Thais Must Prepare For 'downturn Like 1997'

[george]

Economists see hard times ahead

Thais must prepare for 'downturn like 1997'

BANGKOK: -- Leading economists warned yesterday that Thailand could face a new round of economic problems in light of world economic uncertainty. Speaking at the Thai Strategies in the Global Trend seminar, organised by Triam Udom Suksa School yesterday, the economists said Thais should prepare in advance to cope with the possibility of another economic downturn similar to the 1997 crisis.

Virabongsa Ramangura, former finance minister and deputy prime minister, said the economy was on the decline because of world economic uncertainty, particularly in the financial sector.

The world's economic strucuture was changing significantly under the influence of the continuing economic growth of China, India and Russia. Capital flows into and out of the country have increased in volume and become more unpredictable.

''We are worried that if Thailand can't ... [more]

[naka]

Ok, I'm looking for a new (near) Merc.

Naka.

[george]

Economists warn Thailand to prepare for world economic downturn

BANGKOK: -- Leading economists have warned that Thailand could encounter a new round of economic problems due to global economic uncertainty and the country should be well prepared if US and world economies retreat.

Virabongsa Ramangura, former finance minister and deputy prime minister, told participants at a seminar Saturday that Thailand's economy was quite volatile in response to global economic uncertainties, especially capital flows into and out of the Kingdom, which had become larger and unpredictable.

Influence from the continuing economic growth of China, India and Russia is affecting the economic structure of the world and it could be problematic for Thailand to cope with a significantly changed economic situation in time if the world economy falls, said Mr. Virabongsa.

He said the current sharp increase in oil prices, terrorism threats and oil hedge funds would also affect Thailand's domestic growth.

Dhurakijbandit University rector Varakorn Samkoset observed that the government needed to find a way to measure national economic conditions more accurately because the use of gross domestic product (GDP) figures did not always reflect economic prosperity.

Prosperity need not translate to happiness, according to Paiboon Wattanasiritham, chairman of Thailand's Centre for the Promotion of National Strength on Moral Ethics and Values, as the country was facing economic hardships, people should rely more on His Majesty the King's self-sufficiency economic policy.

Mr. Paiboon urged the government to devise a tool to measure the happiness of the people instead of using the GDP, a method which was successfully achieved by Bhutan.

Instead of GDP, Bhutan uses the Gross National Happiness (GNH) Index to measure the country's level of well-being.

--TNA 2006-06-04

[Maestro]

''We are worried that if Thailand can't ... [more]

Censored? That link is dead now. Even Google can’t find that article anymore.

---------------

Maestro

[Thaipwriter]

Thais should prepare in advance to cope

Get a new car on finance now while the finance companies are still open for business.

get a credit card and max it out now.

Borrow as much cash as you can because there will se so much NPL going on it would be wrong to miss out.

[bkkjosh]

Thais should prepare in advance to cope

Get a new car on finance now while the finance companies are still open for business.

get a credit card and max it out now.

Borrow as much cash as you can because there will se so much NPL going on it would be wrong to miss out.

:D

[Jai Dee]

Here is a link to the MCOT English News article.

[britmaveric]

Parallels are strikingly similar - hopefully correctable action can be taken to avoid it.

[joe beets]

''We are worried that if Thailand can't ... [more]

Censored? That link is dead now. Even Google can’t find that article anymore.

---------------

Maestro

Here you go.

Thais must prepare for 'downturn like 1997'

By Anucha Charoenpo

Leading economists warned yesterday that Thailand could face a new round of economic problems in light of world economic uncertainty. Speaking at the Thai Strategies in the Global Trend seminar, organised by Triam Udom Suksa School yesterday, the economists said Thais should prepare in advance to cope with the possibility of another economic downturn similar to the 1997 crisis.

Virabongsa Ramangura, former finance minister and deputy prime minister, said the economy was on the decline because of world economic uncertainty, particularly in the financial sector.

The world's economic strucuture was changing significantly under the influence of the continuing economic growth of China, India and Russia. Capital flows into and out of the country have increased in volume and become more unpredictable.

''We are worried that if Thailand can't cope with this economic situation in time, the country could run into a new round of economic crisis,'' he said.

