Is This True That The Thai Economy Is Going Into Recession?

[Pattaya Daily News]

According to analysts and critics they claim that the export percentage determines the economic growth of the country. They state that Thailand’s economy is taking a downturn! How and will this impact us?

On August 19, 2013- BBC News claimed that the Thai economy has taken a downturn after showing the figure’s proving the economy is going into recession. The GDP of Thailand in the second quarter has reduced by 0.3% after already reducing about 1.7% in the first quarter. In 2012, Thailand’s economy was booming and showed a positive increase by about 6%. Economic analysts believe that the current economy is not what it used to be, this is due to reduction in domestic consumption, consumer confidence, and weak exports. Will Thailand’s economy take a plunge as believed by analysts?

The horrifying numbers and decimals that are presented on newspapers and television are least understood by people. This is because people still pay 35 baht for an average plate of food at an average of 20 baht for the motorbike ride. There are no clear signs of a recession.

Giant companies like Saha Farm that has about 4500 Thai, Burmese, and Cambodian employees announced its shutdown. On July 5 immigrant workers from Saha Farm held a protest demanding two-month overdue wages after the company failed to pay their salaries these workers threatened to cause problems to the factories in Lopburi and Phetchabun.

Pan Asia Footwear Co., Ltd. one of Saha Group branches, is a large manufacturer of footwear in Thailand. Pan Asia footwear is one of the first companies in Thailand to have manufactured shoes for international brand names like Nike and Pan. Pan Asia footwear has currently announced that its factory will close down all shoes and bags production from 31st of August 2013. This factory which is in Rayong, will lay-off an approximate of 2000 employees from closing down this production.

If these laid off workers remain unemployed they would probably have to look for an alternative such as selling street foods on carts or ride motorcycle taxis for instance. Pattaya city itself at the moment is already congested imagine having 1000 more carts on the road and 2000 new motorcycle taxis. What if they cannot sell street foods or ride a motorcycle taxi what will they do? How will they support their family and their children? How will they pay their child’s school fee, and their rent? How will they survive? Imagine walking on the streets and someone spots your necklace. What if that someone is so in need of it with full force no matter what runs 100 m to snatch it and run away with it? What will happen to our community?

Meanwhile, regarding the economically downturn the government led by the central bank of Thailand confirms that this downturn is only a technical recession. But it has had an impact on the cost of living and is a concern by the people. Moreover, the Ministry of commerce has been held responsible in taking care of the costs of living situation.

Is this real ? Will Thailand’s economy take a permanent downturn? Are we really in the verge of a recession again?

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[Michaeliberty]

Will the drop in the bht make the tourist industry pick up? How much does the tourist industry help the economy?

[Bagwan]

Will the drop in the bht make the tourist industry pick up? How much does the tourist industry help the economy?

Some great reading from Wiki... Tourism is about 6-7% of the gdp

Thailand is a newly industrialized country. Its economy is heavily export-dependent, with exports accounting for more than two-thirds of its gross domestic product (GDP). In 2012, according to the Office of the National Economic and Social Development Board, Thailand had a GDP of THB11.375 trillion (US$366 billion).^[1] The Thai economy grew by 6.5 percent,^[1] with a headline inflation rate of 3.02 percent^[3] and an account surplus of 0.7 percent of the country's GDP.^[12] In 2013, the Thai economy is expected to grow in the range of 4.2–5.2 percent.^[1] During the first quarter of 2013 (Q1/2013), the Thai economy grew by 5.3 percent (YoY).^[1]

The industrial and service sectors are the main sectors in the Thai gross domestic product, with the former accounting for 39.2 percent of GDP. Thailand's agricultural sector produces 8.4 percent of the GDP – lower than the trade and logistics and communication sectors, which account for 13.4 percent and 9.8 percent of GDP respectively. The construction and mining sector adds 4.3 percent to the country’s gross domestic product. Other service sectors (including the financial, education and hotel and restaurant sectors) account for 24.9 percent of the country's GDP.^[2] Telecommunications and trade in services are emerging as centers of industrial expansion and economic competitiveness.^[17][18]

Thailand is the second-largest economy in Southeast Asia, after Indonesia; however, its per-capita GDP in 2012 was relatively low ($5,390).^[1] In Southeast Asia Thailand ranks in the middle of per-capita GDP, after Singapore, Brunei and Malaysia. On 19 July 2013 Thailand held $171.2 billion in international reserves,^[19] the second-largest in Southeast Asia (after Singapore). Thailand also ranks second in Southeast Asia in external-trade volume, after Singapore.^[20]

The nation is recognized by the World Bank as “one of the great development success stories” in social and development indicators.^[21] Despite a low per-capita gross national income (GNI) of $5,210^[22] and ranking 103rd in the Human Development Index (HDI) the percentage of people below the national poverty line decreased from 65.26 percent in 1988 to 13.15 percent in 2011, according to the NESDB's new poverty baseline.^[23] As of the first quarter of 2013 Thailand's unemployment rate is 0.7 percent,^[1] the fourth-lowest unemployment rate in the world (after Cambodia, Monaco and Qatar).^[24] The average headline inflation rate of the first half of 2013 stands at 2.70 (YoY),^[25] with a policy interest rate of 2.50 percent.^[26]

[petrmcfree]

My first thought was "I HOPE SO! PRICES WILL GO DOWN".

 

After I realized, that we're  talking about Thailand and dealing with thai logic. Business isn't going well? Not making enough money? INCREASE PRICES RIGHT NOW!

[fugazi]

I'm  not an economist, but I still notice a few things.

 

Over the last 6-7 years the baht has been rock solid. Even after military coups, protestors blockading airports, riots in BKK,the baht didn't as much as blink.  At some point such a hard currency is going to hurt export. Perhaps a correction was overdue.

 

Add to that the political unrest and fear of mass demonstrations on the streets of BKK due to some sort of amnesty bill. I can see the Baht dropping even more to 45 to the €. Then there was the flood not long ago and it's easy to understand why Vietnam and Malaysia become viable alternatives in the area.