Criticism of the junta: Thailand's economy hits rock bottom
Bangkok Post is extremely critical of military government in Thailand. In the economic field they have made a mess of it: figures do not lie.
The balance: Exports fell by 4,2 percent on an annual basis in October (more than 1 percent in the first ten months compared to last year). Industrial production is now zero percent. According to the Bank of Thailand, Thai spending fell by 5,5 percent after Bhumibol's death. That is the lowest level since the major floods five years ago.
But that's not all. Household debt rose in one month from 3,78 trillion baht to 3,81 trillion. Consumer confidence fell and retail sales are lagging.
The Bank of Thailand is also critical, a spokesperson says that the last economic engine that was still working, tourism, is also coming to a simmering halt. For the past two months, Thai and Chinese airlines have canceled 30 or more flights every day, which is 18.000 tourists a day and a quarter of a million tourists a month. The reason for this is Prayut's personal decision to end China's zero-dollar tours.
The junta has since confirmed that Thailand will not meet the target of 10 million Chinese, but would remain stuck at 8,8 million. The government panicked and quickly scrapped the cost of visas for all nationalities for the next XNUMX days.
According to the newspaper, the junta's promises to boost the economy are built on quicksand. Bangkok Post also points out that the new constitution allows for an unelected head of government. Prayut could therefore easily remain in power after the elections.
Source: Bangkok Post
The Thai government or the central bank would be better off devaluing the bath a bit, exporting to Europe is becoming far too expensive. In addition, Thailand is of course also too expensive for European tourists.
The main problem is, of course, the euro, but countries have to come along if they want to save the economy and want stability.
They devalued the baht once before, 1 year ago, and that led to an economic disaster in Asia with Thailand as the instigator and Thailand suffered huge economic losses. So forget about a devaluation.
In addition, they also import a lot and imports also become too expensive for Thailand in the event of a devaluation.
small correction: 1 year ago should be 19 years ago
Devaluing the baht by the government is no longer possible. It's a question of supply and demand. Thailand has a trade surplus (imports are mainly lower due to the low oil price), and then the currency goes up.
The baht moves in a basket of other currencies, a so-called weighted basket. The US$ weighs the heaviest, but the Euro, Yen and possibly the Yuan are also in this basket.
The baht can only go down if supply increases or demand decreases. Because the Bank of Thailand has a huge US$ credit, but too little in Baht, the first option is only possible through so-called Quantative Easing, or printing a lot of baht. Thailand's economy must be able to absorb this extra Baht.
Something we notice every day (shopping, busy on the road, busy at tourist locations, etc.) is now finally confirmed.
Yes, I am also in favor of devaluing the Bhat by 10%.
But please do so at the end of the month if I send money from the Netherlands.
Otherwise I am afraid that the effect will have faded in 2 to 3 weeks.
We know, hey Roel.
Greetings Nico
Also due to the 3-year-old crime not to place beach chairs on Patong Beach anymore. Hear and see around me that a lot of beach lovers are disappearing to Vietnam, Indonesia, Malaysia, Myanmar and Cambodia. Currently, 60% of visitors to Phuket are Chinese and they spend their money at jewelers and shopping malls. Bars, taxis, restaurants, massage parlors have nothing to do with this.
The only thing a government can do to stimulate the economy is adjust the nature of the currency.
a government can do no more than keep the country competitive on price. A government of a country has no influence on world trade
Industrial production 0 %??? That seems like a typo to me. Must be the (not) increase of it. you
And yes, when the military takes over somewhere, it is usually not good for investments and other areas of the economy. In that scenario, tourism hardly ever gets a “boost”.
In addition, economic policy that has not been structured in recent decades cannot be coordinated in a few years.
just see how it turns out.
I believe we need to look at several elements:
Who is the head of Bangkok Post? Who heads Bank of Thailand?
These may possibly be opponents of the military junta.
We have already read about the measures taken by the junta against the zero-dollar tours on this blog. The only benefit of those zero-dollar tours would have been the number of Chinese tourists who have flown into Thailand. That would now be largely gone. But what was the benefit of those tourists in Thailand for Thailand itself? We have been able to read on this blog that the expenditure of those Chinese in Thailand would flow back to China through all kinds of constructions.
When King Bhumibol died, normal life almost came to a standstill. Events have been canceled and Thais have begun to mourn en masse. It has undoubtedly changed the economy in Thailand. Many tourists will undoubtedly have postponed their trip to Thailand for these reasons until normal life resumes.
