Thailand’s economic outlook worst in 40 years

[Robert24]

Yet the Thai Baht grows stronger every day making Exporting harder and with a strong baht surely tourism must drop as well but what do i know .................................

The baht is linked to the US dollar - if you look at historical rates of both against the pound, they correlate almost exactly. The BOT presumably keeps the baht in line with the dollar, at least until that strategy is unsustainable.

The baht is not linked to the $ nor does BoT keep the baht in line with $. the currency swings in the $/ THB movements are evidence for this.

[Suffinator]

I remain perplexed as to why so many expats complain about the high baht. You could do what any other sane business savvy individual has done ... leave and find a place that offers better value for your money. What bitch about the price of bread in one store when a store not 2 minutes away is selling it for half price? Are you all totally stupid?

The Thai economy is going down the toilet fast, over-inflated currency with a dropping GDP. It's like going to the cinema and the place is burning down around you but you insist on staying so you can see the end of the movie.

And they say the Thais are dumb.

[issanaus]

Yet the Thai Baht grows stronger every day making Exporting harder and with a strong baht surely tourism must drop as well but what do i know .................................

Taking the same starting point of July 2014 the exchange rates as of today of the baht against the US$ it is unchanged while the GBP is down 12.6% and the Euro is down 21.3%. That does not make it particularly easy to weaken the baht with anywhere near even results. If the BOT are watching the $/baht exchange rate as their main guide then the US$ needs a to weaken by a significant amount. It would therefore appear the US$ is the main cause of everyone else having to suffer.However, the euro is affecting the GBP, causing it to weaken and that is unlikely to change in the foreseeable future.

The Thai baht is valued against the USD because the bills are paid in USD. It is like an international currency of trade and has been since that status was lost by the British pound in the 1950's or around there.

If you an Italian and want to buy a product from Thailand you are quoted the price in USD and pay the bills in USD. USD is the world's reserve currency.

Thailand does not care a fig about the USD. It is only a way of writing how much the baht is worth relative to other currencies, goods and services.

You can get more information by googling, "reserve currency."

Prices can be expressed in any currency in a contract, and the contract often stipulates which currency the price is to be paid in. This is necessary as part of the terms and conditions of the contract and also to allow the payee to hedge against currency fluctuation.

Yes often the price quoted is US$ often the payment is not.

[Robert24]

I remain perplexed as to why so many expats complain about the high baht. You could do what any other sane business savvy individual has done ... leave and find a place that offers better value for your money. What bitch about the price of bread in one store when a store not 2 minutes away is selling it for half price? Are you all totally stupid?

The Thai economy is going down the toilet fast, over-inflated currency with a dropping GDP. It's like going to the cinema and the place is burning down around you but you insist on staying so you can see the end of the movie.

And they say the Thais are dumb.

GDP is not dropping. Thai GDP is growing somewhere between 3-4% p.a.

[kimamey]

Let's see. How long ago was the Asian Economic Crisis that nearly wiped Thailand off the map? 1997? Bit more recent than 40 years. Do they teach history at the University of Thai Chamber of Commerce?

I suppose it could be the difference between 'outlook' and 'performance'.

I don't know much about the 1997 crisis but I'm guessing it was preceded by a period of financial overconfidence and a positive outlook. After a sudden downfall things are almost certain to get better albeit slowly so the outlook is more positive than negative.

The problem here is how bad will things get ? At the moment the outlook is bad as there is no evidence that things will get better soon and will most likely get worse.

Edited April 17, 2015 by kimamey

[metisdead]

Off topic posts about the Greek debt to the ECB have been removed as well as the replies.

[lostoday]

Yet the Thai Baht grows stronger every day making Exporting harder and with a strong baht surely tourism must drop as well but what do i know .................................

Taking the same starting point of July 2014 the exchange rates as of today of the baht against the US$ it is unchanged while the GBP is down 12.6% and the Euro is down 21.3%. That does not make it particularly easy to weaken the baht with anywhere near even results. If the BOT are watching the $/baht exchange rate as their main guide then the US$ needs a to weaken by a significant amount. It would therefore appear the US$ is the main cause of everyone else having to suffer.However, the euro is affecting the GBP, causing it to weaken and that is unlikely to change in the foreseeable future.

The Thai baht is valued against the USD because the bills are paid in USD. It is like an international currency of trade and has been since that status was lost by the British pound in the 1950's or around there.

If you an Italian and want to buy a product from Thailand you are quoted the price in USD and pay the bills in USD. USD is the world's reserve currency.

Thailand does not care a fig about the USD. It is only a way of writing how much the baht is worth relative to other currencies, goods and services.

