‘Overshooting’ baht raises fears of sluggish growth

[webfact]

‘Overshooting’ baht raises fears of sluggish growth

By WICHIT CHAITRONG 
THE NATION

 

 

WITH THE stronger baht constraining Thai economic growth, other small emerging market economies are facing the risk of recession, economists warn.

 

Teerana Bhongmakapat, former dean of economics at Chulalongkorn University, expressed concern about the baht’s rise against the US dollar and regional currencies. “The overshooting baht doesn’t align with economic fundamentals and could hurt growth,” he told The Nation. 

 

With Bt31 now worth $1, Thai exporters fret it will render their products less competitive on the global market. The average exchange rate on Friday was Bt31.347 per dollar, down from Bt32.351 on January 2, according to the Bank of Thailand.

 

Teerana said a combined central-bank rate hike in December and foreign investors’ positive sentiment have contributed to the baht’s rise in value relatively to the dollar and other Asian currencies. Meanwhile economic fundamentals are not keeping pace, he said. Economic growth is expected to be less than 4 per cent this year.

 

Current growth is sluggish while private investment remains weak, with capacity utilisation ranging from 60-68 per cent, Teerana noted. Exports are expected to slow due to global economic deceleration.

 

With Thailand so economically reliant on tourism, he warned, any global factors that have an adverse effect on foreigners’ travels would badly hurt here.

 

Many analysts are worried about the US and China entering recessions in the next few years, but Teerana believes the world’s largest economies are unlikely to face either a recession or a growth contraction in two consecutive quarters. 

 

Rather, they’re likely to have slower growth, he said. 

 

The US has a large and sound services sector and China has embraced a high-technology value chain in the wake of its manufacturing slowdown, he said.

 

However, small economies have a higher risk of falling into recession, especially those being targeted for US economic sanctions, such as Turkey and Venezuela, Teerana said.

 

The slowing of global growth could also adversely disrupt Thailand’s production chain, he advised.

 

Teerana opposed the central bank’s previous rate hike, noting that the Thai economy has remained in a lower “growth trap” and inflation is quite low. 

 

He did not accept the central bank’s argument that the current 1.75 per cent policy interest rate could still accommodate economic growth. 

 

“Look at the US – the world’s largest economy – which has had high growth and low interest, ranging from 2.25 to 2.5 per cent,” said Teerana. “The interest rate market is expecting that most other countries will be cutting rates within one year, with the exception of Thailand,” noted Kobsidthi Silpachai, head of capital markets research at Kasikornbank. 

 

So the upcoming meeting of the Bank of Thailand’s monetary policy committee (MPC) is critical, he said.

 

If the MPC continues to flag concerns about policy space and search for yield, market expectations that the Thai interest rate is on the way up – even as neighbouring countries are lowering theirs – will continue. 

 

“That will create a diversifying of monetary-policy expectations that will be reflected in the exchange rates,” Kobsidthai added.

 

Sompop Manarungsan, president of the Panyapiwat Institute of Management, said he didn’t think China would suffer a hard landing, thanks to its wealth of financial resources. China has already boosted domestic consumption to compensate for the impacts of the trade war with the US, he said.

 

“However, should China’s growth rate drop below 6 per cent, it would be cause for concern for other countries, including Thailand, which have participated in China’s supply chains,” Sompop warned. 

 

Teerana and Sompop agreed that the US-China trade dispute would continue for some time, with current negotiations likely to produce nothing more than another temporary truce. 

 

Source: http://www.nationmultimedia.com/detail/business/30363467

 

-- © Copyright The Nation 2019-02-04

[Fex Bluse]

49 minutes ago, webfact said:

With Thailand so economically reliant on tourism, he warned, any global factors that have an adverse effect on foreigners’ travels would badly hurt here.

Oh. This will surprise many of the Thai Defender Brigade who genuinely believe the "official" line which is that tourism is only about 10% of Thai GDP. 

