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Home » Economy » The Thai economy is faltering
Most signs point to Thailand's economy not doing very well. The uncertain political situation of the past year does no good.
I came across a few charts on the Thai economy. The first shows the growth of the gross national product (GNP) against that of other Southeast Asian countries. Thailand has been lagging far behind for years.
Another graph shows how both consumption and exports have fallen.
I am unsure about the growth of tourism. I don't believe much of the jubilant numbers. Chiang Mai has been declining for several years. People complain stone and leg. I believe that the same picture can be seen in other tourist areas.
The cause of this lagging growth is often attributed to the uncertain political situation that hinders investment. Personally, I think that the high inequality, even one of the largest in the world, in income and wealth is a very important factor.
Populist measures such as a few hundred baht a month for poor groups will not help much.
What do the readers think about this? What is the reason for the limited growth and what should be done about it?
I'm not an economist, but that doesn't matter because they can't look into the future either and make predictions with a science from the past.
In addition, there are many graphs available and there is also something like today's delusion.
If I then take a look at the Thai stock market, the position is well above the six-year average, or the investors are not bothered by the political developments.
In fact, after the hesitation and subsequent decline to see which direction the coup would take, the stock market is worth more from September 2017 than before https://www.set.or.th/en/market/setindexchart.html
In addition, the Thai conglomerates are also bursting with money and that is invested in everything and anything and it seems strange to me that a commercial company would take unnecessary risks to set up mega shopping malls if they know that it will not yield anything.
Finally, I can look at the people around me and then I cannot really say that they have deteriorated and if people are having a hard time it is the old people and then in many cases the system that gives the children 1000-2000 baht works. pp/pm to the parents.
I therefore see the economic faltering in the consumer market as a normal cooling down because you can't always keep running. Runners are dead runners so there is nothing wrong with taking it easy.
1.
Thailand's economy is written "up".
Hiso exports as much as he can, but imports lag miles behind, resulting in the Thai piggy bank running out.
Read, the national product cannot stop this downward spiral either.
Tourism is very bad and the Chinese tidal wave is being brought to the Chinese entrepreneur in Thailand.
Perhaps the chin.-thai entrepreneur can still enjoy some of that, but then we're done.
A group we all know is in the process of securing his retirement and many descendants, but the world is really going to put a stop to this.
That is my opinion and I think the course towards the end of the year will surprise many of you.
LOUISE
Reports from family, friends and acquaintances from TH have been pointing to deteriorating conditions for much longer. Wages are stagnating, prices for food and household are rising, loans are more difficult to repay, etc. TH people complain that there are less and less farang to see: not only as a tourist, but also as a tenant, as a long-stayer, as a potential partner.
The strangest thing was the following message: an acquaintance of my wife lived with her son and girlfriend, bought in their house in 2010 with a 100% mortgage. Due to job loss a few years later girlfriend left him. He himself moved in with a friend, because he could not / did not want to pay the monthly installments on his own. Mother stayed behind in the house, waiting for eviction by the bank. However, in 2019, six years since the son stopped paying, she still lives there.
Reason: TH banks are confronted with such an immense number of cases of overdue payments/defaults and non-repayments of mortgaged properties that the bank would prefer that these properties continue to be occupied/maintained/used to some extent, rather than leave to their fate left and fall prey to weather, wind, sun and vermin. The number of homes overgrown by former garden plantings is countless. Which indeed shows the condition of TH's economy.
Mother thinks it's all fine: lives without rent or mortgage payments, just pays her electricity, water and internet costs, keeps the garden and the house clean. Every now and then a bank employee comes to ask if her son is willing to pay, and if she indicates that this is not the case, he makes a note on a piece of paper and continues on his way. To the next one, I guess.
When the Thai Baht is brought back to a reasonable level at a minimum of 40 baht for a euro, more tourists will come again. Due to the current exchange rate of the baht, the products for export have become much too expensive. Conclusion: Urgently devalue the baht to revive the economy
In the world of free exchange rates, the rate is NOT determined by a civil servant, bank employee or even prime minister, who can bring about a devaluation by twisting buttons. At most, the bottom or top can be somewhat determined by a purchase or sale program of the Central Bank... until the money runs out, as the Bundesbank discovered around 1985 to keep the US$ rate at the 3DM. 3.5 BILLION DM had evaporated in a few hours. Dragi = ECB needed €750 BILLION to defend the €uro (temporarily).
@Peter Van Lint
Conclusion: Urgently devalue the baht to revive the economy
This is just antisocial or downright selfish isn't it?
