Thai Govt Urged To Be Prepared For Global Financial Storm

[webfact]

GLOBAL FINANCIAL STORM

Govt urged to be prepared

By WICHIT CHAITRONG,

ACHARA PONGVUTITHAM

THE NATION

The growing likelihood that the global economy will tip into a double-dip recession threatens Thailand's economic strength, so the new government should ensure a clear implementation plan for its policies and prepare to respond to rising risks, experts warned last week.

"A negative factor is the risk of a double-dip recession in the West - Europe and the United States," Usara Wilaipich, an economist at Standard Chartered Bank, told a seminar hosted by Nation Multimedia Group.

The market turmoil in recent weeks was part of the continuing fallout from the global financial crisis of 2008, she said.

Investors have dumped shares worldwide after economic data suggested weaker growth in the US, Germany, France and in other large economies in Europe, while many countries suffer sovereign debt crises.

Investors are worried that the US economy may plunge into a double-dip recession due to contagion from the debt crisis in Europe.

The risk of a default by Italy, the third-largest European economy, has increased. The spread of the debt crisis from smaller economies like Greece to larger ones now threatens to pull down Europe's largest economies, Germany and France, together, Usara said.

"The chance of a double-dip is over 50 per cent," said Sethaput Suthiwart-Narueput, an independent economist.

Banks in Europe may start to doubt the financial health of their counterparties and become reluctant to lend funds to each other, a situation similar to what happened in 2008, he said.

"Investors are also worried that policymakers might be running out of bullets," he said.

After rebounding from the 2008 financial crisis partly because of |economic stimulus packages, China and the rest of Asia could be ad-versely affected if the Western economies slow down. China launched the largest package, |worth 4 trillion yuan (Bt17.4 trillion), in early 2009, and now bad debts |in local governments have ballooned.

Since Chinese authorities have implemented policies to tighten bank lending, this could also cause the economy to slow down sharply, Sethaput added.

Dej Patanasethpong, managing director of Thong Thai Textile, was optimistic about Thai exports to the West, saying exports would not be adversely affected in the next two years due partly to the nature of the demand for Thai products in that market.

The financial crisis has changed consumption patterns in the West, and that benefits Thai exports, Dej said.

"Consumers cannot spend on big-ticket items like cars or homes, so they, besides buying smart phones, spend on small items - nice apparel, food and lifestyle products, which are our products," he said.

"Even if these economies slip into recession, consumers will still spend on food and other basic necessities," he said.

Local companies are also exporting more to the Asian market, resulting in less dependence on the US and Europe, he added.

Songtham Pinto, director for |the macroeconomy at the Bank of Thailand, said it would take time |for Europe and the US to address their problems.

Their overconfidence led to excessive borrowing, while the productivity of unskilled labour in the US has dropped. It is only the productivity of skilled workers that is rising, Songtham said.

The US lost its top "AAA" credit rating because rating agency Standard and Poor's lost faith in the competency of American politicians, he said.

"I don't know where the end game is," he said, referring to the deepening economic troubles in the West.

However, the central bank has |not yet seen any impact on Thai exports, as rubber and other farm products are benefiting from rising prices, he added. Sirikamon Udompol, economist at the Finance Ministry, said the economies in the West may slow down or enter a double-dip recession in the second half of this year.

"China may achieve a soft landing, or a full-year growth rate of 9.2 per cent compared with 9.6 per cent in the first half of the year," she said.

Japan has also recovered faster than expected from the devastating tsunami in March, and its efforts to rebuild affected areas would be a positive factor for Thai exports, she said.

Investors are waiting to see a clear-cut plan for how the government is going to execute its economic policies, Sirikamon said.

"There must be a timeline - when each project will be implemented and how to finance it," she said.

The new government has made several pledges including wage hikes, debt suspensions, easy loans, tax cuts and infrastructure investment, which require huge financing beyond tax revenue.

"The government may issue dollar-denominated bonds to raise funds from overseas due to the lower cost," she said.

The government should not borrow from the domestic market, she said, because it would compete for funds with the private sector.

The central bank may slow down rate hikes, as the inflation threat has subsided. Capital is expected to continue flowing into Thailand and Asia, she added.

While spending has continued to rise, Sethaput said, government revenue has not.

Workers' low wages restrict domestic consumption, but wage hikes should come in tandem |with productivity improvements, he said.

Thailand is lagging other countries in terms of investment, which is still only at about 70 per cent of the level seen before the Asian financial crisis in 1997, Sethaput said.

Thai governments have little money to invest in infrastructure due to rising current spending - such as officials' salaries and healthcare expenses - and populist policies, he added.

Dej said investors would wait and see how the government will act on its populist policies.

