World Bank sees dimmer Thai Economic

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ECONOMIC
World Bank sees dimmer Thai Economic
The Nation


Shopping Center in Bangkok launches sale campaing to boos their sale at the period of the country's economy has signed to grow lower than three per cent.

BANGKOK: -- Thailand's economic growth would keep tapering this year and the outlook remains uncertain due to continued political tensions, while global growth is also lacking vigour, according to the World Bank.

The forecast for Thailand's economic growth has been slashed to 2.5 per cent from 3 per cent in April, according to the semi-annual "Global Economic Prospects" report released on Tuesday.

Growth is expected to pick up to 4.5 per cent next year and the following year.

In East Asia and the Pacific, growth is viewed at 7.1 per cent this and next year, before easing to 7 per cent in 2016.

Outside of China, regional growth would slow somewhat this year due to the tightening of domestic policies and the political tensions.

"Recent political tensions have introduced some uncertainty to the outlook," the report said.

"A projected acceleration of growth in the Philippines in 2015 reflects accelerated reconstruction efforts. Overall, aggregate growth for the region, excluding China, is projected to settle at around 5.5 per cent by 2016 as external demand solidifies, the domestic adjustment process comes to an end and Thailand recovers from political crisis. In particular, growth in the Asean-4 is projected to track potential output."

Vietnam would continue to benefit from recovering global demand due to improved macroeconomic fundamentals, including improved price stability, with GDP growth expected to increase modestly, but steadily to reach 5.8 per cent by 2016.

In Indonesia, growth will ease to 5.3 per cent this year as the economy adjusts to tighter financing conditions, before stabilising at 5.6 per cent in the next two years on the back of recovering exports.

This year marks the third straight year for developing economies to expand by less than 5 per cent, a factor that has contributed to rising debt-to-GDP ratios that could make those economies more vulnerable, Andrew Burns, the report's lead author, told Reuters.

"Although the situation in developing countries is pretty good ... it isn't the kind of growth they're going to need if they're going to make the very solid inroads into poverty that we're hoping," he said.

The global growth forecast was trimmed due to a confluence of events, from the Ukraine crisis to unusually cold weather in the United States, which dampened economic expansion in the first half of the year.

The poverty-fighting institution predicted the world economy would grow 2.8 per cent this year, below its January forecast of 3.2 per cent, but expressed confidence that activity was already shifting to more solid footing.

Tensions between Ukraine and Russia hit confidence worldwide. The bank also cut its growth forecast for the United States to 2.1 per cent from 2.8 per cent to account for the weather at the start of the year.

The US economy contracted for the first time in three years in the first quarter, but it already appears to be rebounding.

"Yes, there has been a big downgrade in 2014," Burns said.

"But that's mainly a reflection of stuff that's already happened."

Growth should quicken later this year as richer economies continue their recovery.

The global growth forecasts for the next two years remain unchanged at 3.4 per cent and 3.5 per cent.

The forecasts assume tensions in Ukraine will persist this year but won't worsen. An escalation in the crisis could further shake global confidence, prompting firms to postpone investments and crimping growth in developing economies by as much as 1.4 percentage points under the worst-case scenario.

There is a possibility of financial volatility in emerging markets once the US Federal Reserve starts to raise interest rates, mopping up some of the liquidity glut in global markets.

Emerging markets have not fully priced in the potential for a monetary tightening in richer economies.

"The real concern is what happens in 2015, 2016," Burns said.

Developing countries need to do more to address structural issues that are holding back growth, he added.


-- The Nation 2014-06-12

[EricBerg]

..."due to continued political tensions,"...

That tension is eased to a large extend now. In general the Worldbank predictions on asian countries are less good than on western ones. With the new wind that is blowing there may very well be more growth this year. Let's see how things develop.

[NongKhaiKid]

The World Bank sees a dimmer economic outlook but in the last couple of days we have been told that tourists will be back in numbers very soon, that rice sales will rise and now car exports will reach a record level.

