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Thai economy could take more than 2 years to recover: Standard Chartered


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No one is saying that it cannot get better from here, but the billions that has simply been drained from the economy will take 3-5 years to recover, some countries more. I predict the UK much longer & that is assuming no 2nd wave.

Then for Thailand many tourists that would have come just will not have the resources for 18 months.

Do we want tourists for the next 3 months anyway ? I am not a soothsayer but to start admitting tourists from most countries next month could be a disaster as the virus is far from beaten,

certainly not the US, UK, Africa, Indonesis, India & Sth American countries to name a few

A logical plan of events is to open all businesses to the local population for 2 months & monitor that 

first.

Tourism reopening will need to be a very carefully controlled exercise & doubt it can be achieved 

in the near future without disastrous results

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It would appear the world lurches from one disaster to another.  Going back in history not just the last few years.   We manage to keep going as the human race finds a solution to each problem, sooner or later.  From my personal perspective life is good,  the few health problems I have have been addressed, married a nice girl and live in her house.  Always have enough food,  regular water supply and a sit toilet in the dunny.  What happens to the finance system will happen, the economy will be good or bad without my input.  I guess I am along for the ride and hopefully the road won't be to rough. 

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43 minutes ago, Isaan sailor said:

Say what?  32?  Whatever you’re smoking, i’d like some.  31.83 at the moment.

 

Wow, a whole 17 satang less, split hairs much!

 

OK let's be generous and say it went from 33 to 31.83 over two month, does that suddenly make it a steep increase.....of course it doesn't!

Edited by Trillian
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1 hour ago, SuwadeeS said:

Its all very strange......

 

The Thai Central Bank has control over the exchange rate, even thought I have seen over the last 12 month so many many shop shut down because of bad economy, the tourist industry went downwards, but they still keep the Baht up. Actually the Thai Baht should be 50 Baht for 1 US$.

I do not understand the number of economy down of only 5 or 8 %, even I have studied this subject in university, I can not believe it. But I do believe these numbers are made up to please some superiors. I would say the number of GDP is more around minus 60%, because of the impact to the indirect businesses of tourism e.g. Restaurants, tour operators, clothes sales etc.

 

Since this is an Military government, who are not the smartest when it comes to economy, I do believe it will take much longer to recover. Further, many tourist will move to other destinations, where they are more welcome and not cheated with dual pricing on any corner.

 

Hey Thailand, wake up!!! Lower the Baht value, stop dual pricing, stop all these disgusting immigration regulation which are boyond sence and treat foreigner with more respect. Then they might come back.

The Thai Central Bank has control over the exchange rate to a certain degree but they don't have control over policy, it's their job to implement whatever policy the government of the day has decided upon. BOT could not unilaterally decide to lower the exchange rate just because some people think it is too strong and anyway, devaluing the Baht without fixing the underlying causes of the strong Baht would be nothing more than a waste of time and effort.

 

The major reason why the Baht is so strong is because the current account or trade balance is always in surplus, fixing that problem means Thailand would need to import more which would mean compromising national industries and favored country partnership, e.g. Japan. Changing those things are way beyond BOT's remit and authority, that needs a change in government policy to open up the country to external competition.

 

As for the economy being down 60%, well, that's just nonsense really, you clearly weren't paying attention when you studied the subject in university and you don't read local newspapers, Thai exports last month were actually up on a year ago!

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20 hours ago, seajae said:

this will happen in many countries after covid, Thailand is a cash economy and as many were unable to work during the lock down the cash has dried up so it will take some time for people to be able to start spending again. Then you have tourism which is a big factor in Thailands economy as well, until people from overseas are confident enough to return and have the money to spend Thailand will strugle, hopefully this means the baht will drop in value but as most countries are suffering it may take some time to happen. If the baht does drop it may mean a quicker recovery too, the strength of the baht means people from overseas are looking elsewhere to holiday so once people feel safe a lower baht may draw them back to Thailand but the govt really needs to pull its finger out and make it more hospitable too foreigners as well, especially the western countries which the govt seems to have a dislike for

I wouldn't hold out hope that the baht will devalue. The current economic collapse is different to anything that has happened before during the era of fiat currencies without gold backing. ALL the world's major currencies are in the same boat, so respective to one another they aren't likely to move much. ALL countries are going through the same problems, many worse than Thailand, I believe the baht is more likely to gain strength against a basket of major currencies because Thailand has spent a lot less money trying to help small businesses and its people. They are not printing money to nearly the same extent.

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1 hour ago, Isaan sailor said:

For my frame of reference, I use the 10-year average price of USD/Baht: 32.40.  So yes indeed, I would label the Baht today as overpriced.

