Minister: Stagflation threatens Thailand
Thailand is heading for 'stagflation' as the spending that lubricates the economy lags behind. Poor people don't have money and people with money don't spend it because they don't have faith in the future.
This is what Minister Sommai Phasee (Finance) says about the current economic situation in Thailand, where I immediately point out that the term 'stagflation' is not appropriate, because it refers to a situation where inflation is high, economic growth is slowing down and unemployment remains high. Of these three characteristics, only the second applies to Thailand.
Despite the disappointing spending, Sommai is not worried: the government has a robust budget and the soon-to-be government stimulus measures will boost the economy. He expects to see the results in the first quarter of next year.
Sommai's optimistic outlook for the future is put into perspective by Moody's Investors Service. This agency points out that the high level of household debt in some Southeast Asian countries poses a risk to private spending and the quality of banks' assets. Nevertheless, Rahul Ghosh, vice president and analyst, says that the banking sector in Southeast Asia is healthy and can take a beating.
According to Moody, Malaysia and Thailand are the most vulnerable to interest rate rises because of the high government debt and because lending has increased sharply in recent years. In both countries, the percentage of household debt related to gross domestic product is very high: 87 percent in Malaysia and 82 percent in Thailand.
In addition, household debt has risen relative to income levels in both countries, making debt repayment problematic, also because stricter requirements are imposed on loans.
All in all, Moody thinks the risks are manageable because most Southeast Asian countries have healthy balance sheets. Interest rate rises can be cushioned and risks mitigated by government stimulus programs to support domestic spending.
(Source: Bangkok Post, October 21, 2014)
People who have read Karl Marx's Das Kapital will know that it only gets worse. The rich get richer and the poor get poorer. Or read John Steinbeck: Grapes of Wrath.
This applies not only to Europe and America, but due to globalization all over the world. Greed reigns. A society can only survive and prosper on the basis of reasonable relations.
I myself have a good life, but I am ashamed of the people who devour the world without a conscience.
Thailand cannot escape it either. Debts are getting bigger. The rich will soon store their billions in the Bahamas and the country will go to hell. It's a global trend that won't stop anytime soon.