In Roel's response I read that the Euro would be the main problem. I tend to disagree. Only the Europeans might spend a little less in Thailand. But what is the share of European in Thailand? I think the devaluation of the Russian Ruble will undoubtedly have played a bigger role than the weaker Euro. But besides that there are neither the Japanese, the South Koreans, the Indians, the tourists from other Asian countries, the United States and Canada, the Gulf States, Australia and a few other countries (you name it): for them, I think things are changing nothing. I think they will just continue to travel to Thailand as before… Only the disagreement with the policy in Thailand (the Junta) and the mourning over the death of King Bhumibol will probably prevent some people from these countries from traveling to Thailand (for the time being).
In my opinion, the main cause is the poverty and declining purchasing power of most of the Thai population and the widening gap between the elite and the average Thai population.
I agree with you, Daniel M, and especially with your last sentence. Purchasing power has collapsed, which is especially noticeable in the informal sector where 70% of all Thais work. I hear that turnover has fallen by between 10 and 30% in shops, restaurants, markets, agricultural businesses, etc. My ex sells pork on the market, previously 1 animal per day, now 2 in 3 days. This decline will continue in other sectors in the coming months. These are internal causes, uncertainty about the future, for example, and not so much international factors.
That's right, a long military rule, uncertainty about a return to democracy, a new monarch, all lead to uncertainty. And in times of uncertainty, purchases are postponed. This in turn has consequences for the entire chain, less turnover, less production, less transport => fewer jobs. A vicious circle.
I don't think the bath has gone down. Got only 37thb per euro today. Or the euro is down and I missed that.
The euro has fallen due to problems in Italy
The price of a currency always fluctuates and depends on several factors, especially confidence. But now take a look at the course of the exchange rate of the Thai Baht against the €uro on the website http://www.valuta.nl/koers_grafieken and set it to 4 years. Then you see that the price can fluctuate considerably, but the current price hardly differs from that of 4 years ago. When the rate of the Thai Baht drops everyone shouts it from the rooftops, but when it rises I hear NOTHING…
The downturn of the Thai economy therefore has nothing to do with the exchange rate of the Thai Baht, but with consumer and business confidence.
Euro Baht 38.37-. 06 Oct. 0600 hours. That's before your bank digs.
Canceling 30 flights or more per day would result in 18.000 fewer tourists?!
So about 600 people per flight. Math is not the strongest side of the Thai and can
provide an economic problem as well as the understanding and decision-making in certain situations.
“For the past two months, Thai and Chinese airlines have canceled 30 or more flights every day, which is 18.000 tourists a day”
If exactly 30 flights have been canceled, that means 600 people per plane.
I.Lagemaat's calculation is correct so far.
But it concerns 30 flights OR MORE. Perhaps we should emphasize the latter.
Suppose it is 35 flights, then that is 514 passengers per plane;
Suppose it is 40 flights, then that is 450 passengers per plane;
Suppose it is 45 flights, then that is 400 passengers per plane.
The average capacity of most large aircraft (including the Airbus A330 and A340 and the Boeing 777) fluctuates around 300 seats.
The number is even higher for the Airbus A380 (more than 500) and the Boeing 747 (400 – 500), but these aircraft are much less common than the aforementioned ones.
It must also be assumed that the aircraft are fully booked, which in practice is absolutely not always true.
Either more flights have been canceled or the number of tourists per day is (greatly) exaggerated…
In another article, published on December 3 on Thailandblog, it is stated that Thai knowledge of mathematics is ranked 26th out of 39 countries…
Perhaps we can question the quality of Thai data reporting…
An airplane always has to return to its starting point. If an outward flight is cancelled, it follows that the return flight will also be cancelled. Possibly means 30 return flights of aircraft with approximately 300 seats.
Free golden tip!
Reduce the value of the Baht by 20%.
The fact that a better exchange rate of the Thai Bath against the Euro can promote exports and tourism is a fact, but certainly not the only problem. The biggest problem is the current military government, which may give an apparent calm, but in reality there is none. The new constitution also takes the country further and further away from a real democracy, which is also an uncertain factor for foreign investors and business relations. Even as far as tourism is concerned, the various measures taken often give the impression that everything is happening under a military herachy. A herachie that does not allow any other opinion, or even tourist wishes. If we only look at the strict ban on beach chairs, or the constant changes in the visa destinations, you often get the feeling that they are not dependent on tourism at all. With all the new visa destinations that have been implemented in recent years, although changes, I see no real improvement.
As long as 1% of the Thai people own 58% property and keep the Thb artificially high, you can of course complain that things are going less well. The jug is filled with water until it bursts.
An artifice with the visa is no more than a concealing plaster on the wound.
Partly given the debt burden of middle-income earners, which should be the driving force in the Thai economy, has a crippling effect. At a certain point, people with debts are no longer able to maintain their purchasing power. What makes it even worse is that these are often people in government service, so that there is another erode effect from within. Or more Chinese tourists, I can't imagine being able to compensate for that. Even if half of China comes here, not yet.