Things have changed ever since China became the world's second largest economy.

 

Once the Chinese tourists come back in, be prepared for 30.20 which was what it was before the pandemic.

Edited by EricTh
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31 minutes ago, Trillian said:

 

Wow, a whole 17 satang less, split hairs much!

 

OK let's be generous and say it went from 33 to 31.83 over two month, does that suddenly make it a steep increase.....of course it doesn't!

 

If Thai baht can strengthen so much within such a short time, what do you think will happen when Thailand opens its borders to international tourists again?

 

Back to 30.50 and below.

 

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38 minutes ago, Grumpy John said:

It would appear the world lurches from one disaster to another.  Going back in history not just the last few years.   We manage to keep going as the human race finds a solution to each problem, sooner or later.  From my personal perspective life is good,  the few health problems I have have been addressed, married a nice girl and live in her house.  Always have enough food,  regular water supply and a sit toilet in the dunny.  What happens to the finance system will happen, the economy will be good or bad without my input.  I guess I am along for the ride and hopefully the road won't be to rough. 

'live in her house'. that's not exactly a winning proposition, is it, especially if you get too grumpy? 555

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19 hours ago, seajae said:

this will happen in many countries after covid, Thailand is a cash economy and as many were unable to work during the lock down the cash has dried up so it will take some time for people to be able to start spending again. Then you have tourism which is a big factor in Thailands economy as well, until people from overseas are confident enough to return and have the money to spend Thailand will strugle, hopefully this means the baht will drop in value but as most countries are suffering it may take some time to happen. If the baht does drop it may mean a quicker recovery too, the strength of the baht means people from overseas are looking elsewhere to holiday so once people feel safe a lower baht may draw them back to Thailand but the govt really needs to pull its finger out and make it more hospitable too foreigners as well, especially the western countries which the govt seems to have a dislike for

Great posting, I would also like to point out all the unnecessary rules Thai immigration have made with visas and difficulties for western countrys to get long stay with non immigrant visas. Why force everybody to buy health insurance when they already have pension or 800.000,-THB in a thai bank AC already?  

Do Thailand want western tourist at all?

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16 hours ago, eeworldwide said:

Really? Do you have any sources to back up your claim? You make it sound like the apocalypse.

He doesn't need it. We all know Thailand is far superior to other countries. I think you don't understand Thailand (as I kept being told) ????

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47 minutes ago, EricTh said:

 

If Thai baht can strengthen so much within such a short time, what do you think will happen when Thailand opens its borders to international tourists again?

 

Back to 30.50 and below.

 

You think that 1 Baht, 17 satang in two months is a huge amount in a short space of time, really? Well I don't, especially since during that time the US Dollar fell from 102.0 to 98.1, in truth the value of THB hardly moved at all. But the value of USD did fall over the same period so it gives the appearance of Baht strengthening which in fact it is not.

 

https://www.marketwatch.com/investing/index/dxy

 

But you ask what would happen to the value of THB if Thailand were to open its' doors to international tourism once again, my answer to that question is, not much at all! The value of THB is only affected by trades against USD, not by trades against tourist currencies. Very little USD enters the country as result of tourism but huge amounts are earned by Thai exporters when their export trade bills are settled by overseas buyers because these are all denominated in USD. 

 

 

 

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2 hours ago, Tingtong2mut said:

I just don't believe those figures, and I know Euro foreign tourists here only a small percentage of tourists but places like Pattaya and Phuket were well dead before Covid, and thats coming from hotel owners. We travel a bit and Chinese tourism in the North a huge percentage of the numbers. We were staying in 4 star hotels Chang Rai, Chang Mai, Phitsanalok for a fraction of the normal price and no guests. Went to Koh Chang at the start of high season just before Covid. Resort on the beach, breakfast included 1000 baht a night. lucky to be 10 guests at breakfast any one time, and this a 150 room hotel. The town itself was like a quiet Isaan town and everyone complaining. I am wondering what percentage of these figures are transients on  stop overs to elsewhere. I would say most. I am only going on my own perceptions and I am no economist, but I don't know how you could garner any real figures anyway. I have given up watching the news here. Talk about rubbery figures! You can read 3 different stories every day on for eg exports and growth....and they all seem to contradict themselves. This up 4%, this down 12% overall only down 2% this year but down 7% over all. Figures seemed to be moulded based on who's is presenting them and who is trying to polish the trd 

     Certainly up to you whether you believe TAT's figures.  I said in another post that TAT did show a dip in tourists from the previous year in both 2009 and 2014 so they seem to report lower numbers when they have lower numbers.