So who do we believe ?

[ratcatcher]

Shopping Center in Bangkok launches sale campaing to boos their sale at the period of the country's economy has signed to grow lower than three per cent.

Sounds good to me.

[issanaus]

The World Bank sees a dimmer economic outlook but in the last couple of days we have been told that tourists will be back in numbers very soon, that rice sales will rise and now car exports will reach a record level.

So who do we believe ?

The world Bank measure what can be measured so its predictions are more accurate for the formal economy. However even in the better documented economies (typically western economies) consumer and business confidence is harder to predict and even harder to measure.

Thailand has a very significant informal economy, the political instability has been long term as well as a reduction in the inefficiencies caused by corruption and nepotism (but now has a possibility of longer term resolution). All of this is hard to quantify and even harder to predict as the level of success the current administration will achieve is uncertain.

If the Military succeeds even in part the hand brakes that have been holding back the economy will be released - potentially doubling the growth forecasts for Thailand.

[stickyrice2000]

I don't believe the recovery can be done so quickly. They like to put a positive spin to the news which is the right thing to do. Otherwise, people will hold back on their spending.

[shirtless]

I can see the economy getting worse, recovery will be affected as Thailands trading partners are struggling .

[kalbo123]

Dont worry, the Army is in charge now, that are the same guys that bought those excellent and cheap bomb detectors, it will be all good!

Verzonden vanaf mijn iPhone met behulp van Thaivisa Connect Thailand

[chiang mai]

Actually that was a Brit who sold the fake bomb detectors and the British government and the Ministry of Defense supported him!

The Economy: economists are famous at getting it wrong, it's not an exact science and is only based on probability, famously, the IMF this week has had to publicly grovel to the UK PM for getting its forecast wrong. So just because it's the World Bank who is saying it, doesn't make it true.

My guess: I feel that the current coup is bringing some much needed change that is very positive, if that change continues the end product could be very attractive, I think Thailand will surprise to the upside.

[bigbamboo]

People are naturally still nervous about the political situation but a lot less so than before the coup which has been surprisingly well managed. That nervousness stems not from worries about the ability of the current administration to run the nation's affairs but from the threat of another party wishing to upset the apple cart.

[tim armstrong]

The World Bank sees a dimmer economic outlook but in the last couple of days we have been told that tourists will be back in numbers very soon, that rice sales will rise and now car exports will reach a record level.

So who do we believe ?

The World Bank makes some interesting reports, but they are not some kind of independent charitable institution. They represent the largest global financial institutions, and have strong vested interests in promoting certain countries over others, so I am a bit skeptical about this assessment.

[DubaiIsCalling]

The World Bank sees a dimmer economic outlook but in the last couple of days we have been told that tourists will be back in numbers very soon, that rice sales will rise and now car exports will reach a record level.

So who do we believe ?

I believe the CEO of DTAC

[jonclark]

Actually that was a Brit who sold the fake bomb detectors and the British government and the Ministry of Defense supported him!

The Economy: economists are famous at getting it wrong, it's not an exact science and is only based on probability, famously, the IMF this week has had to publicly grovel to the UK PM for getting its forecast wrong. So just because it's the World Bank who is saying it, doesn't make it true.

My guess: I feel that the current coup is bringing some much needed change that is very positive, if that change continues the end product could be very attractive, I think Thailand will surprise to the upside.

Economists also get it right.

The biggest worry I have is that the average household debt stands at 163'000. (increase of 4'000 baht per house hold since Nov 2013) Issan has the highest income to debt ratio of 73% (i.e. 73% of household income is spent servicing debts) whilst Bangkok has the highest average debt per houshold of 223'000, with an average monthly income of 30'000 baht.

(Source National Statistic Office - Thailand April 2014)

These are quite big numbers given household incomes, and although the banks are fairly well insulated with only 30% of debts being consumer based (Fitch 2014) There has been a worrying trend of non-performing debts rising from 1.1% in 2013 to 2.4% by April 2014. - Fitch also notes that both unemployment and inflation are rising in Thailand.