"The biggest concern is that |the government has become a |market player instead of acting as |a facilitator," he said. "The government must compensate workers if manufacturers close their plants due to the wage hike," he said.

Songtham also expressed concern over public debt and the low tax-revenue base.

"Although our debt is only 42 per cent of GDP, compared with Italy's debt at 120 per cent of GDP, our debt is about 250 per cent of tax revenue, close to Italy's debt to revenue of 260 per cent," he warned.

Sirikamon gave his assurance that the Finance Ministry will first look at revenue before planning spending, to ensure fiscal discipline.

-- The Nation 2011-08-22

[siampolee]

Rather a gloomy outlook as it seems the government is not either aware of the coming storm or that they think all they have offered will be the panacea and oil on the coming troubled waters.

The US lost its top "AAA" credit rating because rating agency Standard and Poor's lost faith in the competency of American politicians, he said.

That may well be the case here before too long.

The new government has made several pledges including wage hikes, debt suspensions, easy loans, tax cuts and infrastructure investment, which require huge financing beyond tax revenue.

"The government may issue dollar-denominated bonds to raise funds from overseas due to the lower cost," she said.

The government should not borrow from the domestic market, she said, because it would compete for funds with the private sector.

The central bank may slow down rate hikes, as the inflation threat has subsided. Capital is expected to continue flowing into Thailand and Asia, she added.

While spending has continued to rise, Sethaput said, government revenue has not.

Workers' low wages restrict domestic consumption, but wage hikes should come in tandem with productivity improvements, he said.

Thailand is lagging other countries in terms of investment, which is still only at about 70 per cent of the level seen before the Asian financial crisis in 1997, Sethaput said.

Thai governments have little money to invest in infrastructure due to rising current spending - such as officials' salaries and healthcare expenses - and populist policies, he added.

Dej said investors would wait and see how the government will act on its populist policies.

"The biggest concern is that |the government has become a |market player instead of acting as |a facilitator," he said. "The government must compensate workers if manufacturers close their plants due to the wage hike," he said.

Songtham also expressed concern over public debt and the low tax-revenue base.

"Although our debt is only 42 per cent of GDP, compared with Italy's debt at 120 per cent of GDP, our debt is about 250 per cent of tax revenue, close to Italy's debt to revenue of 260 per cent," he warned.

Sirikamon gave his assurance that the Finance Ministry will first look at revenue before planning spending, to ensure fiscal discipline.

Indeed fine words however the paymasters have a very different agenda, look back to 1997 and see who made millions if not billions

The fact of the matter is that the Thai economy is on the surface good, lift the flap and there is a rather nasty unpredictable bubbling morass of disaster stew simmering not so gently.

[thunder30101]

This new gov will be able to hold off the storm for awhile due to the large foreign capitol reserves they now hold but when thats gone look out.

[OzMick]

"Sirikamon gave his assurance that the Finance Ministry will first look at revenue before planning spending, to ensure fiscal discipline."

They should have done that BEFORE the election. What gets tossed, election promises or fiscal discipline?

[dcutman]

Next weeks news headline.

Thaksin sooths Voters

"Due to the global slowdown it will be irresposible for the Thai government to implement most campaign promises We are re-shifting our focus back to a export based economy, to keep investors coming to Thailand and everybody working we will be reducing the corporate tax rate to 20% immediately. As soon as the world ecomomy recovers, I personally guarentee to restore all promises made by the PTP. Thank you for your patience and patriotism."

:

Edited August 22, 2011 by dcutman

[Pib]

"Sirikamon gave his assurance that the Finance Ministry will first look at revenue before planning spending, to ensure fiscal discipline."

They should have done that BEFORE the election. What gets tossed, election promises or fiscal discipline?

What gets tossed, election promises or fiscal discipline? Probably a little bit of both through political smoke-and-mirrors while the politicians keep on smiling.

[webfact]

German Finance Minister Wolfgang Schaeuble says U.S. has higher debt levels than even the 'most difficult' country in Europe /via@Reuters

[dcutman]

German Finance Minister Wolfgang Schaeuble says U.S. has higher debt levels than even the 'most difficult' country in Europe /via@Reuters

I would hope Wolfgang is right. I dont know how many countries with $14 trillion naional debt this world can handle. But a debt to income, debt to gdp or debt to revenue there are many countries with much higher debt ratio's than the U.S. many of them in Europe

http://en.wikipedia...._by_public_debt

Edited August 22, 2011 by dcutman

[Rosco911]

Dej Patanasethpong, managing director of Thong Thai Textile, was optimistic about Thai exports to the West, saying exports would not be adversely affected in the next two years due partly to the nature of the demand for Thai products in that market.