     I live in Pattaya year-round and it certainly was not 'well dead' pre-covid.  2019 was quite busy all year.  Some hotels may indeed have reported fewer guests but a good deal of that can be attributed to so many tourists now using condos instead of hotels for their stays.  In the last few years Pattaya has had at least a dozen or more mega-condo projects open--some with 1000 rooms or more--and many are being used by tourists.  That's a lot of rooms to dump on the market and some hotels may have seen a reduction in bookings as a result.  Plus, there were also a number of new hotels that opened, as well, both large and boutique.  Some of the less-desirable hotels may have gotten lost in the shuffle.  

    You say you are '...going on your own perceptions...' and, at least with Pattaya, you may not have been in some of the areas that are now attracting Pattaya's new and most numerous tourists, primarily from Asian countries.  Your favorite western bar may have been 'well dead' but that doesn't mean Pattaya as a whole was.  

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5 hours ago, Logosone said:

It's actually incredibly easy to dismiss, firstly the US currency is the world's leading reserve and crisis currency, if there is economic crisis, guess what happens, the US dollar strengthens.

 

As for the US defaulting on its debt the financial position of the United States includes assets of at least $269.6 trillion (1576% of GDP) and debts of $145.8 trillion (852% of GDP) to produce a net worth of at least $123.8 trillion (723% of GDP) as of Q1 2014.

 

What this means is that the wealth of the USA is virtually unimaginable.

 

 

You assume that it Will be reserve currency forever.

 

I have no idea where you got those numbers from and what they mean so I can't comment.

 

If US is in such a great financial place, why aren't they always printing money? Even when times are good? Why don't they always have zero interest rates? Why did the fed try to normalize interest rates and fail? Why did everyone in the us have zero savings and tons of debt and needed immediate saving/bailout from a government that has no money but need to borrow it from the fed?

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6 hours ago, Logosone said:

It's actually incredibly easy to dismiss, firstly the US currency is the world's leading reserve and crisis currency, if there is economic crisis, guess what happens, the US dollar strengthens.

 

As for the US defaulting on its debt the financial position of the United States includes assets of at least $269.6 trillion (1576% of GDP) and debts of $145.8 trillion (852% of GDP) to produce a net worth of at least $123.8 trillion (723% of GDP) as of Q1 2014.

 

What this means is that the wealth of the USA is virtually unimaginable.

 

 

I hope that's a tongue in cheek posting and that you don't really believe those numbers? It should go without saying that's a snapshot in time and doesn't begin to consider the ongoing and forward financial obligations that can't be simply shelved if (theoretically) all the assets were sold, forward SSc , medical care and T'bills interest payments being just three of them.

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17 hours ago, eeworldwide said:

Really? Do you have any sources to back up your claim? You make it sound like the apocalypse.

'eeworld' was commenting on:

'''2 years is pretty good considering most other countries will take 5 to 10 at least, if at all.''

 

I don't think anyone with an iota of intelligence could consider that ''other'' countries will take 5-10 years or more to return to ''normality''!  Considering the massive sums of borrowed money the USA and European governments have borrowed, how will they pay it all back?  The UK Government is borrowing £38billion a month just to pay those on furlough -- never mind the massive sums spent on health, PPE, bailing out large companies, etc.  How will this be paid back: increasing trade to countries in recession or by high taxation?

 

'eeworld' was obviously educated in 'EE Land'!

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12 hours ago, Trillian said:

That's a one dimensional view. For every existing business that cannot start up once again there will be new businesses getting ready to launch and cash buyers looking to buy existing businesses that are in distress. You seem to imagine the cycle only includes existing business and business owners, it doesn't, it also includes necommers, new capital, acquisitions, mergers, opportunists and others. 

Of course. That is what prevents the downtrend from extending to zero. But to think this current downturn is going to be complete next month when the lockdown is ended is pure fantasy. 

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23 hours ago, timendres said:

This seems to be a common misconception. It cannot get better from here on in. People think in terms of the virus as the determining factor going forward. Even if the virus were to utterly disappear from planet Earth tomorrow, the economic cake has been baked. The lockdowns worldwide have sown the seeds of what comes over the next two to five years, regardless of the virus. As an example, there is a "beer garden" close to my townhouse. It took the owner years to build up that location. The rent on the property is 60,000 per month, which was supported by 8 small restaurants. Now, the place is gutted, and down to only her restaurant. She will shut it down next month. That is gone. It will not come back in one day, one month, possibly ever. Every employee of those restaurants is now unemployed. Where do they find a new job? At the other restaurants that are shutting down? How will they pay their rent? Oh, the apartment building nearby has seen 30% of their units empty over the past two months. They are now laying off personnel. Play that out over many businesses. We are still on the downward trend of this process, and it will need to bottom. Then there is the long climb back up...