 

Of course, other more realistic estimates have it at over 30% of GDP. 

[bojo]

27 minutes ago, Fex Bluse said:

Oh. This will surprise many of the Thai Defender Brigade who genuinely believe the "official" line which is that tourism is only about 10% of Thai GDP. 

 

Of course, other more realistic estimates have it at over 30% of GDP. 

I remember reading some stats in the Bangkok Post in '99 and it was 7% of GDP then and there were about 7 million tourists (give or take) at the time if I remember correctly.

Not sure if that sheds any light on any conspiracy theories or otherwise.

[oldhippy]

1 hour ago, Fex Bluse said:

Oh. This will surprise many of the Thai Defender Brigade who genuinely believe the "official" line which is that tourism is only about 10% of Thai GDP. 

 

Of course, other more realistic estimates have it at over 30% of GDP. 

You do not understand economics, do you?

Of course, you are not alone.

10% - 30%..... 555 try 1% - at the most.

[leeneeds]

When local neighbours currency is Far more attractive to the tourist dollar, apart from this current new year pig flow I would expect the fall of tourist to happen, 

one dollar us 

                   = Laos kip = 8,565

                   =Cam Riel = 4,012

                   = Viet Dong =23,191

                   = Myan Kyat 1,506

I just spent a week end in Laos and far more value for ones hard earned. Bangkok is becoming expensive even for a meal, I would pay normally around 600 - 800 baht for myself and wife to have a good quality meal (now eating at the same restaurant) we are paying 1200 baht, that meal as much as we enjoyed it has become a luxury that we now only have very other trip, not each trip.

[oldhippy]

9 minutes ago, leeneeds said:

When local neighbours currency is Far more attractive to the tourist dollar, apart from this current new year pig flow I would expect the fall of tourist to happen, 

one dollar us 

                   = Laos kip = 8,565

                   =Cam Riel = 4,012

                   = Viet Dong =23,191

                   = Myan Kyat 1,506

I just spent a week end in Laos and far more value for ones hard earned. Bangkok is becoming expensive even for a meal, I would pay normally around 600 - 800 baht for myself and wife to have a good quality meal (now eating at the same restaurant) we are paying 1200 baht, that meal as much as we enjoyed it has become a luxury that we now only have very other trip, not each trip.

For a Thai the exchange rate does not matter. The exchange rate only matters to tourists, and tourism is a very small part of GDP.

[Fex Bluse]

36 minutes ago, oldhippy said:

You do not understand economics, do you?

Of course, you are not alone.

10% - 30%..... 555 try 1% - at the most.

Rather than attack you, which would be easy, I'll give you some things to consider. 

 

1. Thai official estimates of tourism GDP % range from about 10% to 17%.

2. These figures do not include grey market activity like sex industry estimates which themselves are officially reported to be between 10% and 15%. 

3. The government for decades talk more about tourism than almost anything else. 

 

What does all this mean to you? 

 

[BestB]

Total waste of time . What he says makes perfect sense. 

 

Tomorrow or day after , another Thai guru will make a statement to contradict this one, just as it happens evert 6 months or so and has been going on for years.

 

Chinese economy has slowed down in the past 6 months and yet baht remained strong , if anything gained .

 

So to say if Chinese economy was to slow down, Thai economy would suffer is in contradiction to what actually happened.

 

Most certainly more at play than meets the eye

[oldhippy]

8 minutes ago, Fex Bluse said:

Rather than attack you, which would be easy, I'll give you some things to consider. 

 

1. Thai official estimates of tourism GDP % range from about 10% to 17%.

2. These figures do not include grey market activity like sex industry estimates which themselves are officially reported to be between 10% and 15%. 

3. The government for decades talk more about tourism than almost anything else. 

 

What does all this mean to you? 

 

1/ I used to be a macro economics lecturer, so maybe I know what I am talking about.

