Thai economy in a bumpy ride

[Pib]

I see pawnshops growing like mushrooms. The weird thing is that we can't look inside to see what's for sale there. Imagine we see a hi-so Thai in there selling his/her gold/I-phone or Louis Vuiton.....

Most Thai pawn shops I've seen basically take in gold and other goods they have no intention of trying to resell via customers who walk in the door just shopping; instead, the gold/goods is resold through private contacts/networks already setup. And of course, with gold many Thais do come back and pay off their loan to retrieve their gold until it's time to pawn it again...or at least that seems to be the way some of my in-laws operate.

[emilymat]

.......and the baht keeps strengthening against European currencies.

No, the Euro is weakening against just about everything

I'm a pound sterling man, which has been rising steadily against the Euro but weakening against the baht. ??

[Cake Monster]

With Exports now down almost 8 % YoY, the massive amount of rising household debt compared to GDP, falling Tourist numbers, very weak Ag prices, and a housing market that is all but bust open, Thailand is indeed in for much more than a " bumpy ride ".

Many other nations have devalued their currencies to kick start their economies, but Thailand cannot do this due to all the household and commercial debt, which is still not under control, and the debt is still rising. If the baht was devalued, this would encourage even more borrowing, with a higher proportion of NPL,s also with debt on the lower rate, the economy will not be able to sustain the debt incurred.

The only chance Thailand has to grow its economy, is if the US Dollar was to crash, and that will not happen any time soon.

[carstenp]

.......and the baht keeps strengthening against European currencies.

No, the Euro is weakening against just about everything

I'm a pound sterling man, which has been rising steadily against the Euro but weakening against the baht. ??

Mostly because it seems like they has a peg agaist the Dollar/Euro/Pound

I think this will Explain it all.

However, it absolutely beggars belief that when comparing the economic news from the US and Thailand since July 2014, that the USD/THB TT buy rate today of 32.30 (6th March 2015) should be actually be a gnats whisker below that on the 1st July 2014 (TT buy rate, 32.31) when over almost the same period of time the US Dollar Index has actually increased by 18.5% (to 27th February 2015).

[elgordo38]

I wonder why.

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

Push the baht down.

[mommysboy]

Much worse to come. Armies never have been any good at running an economy.

[cloudhopper]

Much worse to come. Armies never have been any good at running an economy.

Much worse to come everywhere in the world, because central banks have never been any good at it either.

[tullynagardy]

I wonder why.

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

Listen, I understand you need to big up the junta on every thread there is, but sometimes it`s better just not commenting when you don`t quite understand the topic at hand.

Anyone who thinks the ongoing crisis in the Eurozone is in any way similar or related to the issues facing this particular developing Asian economy is completely clueless. Sorry.

[halloween]

I wonder why.

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

Listen, I understand you need to big up the junta on every thread there is, but sometimes it`s better just not commenting when you don`t quite understand the topic at hand.

Anyone who thinks the ongoing crisis in the Eurozone is in any way similar or related to the issues facing this particular developing Asian economy is completely clueless. Sorry.

Oh, I am sorry. I thought pointing out that other countries are facing similar problems was relevant. Of course, Europe is a special case, and not at all related, the problems here are caused solely by the junta, and every other country in the world is booming. I await your links to support this supposition as you obviously have far more knowledge than my humble self.

The possible exception is Oz, suffering huge budget deficits due to the drop in resources prices, due to the lack of demand. Probably caused by that bloody junta too. http://www.theaustralian.com.au/opinion/columnists/hold-on-tight-our-economy-is-heading-for-the-biggest-of-falls/story-e6frg7

Edited March 11, 2015 by halloween

[roo860]

i wonder if the endless condo and house construction around hua hin will stop or at least slow down?

With a bit of luck it will fall down! Have not seen a place get ruined so fast on all my life!

[rubl]

The good General had that covered and his solution to our poor economy situation is to raise more taxes. Military men should stay as military men and not try to act as economist.

You might have missed that general government financing and the financing of various projects to stimulate the economy require some money. What with the previous government having been somewhat easy in spending, the current government needs to operate in a tighter environment.

There's still the 700 billion Baht RPPs debt and somehow the 1.4 trillion the previous government parked under the carpet at Bank of Thailand because that gave them better borrowing conditions.