60 million Thai and the foreigners working in Thailand who receive their salary in THB, have to live an even more expensive life so that the tourist can enjoy a cheap holiday?
Any idea how a strong baht affects neighboring countries? You can count on it that part of what the migrant workers earn goes directly to the family and yes, it can seem that they have a very good GDP there.
Rather 20 million Chinese per year with the current exchange rate than 30 million Westerners with a lower exchange rate.
Learn to live with the new reality that the West is an old but rich fossil, which will slowly have to distribute the wealth and yes, then indeed more must be paid for stuff from Thailand, among others.
Dear Thino,
I read your report and all those statistics are nice but I think far from the truth.
Unemployment is indicated at 1% and everyone knows that this should be 10%.
I have spoken to many Thais and asked them why they do not register as unemployed.
Answer does not bring anything and still do not receive a benefit. So why do I need to register?
If the government were to start paying people who are out of work, at least 10 million would register.
And the Thai Baht is also a big deal. Just read that exports are having huge problems with the strong Baht.
Tourists will also choose other (also nice) countries such as Vietnam, Cambodia and more at the moment.
I don't have a monopoly on the truth either, but I read a lot and don't think politics will (or want to) change it.
This is my opinion and it may not be correct.
Greetings
Jochen
the bath is about 35.5 compared to a euro, and dollar so people import less from Thailand much too expensive one goes to neighboring countries, and then it is also expensive for tourists who spend less.
I also notice that it deteriorates every year and there are fewer tourists.
in Bangkok soy cowboy has also become much too expensive, you no longer have to go for that, much cheaper in Europe.
But the Thai bath has never been this strong
Just keeps rising.
Euro rises slightly vs. dollar, but continues to fall compared to thai bath.
Who knows may say
If you look at the price development compared to the wage development in Thailand, the internal market of Thailand can never have made great leaps.
For the majority in rural areas, wages have risen minimally at best, and bear no comparison to increasingly expensive living standards.
Furthermore, you really don't have to be an economist to determine that a very strong Baht can never be good for Export and tourism.
The political situation, which in principle only provides an artificial calm, together with the much too high Baht for Export, can never be an invitation for investors.
If we look at the THB, it has gained strength in recent years against all major major currencies such as the Dollar, Euro and CNY. The Thai currency has also risen against Vietnam, Cambodia and the Philippines. An increase in a currency is based on trust, right? I cannot reconcile this with what I have observed in my environment (Aranyaprathet) over the last 5 years. Things have been getting worse for ordinary men and women in recent years.
The Dutch “levelling is a party” also does not bring prosperity or economic prosperity to the Netherlands. The Thai economy suffers as I have mentioned a few times here from an expensive currency. Export becomes too expensive and factories disappear and/or there are no new investments. Furthermore, foreign tourists choose another cheaper destination in Asia.
I think a large part of the bad numbers is caused by declining tourism.
The income from tourism is seen as income from exports, and if there are fewer tourists, less is consumed.
That declining tourism will not only be due to the price of the Baht.
The reports that the sea is an open sewer and that Thailand's pollution is running out of steam will eventually reach people who want to go on holiday.
This has probably already happened in Europe.
As an organizer of travel, you cannot always keep talking about pearly white beaches and crystal clear water, when reality looks very different.
Then your customers will walk away.
Dear Tina,
I don't think you are an economist, so you have to be careful with all kinds of conclusions in the economic field. You bring in the political situation, but it has nothing to do with it.
If things were so bad in Thailand, why is the baht still rising against the euro?
What is a relevant factor is the aging of the population in Thailand.
the political situation has a lot to do with it, but boosting numbers is one of them…
Well, it has been known for some time that the economy in Thailand is not doing very well. For months we have been reading in the newspapers that the predictions are getting less and less. Say about 3%, which is a lot worse than the neighbors in the region. For the Netherlands, the growth is about 2%.
But growth figures do not say everything, of course, but if we see the people who have to make ends meet, survive from day to day, the great inequality in income (measure the unequal country in the world) and so on, then there is certainly cause for concern.
- https://www.thailand-business-news.com/economics/73170-world-bank-downgrades-thai-growth-to-3-5.html
http://www.nationmultimedia.com/detail/Economy/30361836
http://www.nationmultimedia.com/detail/business/30363467
http://www.nationmultimedia.com/detail/business/30357827
https://www.nrc.nl/nieuws/2018/12/19/cpb-groei-nederlandse-economie-over-het-hoogtepunt-heen-a3126387
@Rob V.
