, energy prices and rising interest rates, according to Dr. Chalongpob Susangkarn, President of the Thailand Development Research Institute (TDRI).

In his assessment of the 2006 economic outlook, the leader of Thailand's respected think-tank said the main variable to affect the economy is the cost of energy -- which is likely to soar well into next year.

Inflation is the second-ranking threat, he said. It is rising dramatically, with September figures at 6 per cent, and any further rise in energy prices will further speed inflation.

TDRI projects overall inflation for 2006 at 4.5 per cent maximum, according to Dr. Chalongpob.

Interest rates remain a medium-to-high risk factor for the Thai economy next year, he said.

The Bank of Thailand (BoT) has accelerated the pace of increasing the key interest 14-day REPO rate, he explained. In the last three months long-term interest rates for bonds have risen as a result. Thais will need to manage the long-term interest burdens well, he said.

The TDRI President also expressed concern regarding the potential outbreak of bird flu as a global pandemic, as such a scenario will surely hurt Thailand's tourism industry, which is turn will have

serious impact on other sectors.

Violence in the southern border region remains another factor to watch as there's no end in sight as to when violence would end. This has an impact on investor confidence.

On a brighter note, export faces minimal risk and is projected to grow at 10 per cent. Dr. Chalongpob said he is unsure that the 20 per cent export growth target of the government can be attainable given the hugely competitive nature of the global market and possible economic slowdown in Thailand's trading partners.

Meanwhile, Thailand's current account deficit should improve as the government has scaled down investment plans for the mega-infrastructure development projects. However, environment, inflation and the deficit should be the key factors taken into account when planning these projects, he said.

--TNA 2005-10-30

[ilyushin]

It will only get worse before it gets better! Where are Doc Tox's comments or assessments?

[bannork]

Could someone please enlighten me as to the difference between core inflation and headline inflation, there was an article in The Nation last Thursday mentioning these 2 terms but without further explanation I was left feeling bewildered.

Thank you in advance.

[qwertyuiop]

Could someone please enlighten me as to the difference between core inflation and headline inflation, there was an article in The Nation last Thursday mentioning these 2 terms but without further explanation I was left feeling bewildered.

Thank you in advance.

<{POST_SNAPBACK}>

Here is my understanding. I hope it makes sense

Inlation is measured by comparing the price of a basket of goods and services over time.

Headline inflation is the rate most typically used and discussed. It is the change in the total basket.

Core inflation is the rate when the more volatile goods/services are omitted from the calculation.

Usually food/energy.

Economists argue over which is the measure which truly reflects the inflation picture

[bannork]

Could someone please enlighten me as to the difference between core inflation and headline inflation, there was an article in The Nation last Thursday mentioning these 2 terms but without further explanation I was left feeling bewildered.

Thank you in advance.

<{POST_SNAPBACK}>

Here is my understanding. I hope it makes sense

Inlation is measured by comparing the price of a basket of goods and services over time.

Headline inflation is the rate most typically used and discussed. It is the change in the total basket.

Core inflation is the rate when the more volatile goods/services are omitted from the calculation.

Usually food/energy.

Economists argue over which is the measure which truly reflects the inflation picture

<{POST_SNAPBACK}>

Thanks for that qw....., interestingly the paper quoted the BOT as forecasting headline inflation at 4.5-5 percent whilst core inflation was only 1.5-2 percent

Edited October 30, 2005 by bannork

[ray23]

Could someone please enlighten me as to the difference between core inflation and headline inflation, there was an article in The Nation last Thursday mentioning these 2 terms but without further explanation I was left feeling bewildered.

Thank you in advance.

<{POST_SNAPBACK}>

Here is my understanding. I hope it makes sense

Inlation is measured by comparing the price of a basket of goods and services over time.

Headline inflation is the rate most typically used and discussed. It is the change in the total basket.

Core inflation is the rate when the more volatile goods/services are omitted from the calculation.

Usually food/energy.

Economists argue over which is the measure which truly reflects the inflation picture

<{POST_SNAPBACK}>

Thanks for that qw....., interestingly the paper quoted the BOT as forecasting headline inflation at 4.5-5 percent whilst core inflation was only 1.5-2 percent

<{POST_SNAPBACK}>

I'm currently reading Thailands Boom to Bust, not far enough in to really understand yet. But even at this stage I do see somethings that happened that look very familiar in todays Thai economy. One thing that stands out is during the boom years to much money went into realestate and not enough into R&D for the export businesses.

I sure see a lot of homes being built round me, easy financing to Thai's with early defaults on loans. Another aspect pointed out.

Time will tell

[otherstuff1957]

I sure see a lot of homes being built round me, easy financing to Thai's with early defaults on loans. Another aspect pointed out.

Time will tell

<{POST_SNAPBACK}>

There really don't seem to be the same consequences for home loan defaults here as there are in the west. I went shopping for bank repo's for a few months last year and was told the same story again and again. "You can look at the outside of the house, but the owners have refused to move out and won't let us inside. If you buy the house, we'll recommend a good lawyer who will help you evict the former owner".

A number of Thai friends told me that this sort of thing is not unusual and that many banks have 20% to 30% of the loans on their books in default! There don't seem to be any real consequences for defaulting on a loan, so why bother to make your payments!

[mijan24]

I sure see a lot of homes being built round me, easy financing to Thai's with early defaults on loans. Another aspect pointed out.

Time will tell

<{POST_SNAPBACK}>

There really don't seem to be the same consequences for home loan defaults here as there are in the west. I went shopping for bank repo's for a few months last year and was told the same story again and again. "You can look at the outside of the house, but the owners have refused to move out and won't let us inside. If you buy the house, we'll recommend a good lawyer who will help you evict the former owner".

A number of Thai friends told me that this sort of thing is not unusual and that many banks have 20% to 30% of the loans on their books in default! There don't seem to be any real consequences for defaulting on a loan, so why bother to make your payments!

<{POST_SNAPBACK}>

The number of non performing loans did not seem to be a problem in the past - but there seems to be a definate move to reduce them - loss of face seems to be part of the equation, hence banks have not chased defaulters in the past - today who knows.

The part of where they advised they could sell but you have to evict seems unbelievable but TiT. When you surf the bank sites you can sometimes see the nb. property loaned out ?? Also some have obviously been over capitalised and the outstanding debt is much greater than the property will realise - hence if no one pushes no one knows and no investigation.

[djinn]

2 years ago I was interested in a repossesed penthouse condo in the Pattaya area.

price asked by owner before repossesion :11 mios

repossesed price in bank: 4.5 mios

value for tax dept:6.5 mios (well I don't know what this meaned but that was the info from my lawyer)

One member of the family of the owner bought the condo for 4.5 mios and received a mortgage the same day from the same bank (SCB) for the same condo.

Amount.......15 mios

My lawyer advised me not to interfere.Powerful family

TIT

Perhaps will I buy it from the same bank for 4 mios in a near future

Who knows