[Robby nz]

The good General had that covered and his solution to our poor economy situation is to raise more taxes. Military men should stay as military men and not try to act as economist.

You might have missed that general government financing and the financing of various projects to stimulate the economy require some money. What with the previous government having been somewhat easy in spending, the current government needs to operate in a tighter environment.

There's still the 700 billion Baht RPPs debt and somehow the 1.4 trillion the previous government parked under the carpet at Bank of Thailand because that gave them better borrowing conditions.

He has also missed that the present finance minister is not a military man but highly respected in the financial world and that the BoT (which has just lowered interest rates by 0.25%) is responsible for managing the economy.

But when you are just posting for a bash what do facts matter.

[heybruce]

I wonder why.

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

Push the baht down.

Let's see, a weaker baht would stimulate tourism, stimulate exports, make outside investment in Thailand cheaper, and stave off deflation while stimulating consumption of Thai products by making imported items more expensive.

On the down side, it means a weaker baht, which the economically ignorant would interpret as making the government lose face.

I guess it all depends on if economic ignorance or rationality prevails in government.

Edited March 11, 2015 by heybruce

[kimamey]

i wonder if the endless condo and house construction around hua hin will stop or at least slow down?

Driving in from Cha Am one sees al those expensive projects. I just don't understand where the buyers are coming from? Many of those projects are smack dab in the middle of nowhere save for access to one very congested main road. There are scores of condos sitting empty between the raiway line and the mountain. The banks must be up to their eyeballs in potential non performing loans. The Phuket region is drowning in expensive condo projects all being promoted as great investment earners to the foreign tourists. I am so happy I never bought anything and have no investment stake.

I'm too committed elsewhere but wouldn't now or in the near future be a good time to invest in property for anyone who is able to take a longer term view? There will be plenty of scope to pick something in a good location.

[useronthenet]

The party is over for Thailand !

[h90]

I wonder why.

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

and increasing currency, increasing salaries, increasing living costs and customer have less money.......

[Eric Loh]

The good General had that covered and his solution to our poor economy situation is to raise more taxes. Military men should stay as military men and not try to act as economist.

You might have missed that general government financing and the financing of various projects to stimulate the economy require some money. What with the previous government having been somewhat easy in spending, the current government needs to operate in a tighter environment.

There's still the 700 billion Baht RPPs debt and somehow the 1.4 trillion the previous government parked under the carpet at Bank of Thailand because that gave them better borrowing conditions.

He has also missed that the present finance minister is not a military man but highly respected in the financial world and that the BoT (which has just lowered interest rates by 0.25%) is responsible for managing the economy.

But when you are just posting for a bash what do facts matter.

Rob, your highly respected financial minister seem highly respected by only the coup leaders. He got his finance portfolio in both coups and not once in an elected government. May be his ability to condescend and follow orders. He is reported to favour the land tax just like the PM.

[baboon]

I wonder why.

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

and increasing currency, increasing salaries, increasing living costs and customer have less money.......

No worries, just borrow more. They (the lenders) really aren't that bothered about being repaid...

[opalred]

who tried in past to hold to us$ and country went broke all of them

[Chris Lawrence]

I read a couple of articles by John Le Fevre

"In the first two months of the Thai government financial year, October and November, only Bt14 billion (US$ 426.959 million) or 9.52 per cent of a slated Bt 147 billion (US$ 4.483 billion) investment budget was disbursed.

With Thai rice prices under threat from exporters in Vietnam and Cambodia (for the third year in a row Cambodia’s premier rice has been voted the world’s best at the World Rice Conference), depressed global rubber prices (Thailand has more than 200,000 tons of rubber stockpiled and prices are at a five-year low), sugar prices at a three-year low on the back of increased global supply and Thailand’s rural sector looks as if it is in for a rough ride in 2015.

According to Kasikorn Research Centre (KRC) about 39 per cent of all Thai exports to the EU previously benefited from the GSP relief scheme, but with the Thai baht appreciating against the Euro by 15.3 per cent since early 2014 Thai products had become increasingly more expensive despite the tariff relief the GSP scheme provided."

In another article Le Fevre also stated:

"On Tuesday Thailand’s three most powerful private-sector organisations, the Board of Trade of Thailand, the Federation of Thai Industries, and the Thai Bankers Association, known collectively as the Joint Private Standing Committee (JPSC) raised its concern over slow government spending and soft consumer spending.