He called on the government to come up with austerity programmes to encourage Thais to economise and stop spending lavishly.

He said apart from the uncertainty of the world economy, the rise in energy costs and terrorism threats would also affect domestic growth.

Varakorn Samkoset, rector of Dhurakijbandit University, said the country urgently needed to pay more attention to human development to enable people to cope better with international uncertainty.

The government, he said, will need to find a way to measure the national economic condition more accurately.

The use of GDP figures did not always accurately reflect the economic success people were enjoying, Mr Varakorn said.

Paiboon Wattanasiritham, chairman of the Centre for the Promotion of National Strength on Moral Ethics and Values, said His Majesty the King's self-sufficiency economic policy was an answer as Thailand faced a looming economic crunch.

He vehemently disagreed with a government idea that economic success could bring more happiness to society.

Instead of focusing on gross domestic product, the government should devise a tool to measure the happiness of the people. This method has been used by Bhutan, he said.

Somkid Jatusripitak, caretaker deputy prime minister and commerce minister, conceded that the government would need to place more emphasis on human development to enable the country to compete with other countries.

The government's ability to develop its people to enable them to attain equality, socially and economically, would be the key to long-term national economic development, he said.

The government will need to promote domestic consumption to enable the economy to be less dependent on exports, he said.

Supachai Panitchpakdi, secretary-general of the UN Conference on Trade and Development (Unctad), warned the government to be more careful in entering free trade agreements with developed countries to prevent undesired impact on the economy.

Mr Supachai said he was very concerned that the government's FTA policy could put the country at a disadvantage if the agreements were not carefully studied beforehand.

He said he was not saying FTAs were good or bad, but he believed agreements should be limited to countries in the same region because their economies were more or less the same size as Thailand's and the agreements were more likely to be mutually beneficial.

[Maestro]

Thank you, Jai Dee and Joe Beets.

---------------

Maestro

[penzman]

But Mr T and his pack have been and will be bragging about over-inflated "predictions" of economic growth, chanting like zombies for months on end. They lied, they would do that? Or maybe are they just all incompetent in dealing with real world situations...

[Gumballl]

Is it just me???? I sincerely want PM Thaksin to do nothing and let the Thai economy collapse. This would be a good thing for farang, right? I do not live in LOS, and all of my dough is in US dollars. I really would like to see an exchange rate of 50 baht to the dollar.

[Thaiquila]

Is it just me???? I sincerely want PM Thaksin to do nothing and let the Thai economy collapse. This would be a good thing for farang, right? I do not live in LOS, and all of my dough is in US dollars. I really would like to see an exchange rate of 50 baht to the dollar.

I wouldn't mind that so much either, however, the long term prognosis is increasing strength for all Asian currencies against the dollar, due to the tsunami like effect of the eventual fair valuing of the Chinsese yuan.

[Ned]

Gumball, I don't know if an economically destroyed Thailand of the future would be such a safe place to live for us cashed up farang. We might see crimes like kidnappings and carjackings become everyday occurrences with the cops and security forces living off the spoils. We might have to move into compounds like the wealthy of Brazil for example, for whom a latenight breakdown on the highway can easily mean death at the hands of marauding predators. What do you think about that eh?

Would n't mind 80 baht to the dollar though.

[Heng]

Exporters will certainly be laughing - as they have been for the last 8 years... as of this month.

[ando]

Is it just me???? I sincerely want PM Thaksin to do nothing and let the Thai economy collapse. This would be a good thing for farang, right? I do not live in LOS, and all of my dough is in US dollars. I really would like to see an exchange rate of 50 baht to the dollar.

Think for a moment what that would mean to the poor in Thailand. Shorter life expectancy, and a much harder life all round for those who can least afford it. I would not WISH to see impoverished people including little kids, suffer so I could have more spending money on holiday.

What may happen in Thailand is beyond our control, -- thank goodness.

[Thaising]

Is it just me???? I sincerely want PM Thaksin to do nothing and let the Thai economy collapse. This would be a good thing for farang, right? I do not live in LOS, and all of my dough is in US dollars. I really would like to see an exchange rate of 50 baht to the dollar.

