BOT governor worried about uneven growth next year

[webfact]

EXCLUSIVE INTERVIEW
BOT governor worried about uneven growth next year
Achara Deboonme
The Nation


Veerathai Santiprabhob

BANGKOK: -- Bank of Thailand Governor Veerathai Santiprabhob has expressed concern about uneven economic growth next year that could be addressed only by integrated macro-economic policies.

In an exclusive interview with Nation Group, the governor said he was particularly worried about small and medium-sized enterprises in some sectors and the agricultural sector not benefiting from the economic recovery, which for the latter would face another year of low commodity prices.

"We will experience stronger growth momentum next year, with stability occurring in and outside the Kingdom to some extent. What's worrying is that the growth could be uneven and each economic sector could experience uneven benefits," he said.

On the plus side, a record 32 million tourists are expected this year. The construction sector and related industries are also expected to benefit from the government's infrastructure investments.

Citing the small contribution of government spending to gross domestic product, Veerathai noted that the Board of Investment's scheme to promote manufacturing clusters would play a bigger role in lifting the country's competitiveness and investment. This is in light of structural changes in several economies particularly China, which would further dampen Thailand's exports.

As an example of these changes, only 30 per cent of what China spends on imports from Thailand is for raw materials, against 60 per cent in the past.

Simply put, the Thai economy is like a car whose engine is in need of an overhaul, he said.

Veerathai stressed the need for structural adjustments in Thailand's growth drivers to enhance competitiveness and sustainable economic growth.

He said farmers, whose problems could be exacerbated by drought next year, should embrace modern techniques or be offered alternative career choices.

Amid uneven growth, he said companies needed to diversify risk further. For exporters, hedging tools are necessary, as the anticipated rise in US interest rates and the further relaxation of rates in Japan and the European Union promised two-way movements of exchange rates.

The BOT has penned a 3.7-per-cent growth forecast for 2016, after 2.7 per cent in 2015. Veerathai predicted that inflationary pressure would remain low next year, thanks mainly to low oil prices. He insisted that Thailand was not experiencing deflation as consumption was still increasing.

In November, headline inflation was minus-0.97 per cent but core inflation, excluding energy and food prices, rose by 0.88 per cent.

He also insisted that Thailand's financial stability could withstand global turbulence thanks to buffers. A limited impact from capital outflows is anticipated.

Unlike some emerging markets, Thailand's foreign debt remains low at one-third of foreign reserves, which stood at $156 billion as of November 20. So far this year, foreign investors have sold more than Bt120 billion net in Thai shares.

"Our reserves are high. The country will not be affected in the event of outflows," the governor said.

Despite slower credit growth and the financial dramas at Sahaviriya Steel Industries, liquidity as a whole remains sufficient, he said, and although non-performing loans tended to increase in an economic cycle, Thai banks were leaders in Asia in terms of capital and loan-loss provisions. "The stress test shows loans to some large companies may turn sour. But none will match the SSI scale," he said.

Source: http://www.nationmultimedia.com/business/BOT-governor-worried-about-uneven-growth-next-year-30274275.html

-- The Nation 2015-12-04

[davehowden]

"On the plus side, a record 32 million tourists are expected this year."

I wonder if he has factored in the possibility of Islamic State attacks in key tourist destinations like Bangkok, Pattaya ........

[Somtamnication]

It has been "uneven" since 1997.

[kannot]

I suggest he gets a surgeon to remove it

[micmichd]

It has been "uneven" since 1997.

Here are the statistics:

http://www.tradingeconomics.com/thailand/gini-index-wb-data.html

Edited December 4, 2015 by micmichd

[onni4me]

Uneven or in decline?

"The stress test shows loans to some large companies may turn sour. But none will match the SSI scale,"

How comforting.

Personally, I would run with my money when Thai official predicts "some" losses and tells that only government can implement some macroeconomic measures to prevent possible "problems".

Thailand exports have declined in value as he said and if any of the numbers we talk about are true in excess of 45% and the trade in volume is down 11-12%. I read these in another article so I am not to be blamed if the numbers are incorrect but they paint a truly scary picture what is coming. So they make more cheap rubbish and less valuable goods and despite that have lost a huge market share.

Thailand is dependent on it's exports. What happened 1997 will replay itself if and when China finally comes up with the truth. And that time is not far from now.

[Srikcir]

“The BOT has penned a 3.7-per-cent growth forecast for 2016”

That is a bit optimistic in view that “the 2016 state budget will account for 20.4 per cent of gross domestic product, which is the same as the 2015 budget when it was introduced.” The Nation 2015-04-29.