2/ I have no Thai work permit, so I can not teach you the basics of macro economics

3/ Please tell me what you think "GDP" means. In your own words, not paste copy from wiki. I am convinced that by answering that question, you will realise your error.

4/ yes there are lots of others making the same mistake, I don't blame you

 

[Fex Bluse]

6 minutes ago, oldhippy said:

1/ I used to be a macro economics lecturer, so maybe I know what I am talking about.

2/ I have no Thai work permit, so I can not teach you the basics of macro economics

3/ Please tell me what you think "GDP" means. In your own words, not paste copy from wiki. I am convinced that by answering that question, you will realise your error.

4/ yes there are lots of others making the same mistake, I don't blame you

 

I see you have accepted defeat. Thanks. 

[oldhippy]

1 minute ago, Fex Bluse said:

I see you have accepted defeat. Thanks. 

Defeat???????????????????????????????????????????????

Like so many others you do not understand the difference between net (GDP) and turnover (tourism) ?

I am still waiting for your definition of GDP - in your own words, please do not copy paste.

And I am not blaming you for being misled by people who should know better.

 

[oldhippy]

OK, let's keep it simple.

 

Suppose GDP  = 100

Suppose turnover (total sales) in tourist industry = 10

 

How much does the tourist industry contribute to GDP?

10 %? more? less?

 

 

[KiChakayan]

Is it an overshoot only? Or should I start thinking of converting my pension, at the average UN rate or the 3 years preceding retirement,  which roughly the current rate? An operation which I would be allowed to revert.

[alfalfa19]

delete

[Fex Bluse]

1 hour ago, oldhippy said:

Defeat???????????????????????????????????????????????

Like so many others you do not understand the difference between net (GDP) and turnover (tourism) ?

I am still waiting for your definition of GDP - in your own words, please do not copy paste.

And I am not blaming you for being misled by people who should know better.

 

As a professor, I imagine you would have learned about logical fallacies. Yet, you have attempted to use several logical fallacies on me. I'm sorry if the below embarrasses you as it was not my intention. 

 

 

1. When you responded to me with, paraphrasing, "try 1% at most!", you were appealing to incredulity, offering no support of your argument.

 

Divine fallacy (argument from incredulity) – arguing that, because something is so incredible or amazing, it must be the result of superior, divine, alien or paranormal agency.^[21]

 

 

2. When you started attacking my interpretation of the meanings of GDP and tourism, you are arguing from another fallacy. However I use the term, as long as I am using it consistently, it has no impact on my argument (percentages). 

 

Argument from fallacy (also known as the fallacy fallacy) – assumption that if an argument for some conclusion is fallacious, then the conclusion is false.^[7]

 

3. When challenged with my argument that Thai tourism might account for around 30% or higher, you again appealed to a logical fallacy, this time stating you were a professor and thus your argument is to be taken over mine, despite, yet again, offering no material support of your argument.

 

Appeal to authority (argument from authority, argumentum ad verecundiam) – an assertion is deemed true because of the position or authority of the person asserting it.^[70][71]

• Appeal to accomplishment – an assertion is deemed true or false based on the accomplishments of the proposer.^[72] This may often also have elements of appeal to emotion (see below).

[alanrchase]

It will all sort itself out once all the TV posters move to Cambodia due to new immigration rules.

[mikebell]

Another figure to bandy about is the one concerning ex-pats living here on a fixed pension.  I used to get 350,000 for every 5000 UKP I brought here.  I spent it all in Thailand. 

Now I get 200,000.  I am much more careful & don't splash the cash anywhere near as much as I did.

[Bundooman]

2 hours ago, oldhippy said:

1/ I used to be a macro economics lecturer, so maybe I know what I am talking about.

2/ I have no Thai work permit, so I can not teach you the basics of macro economics

3/ Please tell me what you think "GDP" means. In your own words, not paste copy from wiki. I am convinced that by answering that question, you will realise your error.

