Thai economy 'close to recession': KResearch

[ginjag]

Bangkok Bank paints a rosy future on the other thread. amazing.

[silent]

I think if they outlawed and imprisioned corruptive people that would solve the recession problem... there would be plenty of money to go all around to shore up the economy... it is unbelievable how corruptions is becoming more and more flagrant.. I wonder how it will play out with ASEAN because Singapore and Malaysia are so anti-corruptive in their measures to individuals who are caught... (Is Thailand becoming the Greece of EU?) hehe

Then Thailand be true sophisticated democracy with layers of corruption so deep, that it's easier to find a missing Malaysian jet and not worth the cost to taxpayers for investigation, conviction and incarceration up to the overturn.

[Bpuumike]

'... just a technical recession" so no loss of face for Thailand there then.

On the other hand, all recessions are, by definition, technical.

Edited April 17, 2014 by Bpuumike

[rametindallas]

Charl Kengchon, managing director of KResearch, said the prolonged political unrest had seriously hit the economy, causing the pressure on domestic spending in the first three months.

I find it ironic that the former Thai Farmers Bank is saying this. A huge aspect should be patently obvious to them that in that there are a lot of unpaid farmers who are in no position to do any "domestic spending".

not to mention that the first-time car buyers who have all their extra cash going to car payments aren't contributing to 'domestic spending' either.

[Sparkles]

Recession? what recession? Go tell that to the 40,000 + people who had placed orders for new cars at the last car's show..

Probably 90 % on credit and 50% of them will be reposessed in due course.

Level of household debt has risen 45 % in the last 5 years my bank manger tells me

[Goat Roper]

Wasn't it just a couple weeks ago that the 'white liar' said Thailand is doing well economically and is not anywhere near a recession?

[Philcoz]

I am lucky to work in a job that is recession proof.

I am lucky to work in a country that doesn't even know how to spell the word "Recession"

[1Ping1]

Gee, let's keep building more and more apartments and houses that nobody can afford or wants. When I first moved here (Korat), 8 years ago, I was struck by all of the vacant houses scattered throughout the place. Over time I discovered more and more and more of them. Learned that then, 2006, over 25% of residential property was unoccupied. With the unprecedented building boom, that number is probably closer to 35% today. Some of those places have been owned by the banks since the baht crash in the late 1990s. What does everybody who's taken a business class, or even a history class, learn? When supply exceeds demand, the price goes down, and vice versa. Not here. In the US, if a bank re-possesses a property, they can hold it on their books for a maximum of 90 days. Then it has to be sold by "public outcry" (auction) for whatever the market will offer. That's why US housing values periodically crash. Sad for the owners bur a real boon for those working class slobs who are lucky to get in on a dip. In most of Asia, Thailand included, banks can hold property indefinitely. And, they can keep its book value at the value they set for the property when it was new. In other words, even though it will never sell, it's over priced to beging with and now vacant for 10 years, there's pigeons living inside it and the wiring is shot, it shows up as 100% of the original asking price as a bank asset. IOW, if you were to really let property prices go to what they should, a condo would go for about 750k, a fancy condo or a simple house for 1-mill, and a large nice house for about 1.5 -mill. Possibly less, based on most Thai's wages. I own my own place here. Paid 2.7 but it honestly should be worth 1.5. It also means that virtually every bank is insolvent. This place is headed for such a day of financial reckoning! And they build more and more and more of these condos and row homes and shop/homes every day. Years after they have finished them, most of the units are still vacant but the price never drops 1 Satang.

Great post. I was just wondering what is your opinion on where property "prices", not "values" are headed in the future?. I agree with everything you have posted and you made clear some of the fog I was looking through. I still though am totally perplexed as to what holds up the prices of properties in all areas, both rural and resort. Issan and South. . They seem to be about 100-200% above true value. All areas have the high vacancy rates you reflected on, it just seems the bubble should burst somehow. Though I have not idea what/how it will play out.

In any open market where people are investing in real estate, you cannot have rents being less than half the price of the house or condo payment. The only way that would happen here is if you put 60-70% down and only financed 30-40%. With the large down payment, you then of course are parking a large sum that is not doing anything for you.

I have invested in property (houses and condos) for over 35 years. Here, I am renting and still trying to sort it all out...........................

[Tomtomtom69]

Recession? what recession? Go tell that to the 40,000 + people who had placed orders for new cars at the last car's show..