Other predictions indicate 3-3.5% growth barring unforeseen international events, political conflict and continued drought:

- HSBC forecasts 2016 economic growth at 3.3% (The Nation 2015-06-25)

- Kasikorn Research Center forecast GDP growth at 3% in 2016 (2015-10-06)

- TDRI predicts the economy to pick up by about 3-3.5% (The Nation 2015-11-13)

- The IMF the 2016 growth projection for Thailand is 3.2% (The Nation 2015-10-07)

According to IMF, Thailand would experience the slowest growth compared to other four countries grouped as Asean-5 which includes Indonesia, Malaysia, the Philippines and Vietnam (The Nation 2015-10-07). An investor wants the lowest risk and the highest return. Thailand will not be their first choice.

[onni4me]

Looking a bit closer to SSI there is some interesting reads:

Losses at the steel group more than doubled to 6.3 billion baht in the first six months of this year from the same period of 2014, the latest financial accounts show. It had 74.3 billion baht of liabilities as of June 30 and 140.5 million baht in cash. The company will also approach other creditors such as suppliers to participate in its rehabilitation plan, Chief Executive Officer Win Viriyaprapaikit said on Sept. 21.

“By forcing Sahaviriya Steel to restructure the debt with the banks, it will probably also drag more creditors down with it too,” said Maria Lapiz, an analyst at Maybank Kim Eng Securities (Thailand) Pcl. “There’ll be a lot of people who will be involving in the restructuring.”

74.3 in liabilities and 140.5 million in cash? I would call that bankrupt...

Also the article's statistical image about the overall NPLs of Thailand's companies makes one think of all kinds of thoughts....

[elgordo38]

"On the plus side, a record 32 million tourists are expected this year."

I wonder if he has factored in the possibility of Islamic State attacks in key tourist destinations like Bangkok, Pattaya ........

Quote We will experience stronger growth momentum next year, with stability occurring in and outside the Kingdom to some extent. What's worrying is that the growth could be uneven and each economic sector could experience uneven benefits," he said. unquote. Good man quote the party line. Please send me the name of your 2016 fortune teller I want to pick some sure winners in the stock market. Thank You.

[elgordo38]

Looking a bit closer to SSI there is some interesting reads:

Losses at the steel group more than doubled to 6.3 billion baht in the first six months of this year from the same period of 2014, the latest financial accounts show. It had 74.3 billion baht of liabilities as of June 30 and 140.5 million baht in cash. The company will also approach other creditors such as suppliers to participate in its rehabilitation plan, Chief Executive Officer Win Viriyaprapaikit said on Sept. 21.

“By forcing Sahaviriya Steel to restructure the debt with the banks, it will probably also drag more creditors down with it too,” said Maria Lapiz, an analyst at Maybank Kim Eng Securities (Thailand) Pcl. “There’ll be a lot of people who will be involving in the restructuring.”

74.3 in liabilities and 140.5 million in cash? I would call that bankrupt...

Also the article's statistical image about the overall NPLs of Thailand's companies makes one think of all kinds of thoughts....

We no longer use words like bankrupt they project a dim/dangerous view of things. The new term is that they hit a "Financial Speedbump"

[elgordo38]

God bless governments and their reassuring information. It seems to me that going back to 1997 Thailand reserves were not even close to what they claimed them to be.

[Thai at Heart]

Looking a bit closer to SSI there is some interesting reads:

Losses at the steel group more than doubled to 6.3 billion baht in the first six months of this year from the same period of 2014, the latest financial accounts show. It had 74.3 billion baht of liabilities as of June 30 and 140.5 million baht in cash. The company will also approach other creditors such as suppliers to participate in its rehabilitation plan, Chief Executive Officer Win Viriyaprapaikit said on Sept. 21.

“By forcing Sahaviriya Steel to restructure the debt with the banks, it will probably also drag more creditors down with it too,” said Maria Lapiz, an analyst at Maybank Kim Eng Securities (Thailand) Pcl. “There’ll be a lot of people who will be involving in the restructuring.”

74.3 in liabilities and 140.5 million in cash? I would call that bankrupt...

Also the article's statistical image about the overall NPLs of Thailand's companies makes one think of all kinds of thoughts....

Those make really horrendous reading. Anytime debts outweigh free cash by that much, times are looking bad.

[phoenixdoglover]

"Uneven"

Translation - a few will prosper; the rest of you are screwed.