4/ yes there are lots of others making the same mistake, I don't blame you

 

We bow to your abundance of knowledge and teachings, oh Lord of Economics and lecturing and superiority. Please humbly forgive us errant posters who do not meet your sophisticated and wise ramblings. Thank you your Grace - truly we doooooooooooooo!

[oldhippy]

6 minutes ago, Bundooman said:

We bow to your abundance of knowledge and teachings, oh Lord of Economics and lecturing and superiority. Please humbly forgive us errant posters who do not meet your sophisticated and wise ramblings. Thank you your Grace - truly we doooooooooooooo!

OK

 

[oldhippy]

1 hour ago, Fex Bluse said:

As a professor, I imagine you would have learned about logical fallacies. Yet, you have attempted to use several logical fallacies on me. I'm sorry if the below embarrasses you as it was not my intention. 

 

 

1. When you responded to me with, paraphrasing, "try 1% at most!", you were appealing to incredulity, offering no support of your argument.

 

Divine fallacy (argument from incredulity) – arguing that, because something is so incredible or amazing, it must be the result of superior, divine, alien or paranormal agency.^[21]

 

 

2. When you started attacking my interpretation of the meanings of GDP and tourism, you are arguing from another fallacy. However I use the term, as long as I am using it consistently, it has no impact on my argument (percentages). 

 

Argument from fallacy (also known as the fallacy fallacy) – assumption that if an argument for some conclusion is fallacious, then the conclusion is false.^[7]

 

3. When challenged with my argument that Thai tourism might account for around 30% or higher, you again appealed to a logical fallacy, this time stating you were a professor and thus your argument is to be taken over mine, despite, yet again, offering no material support of your argument.

 

Appeal to authority (argument from authority, argumentum ad verecundiam) – an assertion is deemed true because of the position or authority of the person asserting it.^[70][71]

• Appeal to accomplishment – an assertion is deemed true or false based on the accomplishments of the proposer.^[72] This may often also have elements of appeal to emotion (see below).

You have not answered my question (post 12).

 

[BritManToo]

11 minutes ago, Father Fintan Stack said:

Cambo is moving to discourage long term expats without work or funds now with similar visa rules to Thailand.

 

Says who?

They've just started 1 year retirement extensions for the over 55s with no financials @ $300

They'll also consider the same extension for the under 55s, if they show financials.

No exchange rate problems either, $1 is still worth $1.

I was there last month.

 

Why post misinformation?

[crees]

3 hours ago, bojo said:

I remember reading some stats in the Bangkok Post in '99 and it was 7% of GDP then and there were about 7 million tourists (give or take) at the time if I remember correctly.

Not sure if that sheds any light on any conspiracy theories or otherwise.

My very first to Thailand was in 1999, the US dollar was worth way more than it is today. I went to the Issan area for a two week vacation. It was truly a third world country back then. I remember lots of pot holes and pealing paint. Today that same area is beautiful and seems to have a really healthy economy. I'll never forget the kids riding the water buffalo's while being used to plow the rice fields. It was a photographers paradise. For my final hurrah in life I choose the ocean to live forever  

[oldhippy]

My last try:

 

A company or a group of companies have a turnover (sales) of 100. They have purchased goods and services from other companies for 80.

What is their contribution to GDP? 100 or 20?

 

 

[Cadbury]

5 hours ago, webfact said:

Overshooting’ baht raises fears of sluggish growth

When allegedly erudite economists like Teerana Bhongmakapat pass comment on the Thai economy they are talking about the recorded economy which shows in official government statistics but does not include the "shadow" or "black" economy. 

Thailand has one of the biggest "black" economies in the world and has been estimated at about 41% of the total GDP and is up there with the best of them like Peru, Bolivia, Ukraine, Belarus, Tanzania, Zimbabwe, Haiti and Guatemala. 