Unless the military starts to print money !!!!! or pay off current household debts, or works out some sort of moratorium for the public indebtedness, these problems will persist for the foreseeable future and certainly undermine the economic stability.

Lurking in the shadows is the very real danger that Thailand will be downgraded to the bottom tier of the human trafficking watch list (with N. Korea, Iran and Co), which is due in a couple of weeks, and also brings the significant possibility of (limited) economic sanctions, with the focus likely to be on shrimp export business which has an export value of over 3'000 million US a year (2012 - 2013).

Thailand is not out of danger - and i'd definitely err on the side of the economists on this one, hope i'm wrong

[chiang mai]

Why is the currency not weakening ?

It has, it's down over 20% (against GBP), this is as near to it's floor as it's likely to get, I believe.

[chiang mai]

I also agree that NPL's and Special Interest loans are a worry, however they become less if the economy takes off yet again. And I didn't mean to disregard entirely the WB report, I just wanted to make the point that it does not represent gospel.

[chainarong]

The word gentlemen is resilient , Thailand is solid as a rock when it comes to the economy ,that's because of the private sectors roll , not the governments , forecasts predict slowing down right through out the region, so this will effect Thailand as well, I would back Thailand to Australia as the one most likely to forge ahead ,at least Thailand has a manufacturing base and isn't relying on one country (China) to keep the economy going, through Iron Ore exports,

Edited June 12, 2014 by chainarong

[soalbundy]

Why is the currency not weakening ?

It has, it's down over 20% (against GBP), this is as near to it's floor as it's likely to get, I believe.

It's up against the Euro,the Euro has lost one Baht inside a few weeks

[chiang mai]

The Euro is down against almost everything, it's not in good shape at all.

[carstenp]

The Euro is down against almost everything, it's not in good shape at all.

Because ECB want a Weak euro. They hope it Will help the oconomy in euro zone.

Sad for us is out here.

[kerrysum]

I can see the economy getting worse, recovery will be affected as Thailands trading partners are struggling .

I agree, it is happening all over the world....

[rickirs]

Just a reminder that the proposed 2015 Thailand federal budget depends on a 6% growth rate. If federal and consumer debt isn't substantially reduced during the 2015 budget year, a 2.5% growth rate originally projected by the Yingluck administration will seem optimistic. Factors beyond current control such as extensive flooding can compound the obstacles to higher growth rates.

[Sandman77]

A growing economy make the prices high! Look at the eu

When the economy stop growing

The live standart for expats is better, because can buy more , when baht goes down!

[useronthenet]

Why is the currency not weakening ?

The baht has been manipulated by the BOT due to the fact they are holding onto a large amount of USD's in reserve. Needless-to-say if the baht falls (as it should have), then (in their eyes), Thailand would lose out. Ironic when you think that having a weaker baht would in fact benefit the country by promoting cheaper exports, and for attracting the tourists.

[i claudius]

The Euro is down against almost everything, it's not in good shape at all.

The EU is dead in the water ,i cannot see why it should not just sink under the waves and go back to indevidual countrys with their own currencies ,like it used to be .

the problem is that too many at the top just do not want the gravy train to stop.

[Thai at Heart]

Actually that was a Brit who sold the fake bomb detectors and the British government and the Ministry of Defense supported him!

The Economy: economists are famous at getting it wrong, it's not an exact science and is only based on probability, famously, the IMF this week has had to publicly grovel to the UK PM for getting its forecast wrong. So just because it's the World Bank who is saying it, doesn't make it true.

My guess: I feel that the current coup is bringing some much needed change that is very positive, if that change continues the end product could be very attractive, I think Thailand will surprise to the upside.

That said, do you think that coups are good GDP growth. Also bear in mind that the junta is busy carving up spending plans from PTP, so that bit is down, tourism numbers are supposedly down, so that's down, and consumers are reportedly not spending or are at least up the wazoo with debt.