I was one of them. Got my car less than 2 weeks later after making an order at the November-December show but lost my job due to the poor economic circumstances in February. Would have immediately gotten a new job at that time, but that company is still holding off because it's very export dependent and many foreigners have lost confidence with Thai export partners right now during these politically induced economic times. My luck may be about to turn, as I'm about to get that job I have been waiting for, but things are definitely still not that rosy.

[rametindallas]

Gee, let's keep building more and more apartments and houses that nobody can afford or wants. When I first moved here (Korat), 8 years ago, I was struck by all of the vacant houses scattered throughout the place. Over time I discovered more and more and more of them. Learned that then, 2006, over 25% of residential property was unoccupied. With the unprecedented building boom, that number is probably closer to 35% today. Some of those places have been owned by the banks since the baht crash in the late 1990s. What does everybody who's taken a business class, or even a history class, learn? When supply exceeds demand, the price goes down, and vice versa. Not here. In the US, if a bank re-possesses a property, they can hold it on their books for a maximum of 90 days. Then it has to be sold by "public outcry" (auction) for whatever the market will offer. That's why US housing values periodically crash. Sad for the owners bur a real boon for those working class slobs who are lucky to get in on a dip. In most of Asia, Thailand included, banks can hold property indefinitely. And, they can keep its book value at the value they set for the property when it was new. In other words, even though it will never sell, it's over priced to beging with and now vacant for 10 years, there's pigeons living inside it and the wiring is shot, it shows up as 100% of the original asking price as a bank asset. IOW, if you were to really let property prices go to what they should, a condo would go for about 750k, a fancy condo or a simple house for 1-mill, and a large nice house for about 1.5 -mill. Possibly less, based on most Thai's wages. I own my own place here. Paid 2.7 but it honestly should be worth 1.5. It also means that virtually every bank is insolvent. This place is headed for such a day of financial reckoning! And they build more and more and more of these condos and row homes and shop/homes every day. Years after they have finished them, most of the units are still vacant but the price never drops 1 Satang.

NPLs. Non performing loans. Many of properties the banks have repossessed would be on the market for money owed because the bank is not making any money off them and still has to pay administrative costs. Many can't be sold as the original owners are contesting the bank repossession and the cases are in the glacially slow civil court system where it can take decades to final resolution. I found this out trying to buy a repo in Bangkok. I'm not arguing with your post, just explaining that some is beyond the bank's control.

[monkey4u]

Gee, let's keep building more and more apartments and houses that nobody can afford or wants. When I first moved here (Korat), 8 years ago, I was struck by all of the vacant houses scattered throughout the place. Over time I discovered more and more and more of them. Learned that then, 2006, over 25% of residential property was unoccupied. With the unprecedented building boom, that number is probably closer to 35% today. Some of those places have been owned by the banks since the baht crash in the late 1990s. What does everybody who's taken a business class, or even a history class, learn? When supply exceeds demand, the price goes down, and vice versa. Not here. In the US, if a bank re-possesses a property, they can hold it on their books for a maximum of 90 days. Then it has to be sold by "public outcry" (auction) for whatever the market will offer. That's why US housing values periodically crash. Sad for the owners bur a real boon for those working class slobs who are lucky to get in on a dip. In most of Asia, Thailand included, banks can hold property indefinitely. And, they can keep its book value at the value they set for the property when it was new. In other words, even though it will never sell, it's over priced to beging with and now vacant for 10 years, there's pigeons living inside it and the wiring is shot, it shows up as 100% of the original asking price as a bank asset. IOW, if you were to really let property prices go to what they should, a condo would go for about 750k, a fancy condo or a simple house for 1-mill, and a large nice house for about 1.5 -mill. Possibly less, based on most Thai's wages. I own my own place here. Paid 2.7 but it honestly should be worth 1.5. It also means that virtually every bank is insolvent. This place is headed for such a day of financial reckoning! And they build more and more and more of these condos and row homes and shop/homes every day. Years after they have finished them, most of the units are still vacant but the price never drops 1 Satang.

I agree

Just look at the properties Kasikorn bank has for sale.

The prices are staggering

[rametindallas]

I do not understand the economy in Thailand. I am surprised I see new condoes and small houses build everywhere in Thailand. Who can afford to buy and live there ? With all that activity in the housing market it seems strange, that there could be a recession, before the market (banks) crash. The building activity must be in the BNP ?