As of mid February only 39.6 per cent or Bt 1.02 trillion (US$ 31.520 billion*) of the juntas total 2015 budget of Bt 2.575 trillion (US$ 79.574 billion*) had been dispersed, well below the 48 per cent targeted, while just 15 per cent or Bt 67.593 billion (US$ 2.089 billion*) of the total investment budget had been spent versus the 41.8 per cent intended.

Chairing the latest meeting of the JPSC Mr Mongkolsuthree said at the current rate of disbursement only about 30 per cent will have been dispersed by the end of this month, half way into the government financial year."

On top of this tourists are down 10%, GM are scaling back production of some vehicles, weak growth exports to the EU from tax privileges under the European Union (EU) Generalised System of Preferences (GSP) terminated as at 1 January, appreciating Baht, tariffs imposed on some prawn exports increase 4% to 12% and I understand trade to China is also on the decline.

Thailand is also in competition with India as the 'Detriot of Asia'; Cambodia and Vietnam are pushing their rice products; and rubber price is in decline with Thailand having a big stockpile of rubber.

It doesn't look good.

[kimamey]

The good General had that covered and his solution to our poor economy situation is to raise more taxes. Military men should stay as military men and not try to act as economist.

You might have missed that general government financing and the financing of various projects to stimulate the economy require some money. What with the previous government having been somewhat easy in spending, the current government needs to operate in a tighter environment.

There's still the 700 billion Baht RPPs debt and somehow the 1.4 trillion the previous government parked under the carpet at Bank of Thailand because that gave them better borrowing conditions.

He has also missed that the present finance minister is not a military man but highly respected in the financial world and that the BoT (which has just lowered interest rates by 0.25%) is responsible for managing the economy.

But when you are just posting for a bash what do facts matter.

Rob, your highly respected financial minister seem highly respected by only the coup leaders. He got his finance portfolio in both coups and not once in an elected government. May be his ability to condescend and follow orders. He is reported to favour the land tax just like the PM.

It could be that the military just want a good economy which will make them look better but have no idea how to do it so they get someone with financial expertise. Having said that I'm sure there are some areas of self interest that he can't mess with. Under elected governments there are probably similar wishes but many more supporters who want jobs and think they can do it. Looking at government jobs more broadly there has been a tendency to give jobs without much regard to ability. That was pretty obvious under the last government and I doubt if the one before that was entirely without fault.

[UDONJIM]

Sorrry guys but you missed the most important word in that article, it was the word LIQUIDITY. Thailand, like the rest of the world is facing a shortage of dollars required to service dollar-denominated debt of which the world is awash and which demand is pushing the dollar ever higher. Please read the thread below if you want to try and understand what's really happening. It will bore many of you but if you want, you can skip to the section entitled ' Ignore this global liquidity at your own peril', there you will find the reason for Thailand's and many other so-called emerging nations (and others) financial woes. I said months ago currency wars were approaching and was laughed at on this forum. It's already happening with currency devaluation taking place around he globe. I say again, it's only a matter of time when the Baht will fall IMHO..

http://davidstockmanscontracorner.com/central-banks-are-crack-dealers-and-faith-healers/

PS If you have ANY interest in what is really happening in the world economy and peripheral politics then read the above site every day as the writer (David Stockman) is a financial genius in my opinion and tells it the way it really is on many matters.

[BestBitterPhuket]

I wonder why.

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

Push the baht down.

Let's see, a weaker baht would stimulate tourism, stimulate exports, make outside investment in Thailand cheaper, and stave off deflation while stimulating consumption of Thai products by making imported items more expensive.

On the down side, it means a weaker baht, which the economically ignorant would interpret as making the government lose face.

I guess it all depends on if economic ignorance or rationality prevails in government.

Avoid losing face at home is more important than salvaging any economic prospects for the future..AND a devaluation means more expensive Prada bags, Lamburginis and overseas luxury vacations for the rich elite. They will never devalue the baht.

[UDONJIM]

Sorry, but they will have to or their exports will become even less competitive. Indonesia, Singapore and Malaysia have already devalued and maybe others in the SE Asian region. It's only a matter of time.

[rubl]

The good General had that covered and his solution to our poor economy situation is to raise more taxes. Military men should stay as military men and not try to act as economist.