Growth figures indeed say little if you look at it from a less developed country. Cambodia has a minimum wage of about 5300 baht while in Thailand it is 9000 baht.
If a Cambodian gains 10%, that is 3,4% in terms of money for a Thai, so growth in % means little in that case.
And what is the big reason for concern? That they get hungry while there are countries where things are much worse? That entire rich country on the North Sea has food banks, that's a real concern.
Moreover, there is still a nice pot of foreign reserves and the upcoming aging population is known and as a measure money is therefore being pumped into good logistics.
The glass is always half full, but others prefer to see it as half empty.
I don't think anything about it, because I'm a foreigner and for my safety I stick to three rules: I don't talk about the royal family, religion or politics. Economics is a politically charged subject, so I have no opinion on it. The walls have ears in Thailand.
Gee Danzig, those are 3 topics I regularly talk about with my Thai family and friends.
Me, too. But even now in the Netherlands I still lower my voice and look around to see if people are listening. My friends in Thailand said, 'Close the door first.'
The Kingdom of Fear.
A taxi driver was once convicted after a passenger, a professor, recorded their conversation on his smartphone. A conversation in which the driver condemned the extreme inequality in property and mentioned some very well-known names.
In June 1996 you got 100 baht for 2,5 Belgian francs (almost €67). In January 1997 already 135 baht…
As far as the decline in the number of tourists is concerned, I think that the rise of the baht against the euro, dollar and other currencies certainly plays a role. That not only affects the economy, but especially, also the fact that non-Thai residents are not allowed to own real estate in Thailand. Furthermore, for the farmers the
financial returns from the rice crops are sadly low. Buyers pay little for it. It would be better if the rice farmers unite in cooperatives in order to enforce higher prices for the rice.
Many point to the strong baht as the reason exports are declining. That is not too bad, because exports are not made in Baht but in US$ or €. Only when the added value of exports falls largely in Thailand (agricultural products, for example), will the exporter either make less profit or have to increase the US$ price. This applies to less than 20% of total exports.
Exports are experiencing problems due to the trade war between the US and China, but Thailand cannot do much about it.
A strong Baht also has advantages for export, because the purchase of raw materials, semi-finished products, machines and oil & gas is cheaper.
Thailand has one of the highest US$ reserves and the Central Bank can only further strengthen the Baht. There is simply too much foreign currency entering the country (exports, tourism, equity market), which is why the Baht is so strong.
Poor distribution of income and property is Thailand's biggest problem. When 50% of the population has to survive on the minimum wage or less, this leads to a good domestic market.
Incidentally, comparing with the buyelanden is not that interesting. Building 1 or 2 large casino resorts in Cambodia immediately leads to a few % growth in GDP. The economies of neighboring countries differ too much for a comparison. .
It's not easy on an iPhone without posting typos.
Just on my laptop…
I agree with you that a somewhat lesser growth and a strong bath is a fairly big but certainly not the biggest problem for Thailand, Petervz.
The large difference in property and income and the lack of a social trap net are the biggest economic problems in Thailand. Environmental protection is also very important. We'll see what the new government will do about it.
It's about who benefits from growth. More goes up than down.
Yes Tino, I use that laptop very little.
Thailand is far too dependent on exports & tourism, neglecting the potential of a strong domestic market. A group that is too large has too little disposable income to actually participate in the Thai economy.
Income (in foreign currency) from tourism and exports largely goes to the rich in Thailand. Take, for example, the Chinese tourist who pays at the 7-11 via Ali-Pay. That yields a lot for CPAll, but here too the income is in Chinese Yuan.
Another reason for the strong Baht is the QE (Quantative Easing) of the European Central Bank. That QE leads to high liquidity in Europe and that money has to go somewhere. A considerable part finds its way to the financial markets in the so-called Emerging Markets, including Thailand.
Better environmental protection and road safety are indeed important points of attention. Thailand is actually a victim of its own success in tourism. The number of tourists has increased far too quickly in recent years.