You can get more information by googling, "reserve currency."

Prices can be expressed in any currency in a contract, and the contract often stipulates which currency the price is to be paid in. This is necessary as part of the terms and conditions of the contract and also to allow the payee to hedge against currency fluctuation.

Yes often the price quoted is US$ often the payment is not.

A reserve currency (or anchor currency) is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves. The reserve currency is commonly used in international transactions and often considered a hard currency or safe-haven currency.

http://en.wikipedia.org/wiki/Reserve_currency

The USD is currently the world's reserve currency.

The Thai baht is in no way linked to the USD. The USD it is simply the currency that money is valued in.

Edited April 17, 2015 by lostoday

[kimamey]

I remain perplexed as to why so many expats complain about the high baht. You could do what any other sane business savvy individual has done ... leave and find a place that offers better value for your money. What bitch about the price of bread in one store when a store not 2 minutes away is selling it for half price? Are you all totally stupid?

The Thai economy is going down the toilet fast, over-inflated currency with a dropping GDP. It's like going to the cinema and the place is burning down around you but you insist on staying so you can see the end of the movie.

And they say the Thais are dumb.

Just a thought that might have evaded your business savvy mind. Maybe our families live in Thailand.

[Thai at Heart]

Should have been up the industrial food chain for 20 years. How many farmers they still got feeding the CP gorgon?

[tullynagardy]

Not only Thailand,

Name me another economy facing it`s worst economic in 40 years?

It is only Thailand.

You and about a dozen posters spend all day on TVF rebutting any criticism of the junta. Quite why no one knows, it is truly bizarre behaviour.

[issanaus]

The Thai baht is valued against the USD because the bills are paid in USD. It is like an international currency of trade and has been since that status was lost by the British pound in the 1950's or around there.

If you an Italian and want to buy a product from Thailand you are quoted the price in USD and pay the bills in USD. USD is the world's reserve currency.

Thailand does not care a fig about the USD. It is only a way of writing how much the baht is worth relative to other currencies, goods and services.

You can get more information by googling, "reserve currency."

Prices can be expressed in any currency in a contract, and the contract often stipulates which currency the price is to be paid in. This is necessary as part of the terms and conditions of the contract and also to allow the payee to hedge against currency fluctuation.

Yes often the price quoted is US$ often the payment is not.

A reserve currency (or anchor currency) is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves. The reserve currency is commonly used in international transactions and often considered a hard currency or safe-haven currency.

http://en.wikipedia.org/wiki/Reserve_currency

The USD is currently the world's reserve currency.

The Thai baht is in no way linked to the USD. The USD it is simply the currency that money is valued in.

You said " If you an Italian and want to buy a product from Thailand you are quoted the price in USD and pay the bills in USD." That's what I responded to!

USA government bonds are what a lot of countries hold a significant proportion of their reserves in. Value of bonds normally move in the opposite direction to interest rates. It will be interesting to see what happens when interest rates eventually rise.

No the Thai baht is not linked to US$ - one of the many complex relationship that creates present exchange rates is hedging by companies and other in anticipation of economic free trade in ASEAN. I think that expectations relating to economic development resulting from free trade in the region are over blown another wild card in the economic predictions for Thailand.

[issanaus]

Not only Thailand,

Name me another economy facing it`s worst economic in 40 years?

It is only Thailand.

You and about a dozen posters spend all day on TVF rebutting any criticism of the junta. Quite why no one knows, it is truly bizarre behaviour.

I would suggest that you look at who was making the statement about the economic OUTLOOK and who is the funding being him - chamber of commerce!

While a lot of the data that was presents is correct it is selective and omits information that completes the picture.

I wish it was only Thailand - I should be in Burma at this moment setting up business for myself and some of my (Burmese friends) unfortunately the outlook there is worse than Thailand. Plans are indefinitely on hold.

There is a little know or understood financial problem in China that has the potential to cause major problems in China and the flow on effects in Thailand and Australia (picking on those countries because I have examine the economic implication for personal financial reasons) could be disastrous and make todays headline look like a dream. The basis of that problem is how china financed dragging the west out of the last major economic hole and the flow on effects to the country especial the state enterprises.

What is bizarre on TVF is the 12 or so posters who make every thread about the PM - the only other people who thinks he is that important is probably the PM himself and Costa

[KamalaRider]

I don't know much about economics either, but I am rather certain the value of the baht is unrelated to rich BK families and their desires to buy BMWs.

Are there more informed readers who know the reasons for the strength of the baht?

Yet the supported Baht stays strong!

But when it finally crashes, what will they say then?

I believe the reason for it not to fall as it should, is because no one (very few) are trading it anyway.