Therefore, thaksin could point the economic meltdown on his opponents and let the rural folks put the blamed all way to anti-thaksin peoples. if Only the exchange rate really hit 50 baht to a dollar, don't expect thais to beg for farang dollars unless they are really in deep deep trouble.

Edited June 7, 2006 by Thaising

[samran]

It is hard to balance the cometing demands of the needs of exporters and the need to dampen inflation. IMHO, a weaker baht is one of the last things Thailand needs. Makes imports more expensive....pushing up already high inflation. The answer to higher inflation....higher interest rates. Great way to kill an economy.

[Martin]

Looking at the downturn that is looming, they mention 1997 to explain what 'downturn' means.

But this will be in no way a repeat of 1997.

That was the result of failure to deflate an Asian bubble, and the coming one is the result of failure to deflate a USA bubble in time.

The USA is far, far into hock. The amounts owed by its Government and by individuals are unsustainable debt burdens, and the longer it goes without signs of a gentle deflating of the bubble starting, the more there is worry that it will burst with a bang.

How the cookie will crumble so far as the US$:Baht ratio goes is anybody's guess. We may well see violent fluctuations.

But it will mean that there is less exporting of manufactured goods and shellfish, with consequent unemployment and reduced purchasing power.

Expect the tourism and entertainment industries to be hit hard, and some general inflation.

As we were saying at this time last year, it makes sense to hold more of one's reserves in gold than in currency.

[h90]

Thais should prepare in advance to cope

Get a new car on finance now while the finance companies are still open for business.

get a credit card and max it out now.

Borrow as much cash as you can because there will se so much NPL going on it would be wrong to miss out.

yes just bought a house on credit 4000000 Baht.

If Thailand crashes I pay it back out of the pocket :-)

[oopapasan]

Thais should prepare in advance to cope

Get a new car on finance now while the finance companies are still open for business.

get a credit card and max it out now.

Borrow as much cash as you can because there will se so much NPL going on it would be wrong to miss out.

They are already doing that,but not for the same reasons.

[oopapasan]

Looking at the downturn that is looming, they mention 1997 to explain what 'downturn' means.

But this will be in no way a repeat of 1997.

That was the result of failure to deflate an Asian bubble, and the coming one is the result of failure to deflate a USA bubble in time.

The USA is far, far into hock. The amounts owed by its Government and by individuals are unsustainable debt burdens, and the longer it goes without signs of a gentle deflating of the bubble starting, the more there is worry that it will burst with a bang.

How the cookie will crumble so far as the US$:Baht ratio goes is anybody's guess. We may well see violent fluctuations.

But it will mean that there is less exporting of manufactured goods and shellfish, with consequent unemployment and reduced purchasing power.

Expect the tourism and entertainment industries to be hit hard, and some general inflation.

As we were saying at this time last year, it makes sense to hold more of one's reserves in gold than in currency.

The peanut gallery is knocking the US again."How goes the US is how goes the world"You better hope you don't get what you wish for!

[lamphun]

Good point, the US is the worlds biggest consumer and drives the economies of places like China and Russia. However Bush is trying to sort that out by bankrupting the country.

[samran]

Good point, the US is the worlds biggest consumer and drives the economies of places like China and Russia. However Bush is trying to sort that out by bankrupting the country.

Depends. Australia survived the Asian financial crisis quite well. Partly depends how diversified your economy is, and how flexible your exporters are.

But agreed, if you are too heavily relaiant on one customer, then.......

[TokyoT]

Looks like there may be some real truth to a 1997 flashback:

Exports are up:

Thai exported over US$ 10 billion during the month of May

Deputy Prime Minister and Commerce Minister Somkid Jatusripitak(สมคิด จาตุศรีพิทักษ์) stated that during the month of May, Thailand has generated US$ 10 billion revenue from its exports. The ministry will also maintain the export rate at 17 percent.

Source: Thai National News Bureau Public Relations Department - 19 June 2006

http://www.thaivisa.com/forum/index.php?sh...3274&hl=exports

but not as much as Imports:

Thailand Posts Biggest Trade Deficit in 11 Months

June 20 (Bloomberg) -- Thailand posted its biggest trade deficit in 11 months in May as imports rose to a record amid high oil prices, the commerce ministry said.