As so often, the figures do not correspond with what I myself observe. Homes are being built (and sold) here to the delight. The rush hour is dominated by students. 2 mega shopping centers opened in 2 years. Recently also noticed by a Dutch acquaintance who visited us, you see the most beautiful and thickest cars on the roads in Thailand. Pick ups are very popular and are often driven by, let's say, Thai modal. The banks are happy to provide loans, that must also be a reason, but there are also enough people in Europe and America who cannot pay their debts for a while. Around 2008, whole pots of bankrupt mortgages were even sold to private individuals, businesses and governments, better known as derivatives. And who could then foot the bill for the massive over-indebtedness in America? Well, especially the European citizen in the form of extra tax to keep the banks afloat, extra interest to banks that just got the money for nothing and so on. The infrastructure in Thailand is constantly being improved. How many articles have been published here lately about the construction of connections, rail and roads. No, give me the Thai economy, or should I say society. All that criticism of the government. In Bangkok I walk even more at ease through the busiest streets, I have no fear in public transport. What a contrast with when I travel in the Netherlands in any public transport. There are always incidents with 'travelers' and I don't feel safe at all. Thailand, a strong currency, many satisfied and working people in my area who can afford more and more. Many opportunities for the increasingly well-educated youth. Isn't that what it's all about? It will never be ideal. I would of course welcome it if the Euro would appreciate a bit more compared to the Thai Bath, but would that help the economy in Thailand? I highly doubt it. Provisional chapeau for the Thai and a long finger to Europe. You should have known what an effort you have to make to take your wife on holiday to the Netherlands to get to know her step (grand) children. That's what I call lagging behind.
as soon as the tbaht becomes more favorable against the euro again, more tourists will come from Europe… compared to 3-4 years ago, it has become 30% more expensive, partly due to the tbaht compared to the euro and the price increases that there are applied to everything…
The Thai economy is faltering. The official figures, the official economy is not doing well, but does that also apply to the unofficial economy?
Should we be sad about that now? I think we should be happy about that. Economic growth (and thinking in terms of more, more, more) and capitalist thinking have brought the earth to the edge of the abyss: increasing inequality in wealth and power (GDP is no longer a measure of prosperity in a country because revenues of growth are disproportionately distributed), wars over raw materials, refugee flows due to climate change and major environmental impacts. The abolition of plastic bags is of course nice, but to really help this earth we have to buy less, fly less, eat less or no more meat and start growing our own food.
If I were in the opposition I would remind the government of passages in the constitution (the 20-year plan) about applying the Sufficiency Economy Philosophy with every measure or law. And propose any measure that conflicts with it to the Constitutional Court for annulment.
Not more tourism, but less. Not more exports, but less. Not more shopping malls, but less. Not more cars, but less. On to 0-growth and if possible, to minus-growth, officially then. And no one eats one korel rice less of that. On the contrary, there is more and better.
I agree with the gist of your argument, Chris. Economic growth should never be the only or most important criterion for greater prosperity or well-being. What growth? Solar cells or fossil fuels? More care for the elderly or more cars? Growth for which parts of the community? Only the rich and the corporations? We need to define growth differently.
Economic growth does not only have to mean more and more, but also and above all better and better.
I think it is a shame that the philosophy of the sufficiency economy, the 'economy of enough', is mainly preached by the rich, who do not do anything about it themselves, against the poor who are therefore unable to send their children to university. I have not yet met a farmer who supports it.
And as for growing our own food……..how do you see that?
“And as for growing our own food….how do you see that?”
We always talk about the poor farmers who just can't get ahead, but is it all that hard?
The characteristic of a farmer is that he has land at his disposal and could very well grow many types of vegetables, in addition, there are also a lot of chickens and ducks scurrying around and it is quite easy to breed catfish.
It's really not rocket science.
For the city dwellers without a garden, allotment gardens could be considered or gardens to which the city dwellers can take out a subscription so that they receive a share of what is produced each week.
The money then no longer flows into the pockets of the intermediary suppliers and sellers and the less fortunate can have a job in the garden and the subscription holders can have cheap food.
From time to time we also receive parcels from relatives from various areas containing such things as dried fish, peteh beans, chillies, lemongrass, rice and anything and everything that can be sent without spoiling.
I myself grow horapa, krapaow, beans and leafy vegetables such as water spinach in large pots, so if I can do it, there are definitely people who can do it too.
It's more a matter of wanting than being able to. If you can save 15 baht on a bundle of horapa, that's not much for me, but for those so-called poverty sufferers that is still 5% of their daily wages.
Allotment gardens for city dwellers sound nice, but where should those millions of people in Bangkok build their allotment garden?
A piece of land for an allotment garden in Bangkok would probably cost more money than you will save with that allotment garden throughout your life.
Then you also have the transport costs to and from your allotment garden.
And you also have to go there daily (after work?) to see if nothing is eating your harvest.
I assume you have a house with a good piece of land, but most farmers' land is on government loan.
If the government were to claim the money from those loans, Bangkok would be millions of beggars richer.
The fact that you speak of so-called poverty sufferers indicates that you have little insight into the harrowing poverty in which many Thais live.