You might have missed that general government financing and the financing of various projects to stimulate the economy require some money. What with the previous government having been somewhat easy in spending, the current government needs to operate in a tighter environment.

There's still the 700 billion Baht RPPs debt and somehow the 1.4 trillion the previous government parked under the carpet at Bank of Thailand because that gave them better borrowing conditions.

He has also missed that the present finance minister is not a military man but highly respected in the financial world and that the BoT (which has just lowered interest rates by 0.25%) is responsible for managing the economy.

But when you are just posting for a bash what do facts matter.

Rob, your highly respected financial minister seem highly respected by only the coup leaders. He got his finance portfolio in both coups and not once in an elected government. May be his ability to condescend and follow orders. He is reported to favour the land tax just like the PM.

My dear Eric, this may surprise you, but the current MoF is not 'my' MoF.

As you may remember the NCPO tried to get a non-political NLA and cabinet. That would excluded all those who by being elected as MP get a chance to become a minister as well. That even excludes our previous Mr. 'little white lies' chap, although he was handpicked by Ms. Yingluck on criteria 'knowledge', 'capabilities' and 'potential'.

Furthermore and this may really surprise you, lots of knowledgeble people make an explicit choice to follow a career in business or academics rather than be soiled by politics.

Lastly, the previous non-elected government under Surayut also tried a 'inheritance and land & house tax law' but dropped the matter as he was convinced by some that such important matters should be left to be decided on by elected governments. Those elected governments promptly forgot about the matter of course. All sides have too many important, rich and landed people as financial or moral backers.

[rubl]

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

Push the baht down.

Let's see, a weaker baht would stimulate tourism, stimulate exports, make outside investment in Thailand cheaper, and stave off deflation while stimulating consumption of Thai products by making imported items more expensive.

On the down side, it means a weaker baht, which the economically ignorant would interpret as making the government lose face.

I guess it all depends on if economic ignorance or rationality prevails in government.

Avoid losing face at home is more important than salvaging any economic prospects for the future..AND a devaluation means more expensive Prada bags, Lamburginis and overseas luxury vacations for the rich elite. They will never devalue the baht.

Te last Bank of Thailand governor who was ordered by the then government to defect the Baht run through the countries foreign reserves and when things had settled down again a bit was made personally responsible for the hundreds of billions lost. A bit as a scapes goat.

Maybe some people have learned from that ?

[djjamie]

Australia is not far behind by the sounds of it.

Though Thailand has certainly done well considering the economy was in free fall just before the 22nd of May last year.

[heybruce]

Australia is not far behind by the sounds of it.

Though Thailand has certainly done well considering the economy was in free fall just before the 22nd of May last year.

I wouldn't describe it as being in free fall, though there were certainly concerns. How was the economy doing before the Suthep led protests in November 2013?

[heybruce]

It could be because they are facing similar economic conditions to the other countries facing deflation this year, 8 in Europe alone.

http://www.bloomberg.com/news/articles/2015-02-06/the-eight-unlucky-countries-facing-deflation-this-year

Push the baht down.

Let's see, a weaker baht would stimulate tourism, stimulate exports, make outside investment in Thailand cheaper, and stave off deflation while stimulating consumption of Thai products by making imported items more expensive.

On the down side, it means a weaker baht, which the economically ignorant would interpret as making the government lose face.

I guess it all depends on if economic ignorance or rationality prevails in government.

Avoid losing face at home is more important than salvaging any economic prospects for the future..AND a devaluation means more expensive Prada bags, Lamburginis and overseas luxury vacations for the rich elite. They will never devalue the baht.

I sort of agree, they probably won't intentionally weaken the baht. However that could lead to the baht weakening unintentionally and uncontrollably.

[hawthorne]

Tourism is relevant and the strength of the baht plus the devaluation of currencies of some large vacation groups such as Russia and Eurpoeans are having an impact on the economy. Look at the number of condos which are either abandoned or up for sale at much reduced prices. This is also hurting the new construction sales which are fed by huge sums of narrowed money. Once construction slows the unemployed grows, defaulted commercial and consumer loans follow and possible bank defaults. Gloomy outlook but certainly a possible scenario if other trading partners of goods or services such as tourism continue to withdraw. Asia is still a better performing region than others at the moment and possibly helped by lower oil prices. Let's see economics is not really a science as some wish to believe but a study of human behavior, if you choose to classify psychology a science.