It should be a different way of thinking, reforms from within, better education and equal opportunities for every Thai. But then we are two generations further.
I would like to comment on the decline in exports.
If I am not mistaken, tourist income is also counted as export.
Then the decline in exports is partly, or perhaps entirely, due to the slump in tourism revenues.
The biggest question is why household debt has risen so sharply in a month.
Or are there fewer loansharks and the money is now borrowed from a bank and the debts become visible?
@I.lagemaat: I have read about standing places in the planes, instead of seats.
And Chinese are usually not that big.
You can also read the text as: 30 flights from Thai airlines and 30 flights from Chinese airlines.
Because it does not say Thai and Chinese airlines TOGETHER…
And that's only about 300 passengers per flight.
There is a state subsidy on a number of export products because otherwise no more export is possible because the product is then too expensive to export.
We have seen the effect of the subsidy on rice.
The entire work process must be much improved, including more automation.
When I see that only a few people are actually working and the rest are actually watching.
There are few Thais who pay taxes, of course nobody wants that. They even try to buy out on interest under the tax by buying real estate and renting it out again.
The whole process is not right in Thailand, that will have to be improved, so reform as it is so beautifully called.
Coming back to the tourists and especially those who no longer come from China, do understand that every ticket includes 700 baht in airport costs and a part of the tourist tax. Let's assume that those 18.000 stay-aways are correct, that 12.600.000 baths are missed per day, count out where that goes on an annual basis.
Western products have become almost unaffordable here because of that extra import tax, certainly not affordable for a Thai, at least not for the large group.
Many expats from various countries live there, due to the depreciation of the euro, for example, these expats who have the euro can also spend less, which also puts pressure on the economy and that is directly related to the large group of Thais who depend on it .
Personally, I think it's just the beginning, assume that Thailand and the whole of Asia will soon have to deal with the depression as has been in the USA and Europe.
Inbound tourism is seen as an export of services.
By value, Thai exports are mainly cars and electronics. Demand in the sales markets is down for both. Hence the export decline
a bit of customer friendly towards the farang and espada would also help
also abolish the crazy rules regarding visas for people who want to spend their pension and savings in Thailand.
they don't know what to come up with to knock the money out of your pocket and if you have paid you still have to leave the country every three months
actually, for three months no more tourists should come so that they woke up.
it is a pity for the ordinary hard-working Thai, it remains one of the most beautiful countries in the world for me
Of course the death of the king and the expensive Baht temporarily put pressure on the economy.. but.. look at what has been happening around BKK in recent years.. boosting economic activity like never before.. we in Europe can only look at that and very jealous.
we have just returned from a business trip and holiday in Thailand.
My husband and I arrived in Bangkok on October 18th quite shortly after the tragic death of their dear King, all the people there walked in black and there were hardly any tourists to be discovered, my husband and I also walked in black to show respect for the Thai people. Tourists simply do not like to go to places where people are in mourning, very unfortunate for the population. We do quite a bit of business there, but also notice that our euro has plummeted to such an extent that it takes quite a bit of haggling to get to a good price. Thailand is every x when we start trading there and that is at least 3x a year, they just keep raising the price, and that it is a logical story that we will move to countries where it is cheaper. And we also saw at the busy intersections that the police intervene and Thai people on scooters and cheap buses with tires that no longer had a profile that were pulled over and that they were fined, they try to restore structure and order and regularity. to make this overcrowded great city a bit safer, also for us tourists. My husband and I love Thailand, the people, the food, the wonderful massages, but in the last 10 years the prices have risen so incredibly and many Europeans
therefore move to cheaper countries. Greetings Antoinette
Only we are working on the Euro again, I understand that the economy is a little less. But I'm not complaining I'm happy that I'm staying in Thailand, adjust to a little less Euros. Save a little on the nightlife, a little less bars, a little less girls. Should we be unhappy about that, no. Example: a little more sport, less nightlife. And you saved!
It is hardly surprising that the event in October and the associated measures have not gone unnoticed.
But fortunately none of the doomsday scenarios have materialized so far and if this difficult period does not cause more than a ripple in the statistics, one can actually consider oneself quite lucky.
Of course, the number of lesser tourists can be correct if 30 flights per day are canceled, because not all tourists will come by plane.
And if they arrest tourists here who play bridge here, it will also cost them many thousands of visitors every year.
These are about people with a well-filled wallet that no country would want to miss as a tourist, except Thailand.