So far the only reasonable quote on this whole topic

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'Recover'... What exactly does that mean?! It's a relative term. Things have never recovered since the political Red Riots of 2010. It's been an economic downward spiral ever since. And the 'Color War' still rages on with the current regime in control, enemies of the Red State.

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https://www.nytimes.com/2020/05/21/opinion/economy-recovery-coronavirus.html

 

Everything hinges on the epidemiology. In the 1918 influenza outbreak, there was a first wave that receded and then a monstrous second wave, and that unfortunately does look like a real possibility for us. If this virus hangs in there, then all my arguments about how the economic scarring from this is not so severe that we can’t recover fast become irrelevant, because we can’t recover fast if the virus is still hanging around.

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On 5/29/2020 at 8:28 AM, hobz said:

You assume that it Will be reserve currency forever.

 

I have no idea where you got those numbers from and what they mean so I can't comment.

 

If US is in such a great financial place, why aren't they always printing money? Even when times are good? Why don't they always have zero interest rates? Why did the fed try to normalize interest rates and fail? Why did everyone in the us have zero savings and tons of debt and needed immediate saving/bailout from a government that has no money but need to borrow it from the fed?

the mexican drug cartels print $ for them and then spend it like crazy on this and that

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On 5/28/2020 at 4:56 PM, Trillian said:

That's a one dimensional view. For every existing business that cannot start up once again there will be new businesses getting ready to launch and cash buyers looking to buy existing businesses that are in distress. You seem to imagine the cycle only includes existing business and business owners, it doesn't, it also includes necommers, new capital, acquisitions, mergers, opportunists and others. 

Excellent prospective. Otherwise we will see streets of bangkok littered with homeless people, standing in long food lines everyday one year from now. 

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https://www.thaiexaminer.com/thai-news-foreigners/2020/05/30/thailands-economy-dependent-government-expenditure/

 

This story I was reading before sums things up for me. I am no economist but it is impossible to make heads nor tails of anything here, in particularly news reports. This seems to paint a realistic picture to me, and seems to marry up with what I see happening.....but I am sure going through the news reports if I scrolled a bit further I would be reading the opposite of this story saying exports up, everything rosey etc. I swear in one day I can read 3 stories on the economy that all seem to contradict each other, and not in a small way, totally the opposite to what I just read. One report saying something up 15%, then another saying the same thing down a percentage. Or it might be put in a smoke and mirrors way like current figures up on May 5 years ago or something. It is literally impossible to sift through the BS. I am sure I read somewhere exports where unusually up, and someone actually mentioned it in this thread.

 

I live up country and businesses, large and small have been shutting down for some time. I don't see too many re opening. Everyone complaining they don't have any money. Every Thai I know that has employment is seriously in debt. Car manufacturers and factories shutting up shop in droves. This was all before covid. Yeah maybe Thailand as a country, or a group of elite has huge gold stocks and US$ cash reserves.... but your average Thai household doesn't. It's a house of cards if ever I have seen one.   

Edited by Tingtong2mut
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50 minutes ago, 3NUMBAS said:

https://www.nytimes.com/2020/05/21/opinion/economy-recovery-coronavirus.html

 

Everything hinges on the epidemiology. In the 1918 influenza outbreak, there was a first wave that receded and then a monstrous second wave, and that unfortunately does look like a real possibility for us. If this virus hangs in there, then all my arguments about how the economic scarring from this is not so severe that we can’t recover fast become irrelevant, because we can’t recover fast if the virus is still hanging around.

This virus is not even close to the Spanish Flu, much less dangerous and lethal

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On 5/29/2020 at 2:47 PM, Chiang Mai Bill said:

'eeworld' was commenting on:

'''2 years is pretty good considering most other countries will take 5 to 10 at least, if at all.''

 

I don't think anyone with an iota of intelligence could consider that ''other'' countries will take 5-10 years or more to return to ''normality''!  Considering the massive sums of borrowed money the USA and European governments have borrowed, how will they pay it all back?  The UK Government is borrowing £38billion a month just to pay those on furlough -- never mind the massive sums spent on health, PPE, bailing out large companies, etc.  How will this be paid back: increasing trade to countries in recession or by high taxation?

 

'eeworld' was obviously educated in 'EE Land'!

Im confused as to what you're trying to say here, considering this is an entirely new situation and lots of predictions are turning out to be quite wrong..

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