The rainy season has been here for a while, but the rice fields are still fallow, because there has hardly been any rain.
The reservoir that is supposed to supply the region with water is also dry.
What will the Thai eat here if there is no harvest this year?
Most of the rice harvest is usually for own use, and without a harvest there is no money to buy food.
Google greenroom from ikea. An allotment garden on your balcony.
I have to disappoint you, but I wish I could have a house with a piece of land. What strikes me is that people in rural areas often do not even use 40m2 of land at their house to grow vegetables for their own use. With 40m2 you really don't need that much water and the work is not too bad, but buying on the market is cooler than eating from your own garden.
The allotment garden system can even work in the city and that is called urban gardening. Worldwide there are many initiatives where the roof is used, but that is seen as a nice hobby for the rich because of course it is nonsense.
If you don't have money to make, you might have to be a little more creative so you can get out of the sad world.
Fewer cars, Malls, tourism, export…Zero growth even.
But I look to the other side; So you're going to get zero job growth. Fewer jobs, it seems to me political suicide.
How do you see that?
Ok you may be right, but what I wonder if the stock market
is a reflection of a country's economy how come
that the Thai bhat is so high and strong
The only truth is that everything in Thailand grows and boosts. The country is advancing rapidly while the west is falling hopelessly behind. Europe has become a bunch of bickering old men who only think about their fat pension. Contrary to what was intended, there seems to be less and less Europe instead of much more. Everyone reverts to their own narrow-minded region. With Europe we have all the tools to be a super-leading continent, but ignorant populist attention seekers without any vision are completely screwing it up. And that's just the beginning. Soon ASEAN cooperation will come and make no mistake… they will work together instead of against each other.
Those who think that things will get worse in the coming decades in Thailand and or the whole of SE Asia will come back from a barren journey. The golden sixties have started in Thailand.
I see it getting better every year for the last 20 years.
Dear Fred,
You are quite right in many respects, but you are wrong on two essential points:
1. It is not the regional leaders who are screwing up in the EU, but the megalomaniac so-called leaders of the EU itself who ramble on without taking into account the legitimate wishes of ordinary citizens. Europe is too diverse to become a political entity and power.
2. SE Asia certainly has the future, but there is still far too much corruption in that part of the world for a real threat from ASEAN. So it will take some time before it becomes a success there.
Today the Bangkok Post says 'weakening economy points to trouble for Asia's top assets' and 'fundamentals are weak, with poor economic prospects, trade conflicts and domestic politics. (…) the economy is weak with slow consumption, investment, exports and tourism'.
Earlier this month, Moody's also indicated problems with headache issues such as the aging population. Personally, I would also add the great division in incomes (largest inequality in the world at the moment).
Of course the country has a lot of potential, but the fact that, as some here insist, Thailand is growing like crazy, things are going great here, that is ostrich behavior, wishful thinking. Is the glass half empty? No, half full. But there are serious challenges. The 'sufficiency economy' theory will not get there. Education, income inequality, less dependence on foreign financial flows, will this happen again? These are serious issues that cannot simply be left alone. Then Somchai can live for many more years with less and less worry for him and his children.
- https://www.bangkokpost.com/business/1703680/weakening-thai-economy-suggests-trouble-for-asias-top-assets#cxrecs_s
- https://www.bangkokpost.com/business/1588786/report-thailand-most-unequal-country-in-2018
Just stating facts, as it actually goes:
A company that exports almost 100% and sells in Euro, received 5 THB/Euro exactly 44.41 years ago and today 34.92 THB/Euro. These are the official rate, in practice you get about 2 to 3% less in your hands because the banks also collect their share. The result is approx. 21% less income.
General metal suppliers such as CNC, laser, welding, etc. have applied an average price increase of about 25% over the last 5 years, based on data from their own company, so not hearsay.
Even with a “large” profit margin a few years ago, production is now at cost price or worse.
Raising the price of the product by about 25% to become profitable again is not realistic as one simply has no customers left, they can get a better price worldwide.
Average prices of all kinds of parts are now cheaper to buy in almost every European country. So, a very simple consequence: stop production in Thailand and move to?
Dear Armand,
Your story is correct for those export products where no import of raw materials and semi-finished products takes place.
However, this is not the case with most export products. After all, 80% of Thai export is the assembly of end products or parts thereof. Take electronics, where the Thai added value is only the labor costs. The rest is import in $ or €, assemble and then export again in $ or €.
In addition, energy is cheaper with a strong $, and so is the purchase of new machines.
The effect of a strong ฿ is relatively low in the Thai trading picture, because ฿ is not traded.