It's overvalued and pegged against US$ for a reason.

Imagine how much the families in BKK would lose if THB would be depreciated, just import of "luxury" cars and other "luxury" products creates both high tax revenues as profit on top, especially if all other currencies are low.

Prices are still the same for consumers, but where is the currency difference when a BMW is now cheaper than ever before when Euro has fallen more than 20%.

Don't believe for a second Thailand is buying in US$.

Why do you think THB is pegged against US$.

Economy is not my field but I have over the years tried to understand the Thai economy and the politics behind it.

I still don't get it, but I believe I can see a pattern, please correct me if I'm off target.

The "families" imports BMW, Ferrari, Luxury items etc. to sell to other rich people and please don't forget, some people, even super rich likes the idea of Thai baht being strong as in their heads it further shows the world that Thailand is strong.

A LOT of Thai people don't care at all about the outside world, they don't like it, they don't want it, they actually hate it more than they love their own people and country, but they still want it in small doses and pretends what we westerners have and they want, they point towards Koreans, because they have it already from us. I'm talking about white skin, blond hair, high heels, trinklets, fashion clothes, fast cars, reliable guns, swagger and stu'f, ya kno, yo bro, be real.

[rijb]

They could ask China or Russia for help.

[KamalaRider]

Yet the Thai Baht grows stronger every day making Exporting harder and with a strong baht surely tourism must drop as well but what do i know .................................

The baht is linked to the US dollar - if you look at historical rates of both against the pound, they correlate almost exactly. The BOT presumably keeps the baht in line with the dollar, at least until that strategy is unsustainable.

The baht is not linked to the $ nor does BoT keep the baht in line with $. the currency swings in the $/ THB movements are evidence for this.

No it's not an evidence, when bank of Thailand can't keep up with the trade of Thai baht, thats when Thai baht starts to swing.

I don't believe any sane person working with currency trading would ever consider Thai baht to be worthy a second glance because of the BoT is doing what it can for the THB to be pegged against the US$, USA don't give a hoot, that's my guess and if I would be bold, I would say the people in Central bank of USA ROFL every week at the BoT's efforts to smash and mash the Thai economy.

[KamalaRider]

If the exchange rate Thai baht to other major currencies was devalued by 15% this would make a huge difference to exports investment and tourist spending power. Yess it would weaken imported goods to a degree but the majority of Thais do not buy imported goods. OK some electrical goods but Thailand still has manufacturing here. Would be a shame for them to loose that in the long run.

I'm sorry, you are so very wrong, most Thais don't want to buy domestic products, they want imported ones because they think themselves Thai products are crap compared.

They have to buy Thai products because most Thais don't make enough to buy imported.

[KamalaRider]

It has not been pegged to the US dollar since 1997 so you are off target on that one.

Its pegged to a Basket of Currencies: US$ , BP, and EUR

The weighting is heaviest with the US$

It is not pegged to anything as it is a floating currency. I agree that it is coupled to currencies but this is a much loser relationship than pegging.

In another thread they talk about the 'BOT to ensure that it doesn't allow the Baht to strengthen against the Dollar' which proves beyond all doubt that it isn't pegged to any other currency or basket of currencies!!

Careful, you are committing a crime in Thailand now when you act like a police, language police.

Be a sport and overlook the exact wordings and find the scent and aroma what's being said.

[KamalaRider]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point

I think it is being manipulated for some reason possibly pegged to the American dollar. I notice it rises and falls in tandem with the USA greenback. Bad news takes time to filter into exchange rates. I am waiting for a big move to bring money over.

No peg with the US$. As previously mentioned, the baht has weakened considerably against the US$ from 29 to now above 32. The problem is the baht relative strength to other Asian currencies and the Euro.

Stop telling people the exchange rate was 29 TBH for one US$, I'm getting paid in US$ and during three years now, the US$ have never been lower than 31 except for a quick drop at one point but BoT quickly called in the troops.

[mathias67]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point!

I agree 100% if you devalue the baht say to 60-65 to the pound then exports would take a dramatic up turn and help solve the problem

[lostoday]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point!

I agree 100% if you devalue the baht say to 60-65 to the pound then exports would take a dramatic up turn and help solve the problem

If Thailand has to buy raw materials which it does and the cost of those materials goes up because of the devalue where is the sense in devalue?

[Robert24]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point

I think it is being manipulated for some reason possibly pegged to the American dollar. I notice it rises and falls in tandem with the USA greenback. Bad news takes time to filter into exchange rates. I am waiting for a big move to bring money over.

No peg with the US$. As previously mentioned, the baht has weakened considerably against the US$ from 29 to now above 32. The problem is the baht relative strength to other Asian currencies and the Euro.