People here, including professors, are just guessing what percentage of the GDP comes from tourism. I ask how can anyone possibly know what the correct figure is when so much of tourism income comes from the "dark" side of the economy. These include food stalls, street and market vendors, street “bars” and hooker venues. Then there are the other tourist unrecorded cash businesses like the "no-meter" taxis, jet ski operators, massage shops and the hundreds of thousands of other tourist service providers who do not pay tax. 

If I may also join in the guessing game I would think that another 100% of tourist income (on top of the published figures) comes from the "dark" side and is not included in official records which mainly rely on taxation figures or highly inflated TAT guesses.  

So I believe no one really knows what Thailand's actual GDP is let alone the GDP growth. And for the same reasons they, like me, haven't got a clue what percentage of the "true" GDP comes from tourism; no one has.

[dinsdale]

Currency manipulation.????

[oldhippy]

2 minutes ago, Cadbury said:

When allegedly erudite economists like Teerana Bhongmakapat pass comment on the Thai economy they are talking about the recorded economy which shows in official government statistics but does not include the "shadow" or "black" economy. 

Thailand has one of the biggest "black" economies in the world and has been estimated at about 41% of the total GDP and is up there with the best of them like Peru, Bolivia, Ukraine, Belarus, Tanzania, Zimbabwe, Haiti and Guatemala. 

People here, including professors, are just guessing what percentage of the GDP comes from tourism. I ask how can anyone possibly know what the correct figure is when so much of tourism income comes from the "dark" side of the economy. These include food stalls, street and market vendors, street “bars” and hooker venues. Then there are the other tourist unrecorded cash businesses like the "no-meter" taxis, jet ski operators, massage shops and the hundreds of thousands of other tourist service providers who do not pay tax. 

If I may also join in the guessing game I would think that another 100% of tourist income (on top of the published figures) comes from the "dark" side and is not included in official records which mainly rely on taxation figures or highly inflated TAT guesses.  

So I believe no one really knows what Thailand's actual GDP is let alone the GDP growth. And for the same reasons they, like me, haven't got a clue what percentage of the "true" GDP comes from tourism; no one has.

I fully agree with you.

I do not know whether the contribution of tourism to GDP is 0,5% or 1% or 1,5%.

However, I do know that is not 10 or 30%.

 

[jabis]

5 minutes ago, oldhippy said:

I fully agree with you.

I do not know whether the contribution of tourism to GDP is 0,5% or 1% or 1,5%.

However, I do know that is not 10 or 30%.

 

What you don't believe on historical data pushing near 10% on official figures? You'd be wise to at least double the official figures from the reported industry to come even close to relatively close data, because of what @Cadbury just stated, which you agreed on ????

[carstenp]

18 minutes ago, oldhippy said:

My last try:

 

A company or a group of companies have a turnover (sales) of 100. They have purchased goods and services from other companies for 80.

What is their contribution to GDP? 100 or 20?

 

 

Thailand welcomed some 35 million foreign tourists in 2017, bringing in 1.8 trillion baht in revenue. The tourism industry has played a significant role over the past several years in driving the economy economy, creating jobs and distributing income to locals. Including domestic tourism, the sector generated as much as 2.76 trillion baht, representing about 20% of GDP in 2017.
Source: Tourism and Sports Minister Weerasak Kowsurat

Tourism will continue to be a powerful driver for economic growth this year, expected to generate 2.21 trillion baht in income from 41.1 million international arrivals.



 

[Fex Bluse]

49 minutes ago, oldhippy said:

You have not answered my question (post 12).

 

Neither have you offered anything to support your argument. By the way, this is not a trial, and I am not required to answer any of your questions nor defend my argument against your attacks.

 

But, it would be courteous for you to provide some idea of why you think tourism accounts for at most 1% of Thai GDP. 

[thailand49]

When I see stories like this it is basically  a little white lie doesn't hurt!  Based on this story we can expect a weakening of Baht in a few weeks!