Thailand heading for another crash?

[spermwhale]

This is an interesting article about what Forbes is predicting for Thailand. Comments?

Thailand's Bubble Economy Is Heading For A 1997-Style Crash

Thailand is part of the overall emerging markets bubble that I have been warning about in recent years, along with Indonesia, Malaysia and other Southeast Asian countries.

The emerging markets bubble started in 2009, when China launched a bold stimulus-driven economic growth strategy to counter the deleterious effects of the global financial crisis on its economy. China immediately scrambled to construct scores of new cities (many of which are still empty) and ambitious infrastructure projects for the sake of generating economic growth, which sparked a global raw materials boom that benefited commodities exporters such as emerging market nations and Australia. Global investors soon began to pile into emerging market investments to diversify away from ailing Western nations in wake of the financial crisis.

Near-zero interest rates in the U.S., Europe and Japan, along with the U.S. Federal Reserve’s multi-trillion dollar quantitative easing stimulus programs encouraged $4 trillion worth of speculative capital to flow into emerging market investments since 2009. Global investors entered carry trades in which they borrowed very cheaply from the U.S. and Japan, and invested the funds in high-yielding emerging market assets, while profiting from the interest rate differential or “spread.” The sudden influx of “hot money” into emerging market investments helped to inflate a bond bubble, which pushed EM borrowing costs to all-time lows and enabled government-driven infrastructure booms, red-hot credit growth, and property bubbles across the entire emerging world.

As international capital clamored into Thai assets, the country’s 10 year government bond yields fell from their prior 4 to 6.5 percent range to just over 3 percent, while total external debt more than doubled:

Even more worrisome is the fact that Thailand’s short-term debt to total external debt ratio has roughly doubled in the past decade, which means that the country is more vulnerable to short-term interest rate increases.

Foreign direct investment (net inflows, current dollars) has surged in the past decade:

The Thai stock market, as measured by the SET index, quadrupled since 2008:

Capital inflows into Thailand contributed to a nearly 30 percent increase in the baht currency’s exchange rate against the U.S. dollar since 2008:

In March 2013, Virabongsa Ramangkura, chairman of the Bank of Thailand, warned about the risk of “hot money” capital inflows inflating a bubble in Thailand’s economy. “Foreign money flows in because of the higher interest rate. If a bubble bursts, everything that we see as good will come to an end or will not happen.”

Continued here with graphs....

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

Edited December 18, 2013 by spermwhale

[bealus]

Winston Churchill: "I only believe in statistics I doctored myself"

[MrWorldwide]

Bit late to the party, arent we ?

http://www.thaivisa.com/forum/topic/689753-one-prominent-expats-view-of-our-expert-economic-forecasts/

[Genericnic]

At least for some of us, a bubble busting might not be terrible. I just checked the historic exchange rate for the THB to the USD. After the 1997 collapse, the rate spiked from about 26 THB/USD to 55. Dropped back the mid 40s over the next 18 months or so and then started a long slow slide to where it us today.

David

[GrantSmith]

With articles like this, I often wonder what TAT's response would be..

I know it's a tough sell for them to put a positive spin on it, but they do it so well!

Keeping it all ticking over like a well versed propaganda machine...

The international tourism market falters, f*** it, never mind, domestic tourism will prop it up.

Is there really a bubble? Supply outstripping demand, or vice versa? Not really a bad thing when supply outstrips demand, things get sat on, decisions deferred, prices drop to appropriate levels and boom, demand picks up.

Is that approach sustainable, given that infrastructure is not up to the task, given that Bangkok's gradually sinking?

Or is there a secret, yet to be announced, gondola project that (caretaker) DPM Plodrasop has cunningly devised to curtail - perhaps enhance - Bangkok's viability as being the Venice of the East, tied in with the TAT anything is possible.

Not sure if they're able to sell sand to the Arabs yet but they seem to do an apt job of selling something to the population...

Or is it simply the market just going through a correction? That will sort itself out without the need of the three little pigs getting involved?

[MrWorldwide]

SARS hit, and the tourists returned

Yellow Shirts closed Swampy and the tourists returned

Red shirts firebombed Central World and the tourists returned

Massive flooding devastated a large chunk of the country and the tourists returned

No idea what Suthep will do to these numbers, but 24 million visitors for the year to November looks pretty damned good to me. Given the events of the last 4 years, and our respective experiences with tourist crowds in various parts of Thailand, I'm hesitant to make any predictions re Thailand's tourism industry. Here's a ticksheet for the glass-half-empty brigade :

- Muslim insurgency : check

- rampant corruption : check

- inconsistent application of the rule of law: check

- marked increase in (reporting of) crime against tourists, including scams : check

- external forces intent on tearing the country apart : check

If that was a country in South America, Africa or elsewhere in Asia, how many tourists would you expect to visit each year ? I sure as hell wouldn't go there.

http://en.wikipedia.org/wiki/Tourism_in_Thailand#Annual_statistics

http://en.wikipedia.org/wiki/World_Tourism_rankings#Asia_and_the_Pacific

[MAJIC]

SARS hit, and the tourists returned

Yellow Shirts closed Swampy and the tourists returned

Red shirts firebombed Central World and the tourists returned

Massive flooding devastated a large chunk of the country and the tourists returned

No idea what Suthep will do to these numbers, but 24 million visitors for the year to November looks pretty damned good to me. Given the events of the last 4 years, and our respective experiences with tourist crowds in various parts of Thailand, I'm hesitant to make any predictions re Thailand's tourism industry. Here's a ticksheet for the glass-half-empty brigade :

- Muslim insurgency : check

- rampant corruption : check

- inconsistent application of the rule of law: check

- marked increase in (reporting of) crime against tourists, including scams : check

- external forces intent on tearing the country apart : check

If that was a country in South America, Africa or elsewhere in Asia, how many tourists would you expect to visit each year ? I sure as hell wouldn't go there.

http://en.wikipedia.org/wiki/Tourism_in_Thailand#Annual_statistics

http://en.wikipedia.org/wiki/World_Tourism_rankings#Asia_and_the_Pacific

I remember all of the negative happenings you mentioned including the last coup,it didn't have the slightest effect on the charmed life of Thailand which would have severely broke most Countries, just goes to show there is always the exception to the rule,unless of course the rule was never right in the first place?

And oh! you forgot the Tsunami 2003? ,and the war on drugs that claimed 2500 - 3000 lives! the same year? and raised severe issues on Thailands Human Rights record with Amnesty International,and let's not talk about Human Slave Trafficking.

Edited December 18, 2013 by MAJIC

[farang000999]

because farang love temples so much...

[chris1dna]

Wasn't the tsunami in 2006?

Edited December 18, 2013 by chris1dna

[chris1dna]

Edit

Edited December 18, 2013 by chris1dna

[tdm]

Another point of view,,

Mark Mobius from the Templeton emerging markets group is positive on thailand in the longer term.

http://www.reuters.com/video/2013/12/17/for-mark-mobius-frontier-markets-move-to?videoId=274950216

[Somtamnication]

Yes.

[Maestro]

Already running here: http://www.thaivisa.com/forum/topic/679467-thailands-bubble-economy-is-heading-for-a-1997-style-crash/