You cannot find a safety deposit box in all Bangkok to rent. They are all full of gold as an investment. Anyone with enough money to invest will not invest in the Thai stock market as it is notoriously manipulated. So, you invest in gold. Once you run out of safe places to store your gold, you then buy real estate. At least 25% of condos will remain empty as they were bought at a discount, before the project opened, as an investment and, since there is no pressure (taxes) to sell, the owners will want a nice return on their investment to make a sale. The developers know this and these properties are built with these investors in mind. There really are few places to park your money in Thailand. Cash in bank accounts is insured for only the first million Baht.

[rickirs]

Government domestic spending has one of the greatest impacts on GDP, whether it be directly funding national infrastructure that ultimate saves money or generates more jobs/businesses and indirectly through populist policies that raise the standard of living and increase business investments. But there has been only an interim government for the last seven months and the EC is projecting a newly installed government by next October, another five months away. An interim government cannot create new obligations and the current interim government has been forestalled to provide increased domestic spending by the Courts. Regardless whom is at fault for the political standoff, the continuing inability of the government to increase domestic spending will continue Thailand's lower GDP and slide into a recession.

[sirchai]

It said under such environment, the country’s economy might be facing a recession soon....

It already does. How should that work, when all is much more expensive but people are not making more money?

100 baht 12 years ago, were pretty much similar to 1,000 baht now.

A good excuse to skip ASEAN now.

[bander]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

Recession? what recession? Go tell that to the 40,000 + people who had placed orders for new cars at the last car's show..

They never tell you about the 39,000 that turn their new cars back in because they find out they can't afford them after one year.

Several of my in-laws are part of that 39,000. But I wouldn't say they turned their cars back in; it's more like the finance company came and took it back.

And the durn shame about it is how some of these in-laws borrowed money from family & friends (not me) to make the downpayment and some of the monthly payments with those family/friends still owed the borrowed money.

Thai style: If you don't have money, borrow it from family or friends, don't think about consequences when you are not able to pay it back

[SICHONSTEVE]

I am lucky to work in a job that is recession proof.

Same here with our (private) school.

[Cadan]

Recession? what recession? Go tell that to the 40,000 + people who had placed orders for new cars at the last car's show..

They never tell you about the 39,000 that turn their new cars back in because they find out they can't afford them after one year.

Several of my in-laws are part of that 39,000. But I wouldn't say they turned their cars back in; it's more like the finance company came and took it back.

And the durn shame about it is how some of these in-laws borrowed money from family & friends (not me) to make the downpayment and some of the monthly payments with those family/friends still owed the borrowed money.

Just do the math. + 1 million cars are sold in Thailand per year which is about 20,000 per week and the show was about 2 weeks. Conclusion is that people buy the cars during the motor show. Why ? Coz you get extra benefits such as extra 2 years warranty. (5 years instead 3)

[carstenp]

First I want to say hello to all of you.First post here

I must admit, I really don't understand the marked down here.

Japan oconomy is down( thailand export) china has big problems(Thailand export), tourist down about 20 %, loose money rice scheme(about 800 bill), 1 car scheme , 1 house scheme, high household debt(about 85%), bad loan , policital problems and so on, But the stock marked is going up, bath is getting stronger. Can somebody please explain why

[whiteman]

I am lucky to work in a job that is recession proof.

Oh my god

your an undertaker

So close it's not funny

So you are a Dead beat

[elgordo38]

I really question if the figure of 39,000 cars reposed is correct. Like most fiction here maybe one should just double the number to get closer to the real one. Looks like another understated figure to me. I feel really sorry for the relatives of the buyers if they helped with the deposit and payments. Trust goes a long way here. I have learned in life that sometimes trust comes at a cost.

[sirchai]

Some times I think my gold fish have more intelligence then some of the people that run this country.

You shouldn't use plural.

[SICHONSTEVE]

I really question if the figure of 39,000 cars reposed is correct. Like most fiction here maybe one should just double the number to get closer to the real one. Looks like another understated figure to me. I feel really sorry for the relatives of the buyers if they helped with the deposit and payments. Trust goes a long way here. I have learned in life that sometimes trust comes at a cost.

One can certainly say trust this government at your peril - I'm sure there are almost a million rice farmers out there wondering about their own decision making last election day!!!

[sirchai]

Bangkok Bank paints a rosy future on the other thread. amazing.

Yep, but the truth is that Yingluck's government is prepared. The high speed train project is canceled due a lack of money.

Please see the mode of transportation for government officials in Thailand. Only 145,000 baht, incl. VAT.

Edited April 17, 2014 by sirchai

[Thai at Heart]

Sorry to have left and apparently plunged the country into crisis financially.

I didn't realisey my meagre million made all the difference.