Does he know in the last 4 years over 2000 textile companies have closed in Thailand. Typical Thai statement, open your eyes.

[1bbcd5]

They should have done that BEFORE the election.

[Colin Yai]

They should have done that BEFORE the election.

Of Course this Government had'nt a clue that most of the outside world has had its head up its financial arse for quite sometime which was bound to affect Thailand,s commerce sooner or later , no doubt they will but the blame on Abhisit's handling of the economy as to just why many if not all their insane un costed promises will now be put on the "back burner" even forgotten ,many thought that this new administration could affect a miracle panacea for its many ailments ,but alas things like this just do not happen in real life do they, no quick fix ,no overnight success's , its going to be a hard hard slog which may well prove just too much for this lot, as most of the electorate expected overnight"wonder's", I think it will not be long before the dawn of realization finally penetrates that it will not be forthcoming!. Edited August 22, 2011 by Colin Yai

[OzMick]

They should have done that BEFORE the election.

I wish I had posted that.

[animatic]

I remember how well they listend 3 years ago when the original world financial crisis was hitting. The PPP was getting the EXACT same advice, and ignored it for the EXACT SAME REASONS. More important to rejigger the world to please Thaksin, than deal with what will affect the whole nation. Do we see round two happening this fall? They ignore external realities because the boss says fix my problems first, the world can wait. And then the street stuff starts yet again.

Well we know how well THAT plan worked before.....

Edited August 22, 2011 by animatic

[animatic]

Next weeks news headline.

Thaksin sooths Voters

"Due to the global slowdown it will be irresposible for the Thai government to implement most campaign promises We are re-shifting our focus back to a export based economy, to keep investors coming to Thailand and everybody working we will be reducing the corporate tax rate to 20% immediately. As soon as the world ecomomy recovers, I personally guarentee to restore all promises made by the PTP. Thank you for your patience and patriotism."

:

Soothing, my derriere. This is like waving a red flag at a bull and saying your dinner will be delayed a few years, deal with it. This was obvious to all DURING the campaign when they made all these promises. So the PTP pols had to know it was a tissue of lies, but when will the PEOPLE realize they've been had bigtime? And how will they react?

[animatic]

German Finance Minister Wolfgang Schaeuble says U.S. has higher debt levels than even the 'most difficult' country in Europe /via@Reuters

I would hope Wolfgang is right. I dont know how many countries with $14 trillion naional debt this world can handle. But a debt to income, debt to gdp or debt to revenue there are many countries with much higher debt ratio's than the U.S. many of them in Europe

http://en.wikipedia...._by_public_debt

Yes, but the USA economy is the same size as much of Europe as a WHOLE,

While most Euro Nations are the size of USA States economically and physically.

[animatic]

They should have done that BEFORE the election.

Of Course this Government had'nt a clue that most of the outside world has had its head up its financial arse for quite sometime which was bound to affect Thailand,s commerce sooner or later , no doubt they will but the blame on Abhisit's handling of the economy as to just why many if not all their insane un costed promises will now be put on the "back burner" even forgotten ,many thought that this new administration could affect a miracle panacea for its many ailments ,but alas things like this just do not happen in real life do they, no quick fix ,no overnight success's , its going to be a hard hard slog which may well prove just too much for this lot, as most of the electorate expected overnight"wonder's", I think it will not be long before the dawn of realization finally penetrates that it will not be forthcoming!.

Which is the main reason I have been against them getting back in power...

the navel gazers have returned and can't see past their own narrow agendas.

Bad business for ALL who depend on them having good judgment.

[scotto]

Time to start reshuffling the chairs on the

THAITANIC

And put the prices up now quickly why they can!!

[edwinchester]

Next weeks news headline.

Thaksin sooths Voters

"Due to the global slowdown it will be irresposible for the Thai government to implement most campaign promises We are re-shifting our focus back to a export based economy, to keep investors coming to Thailand and everybody working we will be reducing the corporate tax rate to 20% immediately. As soon as the world ecomomy recovers, I personally guarentee to restore all promises made by the PTP. Thank you for your patience and patriotism."

:

Soothing, my derriere. This is like waving a red flag at a bull and saying your dinner will be delayed a few years, deal with it. This was obvious to all DURING the campaign when they made all these promises. So the PTP pols had to know it was a tissue of lies, but when will the PEOPLE realize they've been had bigtime? And how will they react?

Read the very first line of the post again.

[softgeorge]

J.J and his crew will be rolling out a few more jetskis, that should help Thailand ride it out. They could also keep the the "Sex Tourism Tag" for a little longer.

