BoT asserts Thai economy picking up slowly this year

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BoT asserts Thai economy picking up slowly this year
By Digital Content



BANGKOK, June 12 - Bank of Thailand (BoT) Governor Prasarn Trairatvorakul said today that the Thai economy has started to show positive signs but its growth would not be fast this year.

Addressing the Euromoney Conference: The Greater Mekong Investment Forum, Mr Prasarn said consumers had confidence but household spending had not returned to normal because household debts remained high.

He also said that disbursement of the 2015 budget would begin this October as planned, but it would not fully benefit the national economy until next year.

Meanwhile, the private sector is waiting for a clear implementation of the National Council for Peace and Order (NCPO) roadmap. Therefore, its investment should fully recover next year, Mr Prasarn said.

The BOT governor commented that Thai exports will grow this year but would be a stronger force supporting the national economy next year because the global economy and the economic situation of trading parties were expected to fully recover next year.

Overseas funds were returning to the Stock Exchange of Thailand, he said.

Gov Prasarn said the Monetary Policy Committee will review its Thai economic growth rate forecast on June 18. Earlier it expected the Thai economy would grow less than 2.7 per cent this year and commented that the repurchase rate at 2 per cent was low, suitable to stimulate the national economy.

He also called for reasonable economic policies and cited 'unreasonable policies' such as the rice-pledging scheme and the first-car buyer scheme of the past government as shaking investor confidence.

Mr Prasarn recommended that in the medium term Thailand should solve its weakness and enhance its competitiveness.

Regarding energy prices, he said the NCPO should let market mechanisms govern them. (MCOT online news)


-- TNA 2014-06-12

[David48]

Interesting that The Nation reports ...

World Bank sees dimmer Thai Economic [The Nation]

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.

Humm ... World Bank assessment vs. the Bank of Thailand ... which one to believe ...

[fletchsmile]

Interesting that The Nation reports ...

World Bank sees dimmer Thai Economic [The Nation]

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.

Humm ... World Bank assessment vs. the Bank of Thailand ... which one to believe ...

Timing difference:

K.Prasran was speaking yesterday a couple of weeks after the coup.

The WB forecast was done in April before the coup (in April) although only released yesterday.

So I'd say BOT's assessment is the more timely and relevant and a better reflection for where we are now. The coup has helped stop the continual downward revisions, and created an environment where growth will start to climb again. They've already paid a large amount to the rice farmers that Yingluck's cronies couldn't deliver on, plus certain other budgets and spendings can now go ahead. Consumer confidence and forecasts generally are now for things to stop declining and start to improve, bank lending is slowly picking up....

Cheers

Fletch

[Chris Lawrence]

Interesting that The Nation reports ...

World Bank sees dimmer Thai Economic [The Nation]

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.

Humm ... World Bank assessment vs. the Bank of Thailand ... which one to believe ...

Timing difference:

K.Prasran was speaking yesterday a couple of weeks after the coup.

The WB forecast was done in April before the coup (in April) although only released yesterday.

So I'd say BOT's assessment is the more timely and relevant and a better reflection for where we are now. The coup has helped stop the continual downward revisions, and created an environment where growth will start to climb again. They've already paid a large amount to the rice farmers that Yingluck's cronies couldn't deliver on, plus certain other budgets and spendings can now go ahead. Consumer confidence and forecasts generally are now for things to stop declining and start to improve, bank lending is slowly picking up....

Cheers

Fletch

Fletch, I think most people would take note of the world bank as there hasn't been a great difference in time. You had Toyota slwoing production by 40%, don't know what is happening with the 17 banking organisations waiting to get onshore, the junta hasn't put their road map together, Infrastructure spending has been put on hold, the junta is placating the country with minor changes ( although welcomed by most not a hit internationally) and they have a few tons of rice to sell.

How the Junta starts spending will tell the world community what to look forward too.

Maybe your thoughts although wanted maybe a bit premature.

[fletchsmile]

The time diff may not be great but the events that have occurred are significant.

Before no-one could easily see an end in sight and there was a continual trend in negative revisions to forecasts.

Now everywhere I look sentiment is imroving, GDP revisions upwards, loan growth rates revisions upwards. Not saying they are fantastic but the key is positive revisions now instead of negative.

Less need for the MPC to cut rates. PTT just issued a landmark bond issuance with more attractive pricing than expected.

5 year credit default swaps CDS coming down. Rose a little after the coup but now around 20bp lower than pre coup.

SET forecasts being raised.

So while it s not exactly a magic wand thats waved away all the problems, a definite corner has been turned. That s a corner not reflected in the WB report.

Still have to see where the corner leads tho

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

[David48]

Great comments above ... I enjoyed reading them all ...

[Gomyway]

@Chris Lawrence - with respect I would like to contradict your saying Toyota slowing down by 40% - its Honda doing this.

And here Toyota starts its moving: http://www.asianewsnet.net/Toyota-mulls-expansion-in-Indonesia-amid-political-61142.html

Important read to know how the investors and the big money thinks: "Late last month, Thailand’s military instigated a coup, causing investors to loose their appetite for business there."

One can really hope it doesn't hit Thailand that hard.

[rickirs]

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

Interesting that The Nation reports ...