So, all in a its not a crazy prediction.

[Eloelo]

The Euro is down against almost everything, it's not in good shape at all.

The EU is dead in the water ,i cannot see why it should not just sink under the waves and go back to indevidual countrys with their own currencies ,like it used to be .

the problem is that too many at the top just do not want the gravy train to stop.

Absolutely! and soon most countries will be on economic life support systems until they splutter and die...then we will have war.!

[Roadman]

I can see the economy getting worse, recovery will be affected as Thailands trading partners are struggling .

I agree, it is happening all over the world....

Some economies are going to get a shock in the next few months. As of this week there are Chinese and South Korean business's struggling to secure bank loans for raw materials. There are a lot of ships in the South China Sea area right now with cargoes now with no homes intended for failed buyers. Edited June 12, 2014 by Roadman

[Emptyset]

Actually that was a Brit who sold the fake bomb detectors and the British government and the Ministry of Defense supported him!

The Economy: economists are famous at getting it wrong, it's not an exact science and is only based on probability, famously, the IMF this week has had to publicly grovel to the UK PM for getting its forecast wrong. So just because it's the World Bank who is saying it, doesn't make it true.

My guess: I feel that the current coup is bringing some much needed change that is very positive, if that change continues the end product could be very attractive, I think Thailand will surprise to the upside.

That said, do you think that coups are good GDP growth. Also bear in mind that the junta is busy carving up spending plans from PTP, so that bit is down, tourism numbers are supposedly down, so that's down, and consumers are reportedly not spending or are at least up the wazoo with debt.

So, all in a its not a crazy prediction.

Cracking down on the informal economy, nightlife etc probably also has at least a small negative effect on GDP.

"A statistical analysis and probabilistic simulation by political scientist and consultant Jay Ulfelder, at his blog Dart-Throwing Chimp, shows that economic growth slows, on average, by 2.1 percentage points in the year of a coup, 1.3 points in the year after and 0.2 points in the year after that." http://fivethirtyeight.com/datalab/how-thailands-coup-could-affect-its-economy/

I wouldn't think the effect would be as big in Thailand specifically because I don't think anyone expects the fundamentals to be affected that much.

[Ricardo]

That said, do you think that coups are good GDP growth. Also bear in mind that the junta is busy carving up spending plans from PTP, so that bit is down, tourism numbers are supposedly down, so that's down, and consumers are reportedly not spending or are at least up the wazoo with debt.

So, all in a its not a crazy prediction.

If you believe that PTP's economic-plans were good, which many (including myself) don't, then the junta's interruption of them would be a negative.

But Yingluck inherited a reasonably-growing economy, which growth since then has declined, and was borrowing to fund things like the free-laptops, rice-scam & 50-year infrastructure-gravytrain.

If the junta can impose a little discipline, and ensure slightly-more-productive investment, the trend set by PTP & Dear Leader's economic-genius might be reversed ?

Having said which, no way is Thailand ready for ASEAN, and the next few years would have been rocky, whoever was in charge, all IMO of course.

[leggo]

The economy here was going downhill way before the protests started and with the debt ratio per household increasing , practically on a monthly basis, the only way it can grow is through exports, which for the moment are good, and tourism which as we know for the moment is bad -this will change in the last quarter of 2014 and first 2015 when the high season returns; but how well who knows. The industry has been badly damaged and if martial law is still in place which it probably will be there will be considerable hesitation from the Chinese and there will be less Russians due to the recent devaluation

of the rouble. It is also true that apart from all the political troubles the country is facing an image problem and a lot of tourists do not think that Thailand is the paradise it once was. I have some Australian friends, who are doing alright as they say and they have never been here and recently told me that they wouldn't be coming in a million years - didn't like the idea of being ripped off, too many drugs, terrible road accidents etc and one can see where they are coming from -so -not so certain that tourism will bounce back just like that or for that matter the economy -this time I agree with the World Bank.