The Southeast Asian nation had a $646 million deficit in May following April's a $551 million shortfall, Karun Kittisathaporn, the commerce ministry's secretary general, told a press conference in Nonthaburi province in suburban Bangkok today. The deficit was the highest since June 2005.

.....

Current Account

The current account deficit was $3.71 billion last year, the country's first shortfall since 1997. A record $14 billion deficit in 1996 forced Thailand to abandon the baht's peg to the U.S. dollar a year later and allow the currency to float, triggering financial turmoil in the region.

Source: Bloomberg - 21 June 2006

http://www.thaivisa.com/forum/index.php?showtopic=73477&hl=

Earlier this year MoC attempting to convince everyone reserves were in good shape:

The Ministry of Commerce reveals that currency supply in 2006 is 4 times higher than in 1997

Thailand itself has a currency reserve of 10.6 billion US dollars, which has expanded from 6.7% of the national GDP to 42.7% of the GDP in the third trimester of 2006.

Source: Thai National News Bureau Public Relations Department - 21 March 2006

http://www.thaivisa.com/forum/index.php?sh...oreign+currency

More recent news continueing to attempt to convince everyone reserves are in good shape:

Thailand has adequate international reserves to cope with capital outflows

M.R. Pridiyathorn said he was not concerned about the present financial situation as Thailand still had as much as 57 billion US dollars in international reserves while investments from the beginning of this year until now exceeded the outflows.

Source: Thai National News Bureau Public Relations Department - 17 June 2006

With the trade imbalance and all (no end in sight), why do you think the government wants everyone to think Thailand have adequate reserves?

[opothai]

not just thailand but world wide problems

in the uk remember the crash of the seventies

housing boom, unbelievable credit lending limits for that time and a bull market in oil and gold.

this is what happened before inflation grew to 27% and the stock market plummetted by more than 60%

we are now in 2006 with a housing boom, massive and unsustainable credit limits, and we have a major bull market in oil and gold.

unless the governments can learn from previous mistakes could we see history repeat itself not just in los but in all the major western economies ???

[Martin]

I think you are right, 'opothai', that the present times are more like the early seventies than 1997.

So many Western countries have excessively-indebted populations.

In fact, this time SE Asian countries may fare less badly than Western ones.

It is the borrowing against artificial valuations of family residences that is particularly worrying, and the people of Thailand don't seem to be deeply into that.

[cclub75]

That was the result of failure to deflate an Asian bubble, and the coming one is the result of failure to deflate a USA bubble in time.

Very true. And that's why it is going to be much, much more harmful.

But to be more precise, I would add that actually some asian bubbles will burst too, as a consequence.

Very gloomy indeed.

[plachon]

not just thailand but world wide problems

in the uk remember the crash of the seventies

housing boom, unbelievable credit lending limits for that time and a bull market in oil and gold.

this is what happened before inflation grew to 27% and the stock market plummetted by more than 60%

we are now in 2006 with a housing boom, massive and unsustainable credit limits, and we have a major bull market in oil and gold.

unless the governments can learn from previous mistakes could we see history repeat itself not just in los but in all the major western economies ???

The housing "boom" is over IMO, with house prices only edging up at at a sustainable rate of growth these days. In London prices have been stagnant for some time, with some areas seen prices falling.

No fear of an economic crash in UK in the short to medium term, but v. real in Thailand in the not too distant future. All the signs are there............

[Johpa]

The housing "boom" is over IMO, with house prices only edging up at at a sustainable rate of growth these days. In London prices have been stagnant for some time, with some areas seen prices falling.

No fear of an economic crash in UK in the short to medium term, but v. real in Thailand in the not too distant future. All the signs are there............

From here in my region of the US, the housing bubble also seems about to burst. Last summer, houses in my neighborhood, a very nice (and boring) middle class suburb, were selling at full asking price within weeks of listing. This past two months, the houses for sale are not selling and I have just noticed the first "price reduced" sign.

If the dollar collapses the effect will be worldwide as the $US, for better or for worse, until death do us part, is the international currency. In a worst case scenario, and it is not that far out of the question, we are looking at something closer to 1929 rather than 1997 or the 1970s.

And there are even worse case scenarios out there as the entire global economy is based upon a very fragile physical infrastructure. I mean what we would do without access for our dose of Thai Visa?