World Bank sees dimmer Thai Economic [The Nation]

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.

Humm ... World Bank assessment vs. the Bank of Thailand ... which one to believe ... alt=whistling.gif>

Timing difference:

K.Prasran was speaking yesterday a couple of weeks after the coup.

The WB forecast was done in April before the coup (in April) although only released yesterday.

So I'd say BOT's assessment is the more timely and relevant and a better reflection for where we are now. The coup has helped stop the continual downward revisions, and created an environment where growth will start to climb again. They've already paid a large amount to the rice farmers that Yingluck's cronies couldn't deliver on, plus certain other budgets and spendings can now go ahead. Consumer confidence and forecasts generally are now for things to stop declining and start to improve, bank lending is slowly picking up....

Cheers

Fletch

"They've already paid a large amount to the rice farmers that Yingluck's cronies couldn't deliver on.."

And why was that?

As you well know as an interim government the Yingluck regime could not since October 2013 AS PER THE CONSTITUTION and as denied by the ELECTION COMMISSION to borrow any funds that might place a financial burden on the next new government. That left the regime with only sales revenues to pay the farmers where the market price was well below the rice subsidy price. With the Constitution now suspended (except for Article 2) there is no constraint on borrowing. This also permits the borrowing of over 400 million baht to show the World Soccer Games free in Thailand, as well as any new subsidies and programs introduced for the 2015 fiscal year. So while now the farmers have their payments, the repayment of new government loans will be born by Thais for years to come as well as the increasing consumer debt. These factors may further complicate a quick economic recovery.

Therefoe, I am not so sure BOT has adequately taken into developing debt against any economic recovery. The current Thai economic situation is on a precipice with a challenge to carefully balance stimulus spending with debt obligations.

[wandasloan]

BoT asserts Thai economy picking up slowly this year

You mean it has a choice? Is there just one reader who thinks the BoT of June 2014 would ever, EVER assert the economy is NOT picking up?

People, please learn to read the Thai media under censorship. The point of this story is nothing to do with the economy and everything to do with what the BoT MUST report.

.

Edited June 13, 2014 by wandasloan

[Chris Lawrence]

Thanks Gomy. Yeah I thought it was 40% Toyota. But I did have another look at some news reports on the car industry.

http://www.chinadailyasia.com/news/2014-03/21/content_15126329.html

"Toyota, the largest car manufacturer in Thailand, produces more than 800,000 vehicles a year in the kingdom and was planning to increase that capacity by a further 200,000 units a year with an investment of $609 million.

“Our new investment in Thailand may not happen if the current political crisis goes on longer,” Reuters quoted Tanada as saying.

“For those that have already invested, like Toyota, we will not go away. But whether we will invest (further) or not, we are unsure.”" China Daily

"Thailand’s domestic auto market declined significantly in the last half of 2013 with consumer confidence sinking to a record 12-year low last month. Analysts say consumer confidence is expected to get worse as the political impasse continues.

Japanese truck maker Hino, for example, is scaling back production in Thailand, according to data from IHS.

Tetsuo Iwamura, Honda’s executive vice president, said last month that the company had “cautiously” made its 17.15 billion baht ($530 million) investment in a third factory in Thailand but has no investment plan for the country in the immediate future."

http://www.bloomberg.com/news/2014-03-30/thai-investment-threatened-by-political-deadlock-southeast-asia.html

“Without a fully-functional government, confidence will be weak,” said Phatra Securities economist Thanomsri Fongarunrung. “Private investment will remain stalled as the political vacuum continues. The delay in project approvals by the BOI is a concern. A long delay may prompt investors to shift to other countries as it will affect their production plans.”

Applications for investment incentives fell 58 percent to 63.1 billion baht ($1.94 billion) in the first two months of 2014, and a new BOI board must be endorsed by the government before any major projects can be approved, Udom said." Bloomberg May 2014

http://www.fool.com/investing/general/2014/02/14/can-toyota-survive-the-thai-crisis.aspx

"Toyota may reassess its plans in Thailand should the political unrest continue to pull the economy down. The company may abandon its current plan to invest 20 billion baht (approximately $609 million) to boost its capacity by 200,000 vehicles over the next three to four years. If the situation worsens, the Japanese carmaker could even cut production to maintain a balance between supply and demand. This strategy is a part of Toyota's production system and is largely known as the "just in time" approach." Motley Fool Feb2014

The car scheme, downturn in world economies and add the junta to the mix, doesn't help. The car manufactures are not going to remove themselves from Thailand, but their investment in the place may decline. Toyota hasn't made their decision on $609 million investment yet.

I would alos see this as an opportunity by forigen car manufactures to negotiate hard with the junta for consessions; makes sence as the junta would be able to turn around and say 'look what we have done'.

Picking up slowly may be pesermistic as there appears a lot of investment on the sidelines waiting to get into Thailand. The junta also appears to be getting comfortable in running the country and may be around for quite a while. I also see that the junta has approved infulstructure spending. They need to get in and kick start the economy; spend money and attract investors.

From press reports it seems as Thailand is on a crest of a wave for investments. The junta may need to borrow that big board Tony dumb dumb (Oz Prime Minister) just gave Obama to ride this one into the shore.