[ratcatcher]

The average Thai doesn't know or care about what's going on in Europe or the U.S.A. Many are more worried about whether everything they own will be flooded out in the next week or so.

What they do know, at least the ones who voted for PTP, is that Santa Shinawatra will be back by Chrisamat with his bag full of goodies for the kiddies.

Minimum wages up to B300, tablet computers for the school kids, B15,000 a month for freshmen.

Meanwhile in the real world, sad as it really is, there's wars being fought in Afghanistan, Libya, and probably a dozen other hot spots. Financial meltdowns in previously upstanding nations.

But hey, this is Thailand and we're having fun now that we've got Barbie as the P.M. The future is bright here in Thailand.

Try to look on the bright side of life.

Na Ka!

[animatic]

Next weeks news headline.

Thaksin sooths Voters

"Due to the global slowdown it will be irresposible for the Thai government to implement most campaign promises We are re-shifting our focus back to a export based economy, to keep investors coming to Thailand and everybody working we will be reducing the corporate tax rate to 20% immediately. As soon as the world ecomomy recovers, I personally guarentee to restore all promises made by the PTP. Thank you for your patience and patriotism."

:

Soothing, my derriere. This is like waving a red flag at a bull and saying your dinner will be delayed a few years, deal with it. This was obvious to all DURING the campaign when they made all these promises. So the PTP pols had to know it was a tissue of lies, but when will the PEOPLE realize they've been had bigtime? And how will they react?

Read the very first line of the post again.

Of course it is parody,

but the signs that this is happening are there none the less.

[kraplung]

The average Thai doesn't know or care about what's going on in Europe or the U.S.A. Many are more worried about whether everything they own will be flooded out in the next week or so.

What they do know, at least the ones who voted for PTP, is that Santa Shinawatra will be back by Chrisamat with his bag full of goodies for the kiddies.

Minimum wages up to B300, tablet computers for the school kids, B15,000 a month for freshmen.

Meanwhile in the real world, sad as it really is, there's wars being fought in Afghanistan, Libya, and probably a dozen other hot spots. Financial meltdowns in previously upstanding nations.

But hey, this is Thailand and we're having fun now that we've got Barbie as the P.M. The future is bright here in Thailand.

Try to look on the bright side of life.

Na Ka!

That's the way to do it!...... as Punch said to Judy.

[dcutman]

Next weeks news headline.

Thaksin sooths Voters

"Due to the global slowdown it will be irresposible for the Thai government to implement most campaign promises We are re-shifting our focus back to a export based economy, to keep investors coming to Thailand and everybody working we will be reducing the corporate tax rate to 20% immediately. As soon as the world ecomomy recovers, I personally guarentee to restore all promises made by the PTP. Thank you for your patience and patriotism."

:

Soothing, my derriere. This is like waving a red flag at a bull and saying your dinner will be delayed a few years, deal with it. This was obvious to all DURING the campaign when they made all these promises. So the PTP pols had to know it was a tissue of lies, but when will the PEOPLE realize they've been had bigtime? And how will they react?

Realise they have been had? = Very soon.

How will they react? = Have some fire extiguishers on hand.

Edited August 22, 2011 by dcutman

[khaowong1]

The average Thai doesn't know or care about what's going on in Europe or the U.S.A. Many are more worried about whether everything they own will be flooded out in the next week or so.

What they do know, at least the ones who voted for PTP, is that Santa Shinawatra will be back by Chrisamat with his bag full of goodies for the kiddies.

Minimum wages up to B300, tablet computers for the school kids, B15,000 a month for freshmen.

Meanwhile in the real world, sad as it really is, there's wars being fought in Afghanistan, Libya, and probably a dozen other hot spots. Financial meltdowns in previously upstanding nations.

But hey, this is Thailand and we're having fun now that we've got Barbie as the P.M. The future is bright here in Thailand.

Try to look on the bright side of life.

Na Ka!

That's the way to do it!...... as Punch said to Judy.

"But hey, this is Thailand and we're having fun now that we've got Barbie as the P.M. The future is bright here in Thailand.

Try to look on the bright side of life."

[SICHONSTEVE]

"Sirikamon gave his assurance that the Finance Ministry will first look at revenue before planning spending, to ensure fiscal discipline."

They should have done that BEFORE the election. What gets tossed, election promises or fiscal discipline?

Neither according to Yingluck's ministers as nothing is beyond her government - they can perform miracles beyond economics. All of her policies will be implemented and it won't affect anything!!! I am watching with great interest to see how they get on!!! Ha Ha Ha Ha!!!!

I think, that being new to politics and then thrust into government will be a chastising experience for her which will reduce her to despair when it all goes wrong and collapses around her. Ah diddums!!!!