Stop telling people the exchange rate was 29 TBH for one US$, I'm getting paid in US$ and during three years now, the US$ have never been lower than 31 except for a quick drop at one point but BoT quickly called in the troops.

Maybe you should look at the charts of the USD/THB rate in post 120 and 121 to remind you of the times of the rate below 30. or maybe you remember the fight between the former Finance minister Kittirat with the BoT about the strength of the baht vs the $. remember?

[Myshkin]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point!

Why the Bath should drop? Some foreigners think quite selfish, just to get more THB for their pension.

If the THB drops, the gas (petrol) prices will rise, transportation costs will rise, all import goods (cars, parts, electronics, tools, machines, etc.) will rise, even farming products will rise (because of higher gas prices) and finally salaries will increase as well.

Even land and building costs will increase (all tools and machines are made in China), because of higher import and transport costs and i guess the "Chinese landlord" take the chance to increase his land prices as well, because he know, that the foreigners get more cash for their foreign currency.

When i came here the THB was 25 to the USD, the German THB was 12.5 to the DM and no farangs whined about.

You came here when they were still on the DM? Christ, that's what....20 years ago?

Yes, actually in 1990. Correct!

I thought they switched from DM to EUR in 2002: http://en.wikipedia.org/wiki/Deutsche_Mark

[Old Man River]

As already pointed up by many weaker baht would solve exports problems.

Rising prices coupled with bad exchange certainly of no help for exports or tourism

Don't know if the Generals have an idea on how to do this? or what would happen?

The BOT is working on weakening the baht via cutting their policy rate. This has nothing to do with the generals.

[Sirbergan]

Its not only the numbers - it is also being expressed in an appreciating currency - so unless all the reserves were being held in US$ the value of the reserves in US$ would decline

I see what you are saying. Is the chart below in error?

http://www.tradingeconomics.com/thailand/foreign-exchange-reserves

Look closer – the chart is in USD million, and April shows approx. $156bn. Don't let the size of the bar fool you, look at the numbers instead.

Yes, but a pretty small decline - while it looks pretty dramatic if you look at the bars only.

[Srikcir]

"if exports grow by 0.4 percent, the growth rate will be 3.2 percent"

NO

Exports account for 70% of Thailand's GDP. If exports by value grow by only 0.4%, then 70% of the TOTAL GDP grows by 0.4% .

In order for the Total GDP growth rate to achieve 3.2%, the three factors of the Thai economy (domestic consumption, government spending, tourism) for the remaining 30% of the GDP must grow 10%. Domestic consumption is constrained by increasing historical levels of household debt; government investment in the economy has been restrained; and tourism is unpredictable at best. If any of the remaining economic three factors fall short of 10% growth, a higher growth rate beyond 10% must be achieved.

Unless exports drastically increase by mid-year 2015, Thailand is facing deflation.

[chiang mai]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point

I think it is being manipulated for some reason possibly pegged to the American dollar. I notice it rises and falls in tandem with the USA greenback. Bad news takes time to filter into exchange rates. I am waiting for a big move to bring money over.

No peg with the US$. As previously mentioned, the baht has weakened considerably against the US$ from 29 to now above 32. The problem is the baht relative strength to other Asian currencies and the Euro.

Stop telling people the exchange rate was 29 TBH for one US$, I'm getting paid in US$ and during three years now, the US$ have never been lower than 31 except for a quick drop at one point but BoT quickly called in the troops.

April 21 2013, 28.76.

http://www.oanda.com/currency/historical-rates/

[Stargeezr]

Hey Thailand welcome to the rest of the world.

I do hope you quit supporting the Thai baht so much, and let it slump a bit

toward the real value of Baht versus USA dollar.

Just saying!

[Thai at Heart]

Ok, I understand that.....now, when will the baht drop against other currencies? I am talking a significant drop, not half a point!

I agree 100% if you devalue the baht say to 60-65 to the pound then exports would take a dramatic up turn and help solve the problem

Great. And inflation would go through the roof and loads of companies would go bankrupt. People wishing for a 97 style crash have no idea what they wish for.

Last time they blamed Soros. This time it may be that they blame u and me.

[Thai at Heart]

Hey Thailand welcome to the rest of the world.

I do hope you quit supporting the Thai baht so much, and let it slump a bit

toward the real value of Baht versus USA dollar.

Just saying!

What is USA govt debt to gdp now? 80%? 85? Go look up Thailand and understand why the USD is so weak.

[cookee68]

Do they have maths teachers in Thailand, because nobody seems to come up with the same numbers, and they change by the day