In Thailand, too, it is becoming increasingly clear that the neo-liberal economic, capitalist model (applied by all governments in recent decades, red, yellow, military) is doomed. Financial gifts are handed out to the less fortunate, but structural solutions to the causes of the economic crisis, including tax measures for the rich, are absolutely out of the question. It is not only about the value of the Baht, nor about the slower growth of tourism (because tourism is still growing), but about better education, agricultural policy, income policy (in particular raising the minimum wage) and preventing the outflow of money earned in Thailand (via the purchase of shares and real estate abroad and even entire companies or football clubs). CP recently bought an American food company for more than 1 billion dollars.
The wealthy in this country are not only decadent but shortsighted and unpatriotic.
One of the reasons, perhaps the most important, why the baht will not be devalued is that the value of the foreign assets of the upper class will then fall significantly in value. This was seen in 1997 with the then devaluation and evaporation of assets.
dear Ger. The value of foreign assets does not change because they are not valued in Thai Baht.
If the value of foreign assets is not valued in Thai Baht, it is not known whether that value will change.
A currency will be officially devalued if the market has not already devalued it. Devaluation is rectification to a factual situation.
A government will never be guided by (the original foreign investment in) foreign assets. Foreign investors are also taking this into account. For a government, in addition to an actual fall in value, a devaluation is a means of steering the economy. After all, exports are getting cheaper.
Broadly speaking, I agree with you. However, buying up foreign companies is often intended to expand sales markets. This can increase the sales of domestic production. An additional advantage is that if the domestic currency is devalued, the foreign value will increase relative to the domestic currency value (after devaluation). That is pure profit.
Foreign investment in Thailand has fallen dramatically, especially in the last year as, as Chris pointed out, Thai money is increasingly being invested abroad. The rich in Thailand are already seeing the storm coming.
The Thai bath is too expensive and urgently needs to be devalued. Corruption is still rampant... This year, 600 Belgians living in Thailand left the country permanently. I suspect that this also affects other nationalities... There must be clarity and consistent rules without corrupt officials... But... is this possible?
Funny. The TAT today received the 30 millionth tourist for 2016 in Bangkok.
(29,88 in 2015) It concerns Huang Junyi 27 years old from Guangzhou. Now widely reported in Chinese newspapers.
Have you ever read that in some economies it is better to leave corruption alone, otherwise the whole thing will collapse.
Before the crisis, the black circuit of Spain made up 25 percent of the total economy. Since then, this has been successfully addressed and Spain is recovering well.
Complain that the Baht is so expensive, or the Euro is not worth enough – who cares in the end? We used to go to Italy, and when that became too expensive we successively went to Spain, Greece, Turkey, Egypt and Tunisia. Here too we can simply vote with our feet. The whole world is open, starting with the rest of Asia.
Come somewhere again!
Recently someone who knows a very powerful Thai businessman said to me that those in power have the most capital. He once advised Taksin to leave politics and do business in Thailand again. Behind the scenes, we can exert much more influence over any government.
I call that mafia business.
It is a fact that tourism is declining, and that it is becoming increasingly difficult to obtain a visa for three/six months, which is probably not surprising, at least this is the situation in Berchem (Antwerp) and I suspect at several consulates or embassies.
The opposite would work , and could boost tourism , why all this difficult stuff ?
Dear Marc. Look at the numbers. Tourism to Thailand is STILL RISING. Perhaps it could rise even more. Visa for three and six months for tourists? How many of these 'tourists' are we talking about: a few thousand out of 30 million? That is less than 1%. Don't put sod on the dike.
Indeed, the tourist visa is not really for the average tourist. In any case, you can stay freely for a month without a visa. What would help is putting the currency back in order. It is now simply too expensive for many tourists. What would also help is more customer friendliness in the tourist regions. And I especially mean the many rip-offs by taxis and other Thais, who think that every Farang is a millionaire. In the tourist areas you cannot get a meter taxi unless you try 20. Tuk tuks that lure tourists under false pretenses, etc. I personally don't think Thailand is really improving for tourists
According to this message, the free visa is not for all nationalities, but only for 19 (which unfortunately does not include us) http://www.ttrweekly.com/site/2016/11/thailand-hands-out-free-visas/comment-page-1/
In addition to my response just now: the exemption was indeed initially for 19 nationalities, but has now been extended to all nationalities. It only applies to single entry visas. Through this link http://www.thaiembassy.org/penang/th/news/3794/73233-Temporary-Tourist-Visa-(Single-Entry)-fee-exemptio.html find the official announcement. Please note, the page itself is in Thai, but if you click on the image you will get the announcement in English.
It is not the Army that rules now, but the corruption that was there before. The Army does not want to participate in this now and is facing opposition from the Foreign Countries, who were used to corruption. Now that that is no longer possible, Thailand is getting a kind of punishment, because more honesty is rarely rewarded. In a way, the Army has always been a kind of Guardian of Democracy and most people don't want to see that.