Thai GDP declines to 4% this year: World Bank

[webfact]

Thai GDP declines to 4% this year: World Bank
By English News

BANGKOK, Oct 7 - The World Bank has reduced its Thai economic growth projection from 5 per cent to 4 per cent this year given the slower-than-expected global economic recovery and economic slowdown in China, its senior economist Kirida Bhaopichitr said today.

She said the global impacts have plunged Thailand's exports in the first half the year to expand at only 1.2 per cent and it is predicted that export growth for the entire year would be 2.5 per cent.

Thai exports in the four remaining months should increase at least 4-5 per cent while imports will rise 6 per cent, she said, adding that domestic consumption has been slowed to only 2.5 per cent due to the completion of the government's tax incentives for first-car buyers.

She predicted a positive trend for the Thai economy next year, saying it should grow at 4.5 per cent given signals of strengthened global economy and the government's planned investment on mega infrastructure projects.

However, the government should be wary of delayed disbursements of the 2014 budget which will have an impact on state projects, especially water management and the Bt2 trillion infrastructure development, she said.

Higher household debts could also deter private consumption and result in less-than-targeted economic growth, she said.

Regarding US economy, Ms Kirida said the World Bank predicted that the US hiccup in its economic stimulus would lower its gross domestic product (GDP) growth by 2 per cent and the impact could be felt globally including East Asia.

If the US GDP declines by 1 per cent, it will lower East Asia's GDP by 0.5 per cent but the World Bank could not evaluate the coming impact in case the US fails to postpone the debt ceiling deadline and pay its debt for the first time on October 17, said Ms Kirida.

She said the US should successfully meet the October 17 deadline to avoid negative impacts on confidence towards the US, which will consequently affect global confidence.

She predicted that foreign capital would flow out of Asia after the US reduces its economic stimulus through quantitative easing and the outflows could affect the bond and stock markets in the region as well as weaken the Thai currency.

The Thai economy will remain strong and Thai financial institutions will be able to cope with the capital outflows, she said.

She said Thailand will lose Bt200 billion, or 2 per cent of GDP, if the government carries on with the rice pledging scheme and two years of rice subsidies has cost the kingdom a total loss of Bt400 billion. (MCOT online news)


-- TNA 2013-10-07

[bigbamboo]

So that's a quarter of the 2.2 trillion loan gone in rice pledge losses and they haven't even started filling the brown envelopes yet.

Will there even be anything left for the mega projects?

[GeorgeO]

Given the various comments, all of which allude to the gross incompetence of the current government, I fail to see where she gets her prediction of better growth next year.

The sh1t has not yet hit the fan, but when it does, Moody's will be right there to implement it's earlier promise of a downgrade. That will accelerate the outflows of foreign investment leading to further weakening of the Thai Baht (great..!!).

I am, however, very concerned as to what the real damage has been to the economy as a result of this government's tenure. We won't really know until they have been ousted, and I still believe that we have only seen the tip of the iceberg..!

This country may well be as close to broke as it has ever been...!!

[NanLaew]

A bit like the UK when Labour were booted out and the incoming coalition Treasury chief found a note in the petty cash box saying, "Dear Chief Secretary, Im afraid there is no money. Kind regards and good luck!"

[asdecas]

"Thai GDP declines to 4% this year: World Bank"

How can Gross Domestic Product decline to 4%?

We all know what they mean but can't anyone in a global organisation such as the World Bank write literate English?

[osiboy]

de-value the Baht,...problem solved !

[Thai at Heart]

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

[h90]

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

Well devalue currencies is a very very common thing that many Governments did in the past!

Usually to pay back debts...Greece, Italy some South American countries did it many times and also told so.

USA is trying to do it secretly....

[rametindallas]

Take another look at Japan and the US. PM Abe clearly stated his intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

Take another look at Japan and the US. PM Abe clearly stated his government’s intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

[Thai at Heart]

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

Well devalue currencies is a very very common thing that many Governments did in the past!

Usually to pay back debts...Greece, Italy some South American countries did it many times and also told so.

USA is trying to do it secretly....

The USA is dropping interest rates to zero and printing money. The market takes all that to consideration versus everyone else and puts a value.