The rail stuff is on hold which stops massive spending on infrastructure. The property markets are apparently awash with stock. Are people still building ? Everyone bought their new car last year.

Exports aren't moving. Why is that? Rest of the world still in a mess.

Edited April 17, 2014 by Thai at Heart

[Donk]

There is something very strange about the thai economy. Thais buy big expensive cars in huge quantities and in a few years have a much newer and more expensive car than in europe. They build new and big houses for huge sums. It seems to be very easy to borrow money from banks and finance companies. If you take into terms to which wages that Thais have so I can not understand how they can get the economy to make ends meet. I suspect the banks and finance companies will have to take back large amounts of both cars and houses. I think it must mean that in near future we will see an economic and banking crisis in Thailand.

[Thai at Heart]

There is something very strange about the thai economy. Thais buy big expensive cars in huge quantities and in a few years have a much newer and more expensive car than in europe. They build new and big houses for huge sums. It seems to be very easy to borrow money from banks and finance companies. If you take into terms to which wages that Thais have so I can not understand how they can get the economy to make ends meet. I suspect the banks and finance companies will have to take back large amounts of both cars and houses. I think it must mean that in near future we will see an economic and banking crisis in Thailand.

You have to realise that every town has its cash rich people that are completely untouched by the tax man. Markets, restaurants, whole sellers, booze men, cigarette men, hotleiers,and the list goes on

They wash their money in land and property. As long as they can stay liquid, the whole thing stays up.

[majhiggins]

Recession? what recession? Go tell that to the 40,000 + people who had placed orders for new cars at the last car's show..

They never tell you about the 39,000 that turn their new cars back in because they find out they can't afford them after one year.

Several of my in-laws are part of that 39,000. But I wouldn't say they turned their cars back in; it's more like the finance company came and took it back.

And the durn shame about it is how some of these in-laws borrowed money from family & friends (not me) to make the downpayment and some of the monthly payments with those family/friends still owed the borrowed money.

Just do the math. + 1 million cars are sold in Thailand per year which is about 20,000 per week and the show was about 2 weeks. Conclusion is that people buy the cars during the motor show. Why ? Coz you get extra benefits such as extra 2 years warranty. (5 years instead 3)

With all of these repossessed cars, why are second hand autos almost as expensive as the new ones? They not only don't obey the rules of supply and demand, they also are impervious to depreciation. You're better off buying a new car. If they paid 750,000 for it 6 years ago, by god it's still got to be worth 680,000 today. And why can I buy almost 3 brand new turbocharged Minis Cooper Ss in the USA (Starting at $24,000 x 30 = 720,000 Baht) for the price of a new Accord 2.4 (1.9 million baht) in Thailand? And the Mini, without turbocharger, costs almost twice that!

Edited April 17, 2014 by majhiggins

[carstenp]

Recession? what recession? Go tell that to the 40,000 + people who had placed orders for new cars at the last car's show..

They never tell you about the 39,000 that turn their new cars back in because they find out they can't afford them after one year.

Several of my in-laws are part of that 39,000. But I wouldn't say they turned their cars back in; it's more like the finance company came and took it back.

And the durn shame about it is how some of these in-laws borrowed money from family & friends (not me) to make the downpayment and some of the monthly payments with those family/friends still owed the borrowed money.

Just do the math. + 1 million cars are sold in Thailand per year which is about 20,000 per week and the show was about 2 weeks. Conclusion is that people buy the cars during the motor show. Why ? Coz you get extra benefits such as extra 2 years warranty. (5 years instead 3)

With all of these repossessed cars, why are second hand autos almost as expensive as the new ones? They not only don't obey the rules of supply and demand, they also are impervious to depreciation. You're better off buying a new car. If they paid 750,000 for it 6 years ago, by god it's still got to be worth 680,000 today. And why can I buy almost 3 brand new turbocharged Minis Cooper Ss in the USA (Starting at $24,000 x 30 = 720,000 Baht) for the price of a new Accord 2.4 (1.9 million baht) in Thailand? And the Mini, without turbocharger, costs almost twice that!

Because there is tax on imported cars. That's way many farriers is build by items of spare part no tax

[MaxLee]

It's already in a recession:

1. Rice pledging Scam

2. Tablet Scam

3. Flood scam

4. Tourism scam

The list goes on, but the people in power don't give a damn...

[GAZZPA]

I am lucky to work in a job that is recession proof.

Oh my god

your an undertaker

So close it's not funny

pathologist? Or perhaps political reporter,, always have work in Thailand.