I.e. you can't devalue if everyone else is in the poop also. You reckon when one thinks of mess in the USA right now, that will strengthen the USD?

[Thai at Heart]

Take another look at Japan and the US. PM Abe clearly stated his intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

Take another look at Japan and the US. PM Abe clearly stated his governments intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

The point was not to devalue the currency. He basically printed money massively, a by product is the shift in the yen. they had no inflation what so ever.

[pistachios]

GDP shrank 2.2% on first semester without any particular handicaping event. I can't really see how the second semester would magically see a 6.4% growth to get to this final 4% result, given the current flood or the almost stalled car industry.

[rametindallas]

Take another look at Japan and the US. PM Abe clearly stated his intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

Take another look at Japan and the US. PM Abe clearly stated his governments intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

The point was not to devalue the currency. He basically printed money massively, a by product is the shift in the yen. they had no inflation what so ever.

Shinzo Abe has been elected with an effective platform of devaluing the Yen. (3rd sentence of article)

http://seekingalpha.com/article/1087451-while-the-world-watches-fiscal-cliff-shinzo-abe-creates-fiscal-disaster-in-japan

Abe Ally Yamamoto Says Currency Devaluation Spurs Growth

http://www.bloomberg.com/news/2013-02-15/abe-ally-yamamoto-says-currency-devaluation-spurs-global-growth.html

[Thai at Heart]

Take another look at Japan and the US. PM Abe clearly stated his intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

Take another look at Japan and the US. PM Abe clearly stated his governments intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

The point was not to devalue the currency. He basically printed money massively, a by product is the shift in the yen. they had no inflation what so ever.

Shinzo Abe has been elected with an effective platform of devaluing the Yen. (3rd sentence of article)

http://seekingalpha.com/article/1087451-while-the-world-watches-fiscal-cliff-shinzo-abe-creates-fiscal-disaster-in-japan

Abe Ally Yamamoto Says Currency Devaluation Spurs Growth

http://www.bloomberg.com/news/2013-02-15/abe-ally-yamamoto-says-currency-devaluation-spurs-global-growth.html

Well, inflate the economy, devalue the currency. The move to devalue, came once stagflation set in.

[osiboy]

Take another look at Japan and the US. PM Abe clearly stated his intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

Take another look at Japan and the US. PM Abe clearly stated his government’s intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

im no economist but i think you agree with me to some extent , the way i see it is,......LOS is a tourist destination and foriegn money is important to their economy , if there are others like me {and i kno there are } , i used to buy double/treble what i now buy in LOS especially on birds n booze , it was so cheap , i did'nt even ask how much a few years ago , but now its so expensive for ppl like me who make money in europe that i watch every baht , dont buy girls drinks and dont tip , with so many others {friends} saying the same thing i cant believe this has little impact on the economy , bars pay girls pay family pay for kids pay schools etc etc , and thats just one example , hotels , gift shops ,clothes , food ,???, too expensive .......not anymore i dont !! ..........cheaper back home and better quality , ...when i say to thais that i can buy trainers or shirts in the UK for 20-50% less, they don't believe me !, .........i pity how they are ripped off by their own gov;t from cars to genuine clothes ,........the ruskies tho think they're gettin a bargain ! , can't imagine what they pay for a pair of trainers there !

i bought some thai rice last week in the UK , the Mrs said it was the same price as in LOS ! , MKJ

[MAJIC]

If 4% decline in GDP is considered a loss, i'm sure many Countries around the World (especially in Europe) would be happy to see it!

[rametindallas]

Take another look at Japan and the US. PM Abe clearly stated his intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

de-value the Baht,...problem solved !

The market will do that in its own. Governments rarely pursue a policy to actively devalue a currency.

Take another look at Japan and the US. PM Abe clearly stated his governments intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

The point was not to devalue the currency. He basically printed money massively, a by product is the shift in the yen. they had no inflation what so ever.

Shinzo Abe has been elected with an effective platform of devaluing the Yen. (3rd sentence of article)

http://seekingalpha.com/article/1087451-while-the-world-watches-fiscal-cliff-shinzo-abe-creates-fiscal-disaster-in-japan

Abe Ally Yamamoto Says Currency Devaluation Spurs Growth

http://www.bloomberg.com/news/2013-02-15/abe-ally-yamamoto-says-currency-devaluation-spurs-global-growth.html

Well, inflate the economy, devalue the currency. The move to devalue, came once stagflation set in.

Actually, it's 'devalue the currency, inflate the economy'. The move to devalue the Yen is not a reaction to recent events. Stagflation set in back in 1995, and is still in effect as there has been no evidence, after ten months of inflationary spending, that anything is changing. The move by the Abe government, against the wishes of the Bank of Japan, to devalue the currency (making Japanese products more affordable for the export market) was taken in January of this year, only because they had tried everything else. 18 years of a stagnant economy and deflating currency is a long time to suffer. I'm not pro or con on the issue; I just want to keep the history correct.

To apply this thinking to the current Thailand situation, the government desperately wants the Bank of Thailand to lower interest rates so they can take credit for improved exports (hurt badly by the collapse of the rice market and recent strengthening of the Baht) and also to lower borrowing costs for their huge loan schemes. The wealthy and connected have diversified and don't feel impacted by the value of the Baht. With the interest rates as high as they are, relative to other countries, they attract foreign money. This is 'hot' money and is not invested in the country long term and can leave nearly as fast as it came in. As soon as the economies of the US and EU recover, and they will recover eventually, Thailand will see foreign 'hot' money flee so fast that the bottom may fall out of the economy before the Central Bank can react. Thailand will need to be on firm financial footing to weather this. Right now, Thailand is not too deeply in debt and, if the government would spend within its means, the people would have a bright economic future. Unfortunately for them, the current government just had its first reading of a bill that will steal all the future money from them.

[rametindallas]

Take another look at Japan and the US. PM Abe clearly stated his government’s intention to devalue the currency in the attempt to get the Japanese people to spend their money before it lost value and in the US, the Federal Reserve Bank has created more than $3T to keep the govt. borrowing rate at 0% and to pay back foreign and domestic lenders with devalued currency. The EU would love to do the same but are prevented by their constitution. This practice is hurting the economies of the BRIC nations who have not devalued their currencies.

de-value the Baht,...problem solved !

im no economist but i think you agree with me to some extent , the way i see it is,......LOS is a tourist destination and foriegn money is important to their economy , if there are others like me {and i kno there are } , i used to buy double/treble what i now buy in LOS especially on birds n booze , it was so cheap , i did'nt even ask how much a few years ago , but now its so expensive for ppl like me who make money in europe that i watch every baht , dont buy girls drinks and dont tip , with so many others {friends} saying the same thing i cant believe this has little impact on the economy , bars pay girls pay family pay for kids pay schools etc etc , and thats just one example , hotels , gift shops ,clothes , food ,???, too expensive .......not anymore i dont !! ..........cheaper back home and better quality , ...when i say to thais that i can buy trainers or shirts in the UK for 20-50% less, they don't believe me !, .........i pity how they are ripped off by their own gov;t from cars to genuine clothes ,........the ruskies tho think they're gettin a bargain ! , can't imagine what they pay for a pair of trainers there !

i bought some thai rice last week in the UK , the Mrs said it was the same price as in LOS ! , MKJ

I agree that devaluing the Baht (currency war anyone? every other country is doing it) will help the overall economy by creating jobs here by boosting exports and tourism. It will also hurt the overall economy because Thailand imports so much of its energy needs and that will cause prices on manufacturing and transportation to rise. I can't know which effect will be greater. Except for those costs, most low income Thais, if they don't buy foreign made products or gasoline, won't notice if the Baht devalues. BTW expat foreigners spending habits are not a factor in the economy. One thing to note is that the Thai economy is very overheated with 0.5% unemployment and a housing bubble. The government plans all will make the economy even more overheated. I don't know how if will manifest itself, but the heat WILL be dissipated somehow. I am not optimistic about the future of my Thai friends who are not wealthy. My situation, because my income comes from the US, will, IMO, only improve.

Regarding the original article, most government would kill to have 4% rise in GDP.

[simple1]

If 4% decline in GDP is considered a loss, i'm sure many Countries around the World (especially in Europe) would be happy to see it!

From the OP: The World Bank has reduced its Thai economic growth projection from 5 per cent to 4 per cent this year