Short
Shrink Boosts Thai Rebound
 At
the start of 2009, the prospects were somewhat bleak for the economy
of Thailand, already deep in recession, but 12 months later the country
is well on its way to recovery, though there are still a snags that
could undermine growth.
Though Thailand's economy contracted by
2.8% year-on-year in the third quarter, the shrinkage was far less than
the 7.1% in the first three months of 2009 or the 4.9% in the second
quarter.
According to a report issued by the Bank
of Thailand in December, the fall in GDP should be around 3% for the
year compared to 2008, while the coming year should see economic growth
of between 3.3% and 5.3%.
There are a number of signs that the Thai
economy is again moving forward: consumer confidence is on the rise
and a key indicator of economic health—automotive sales—shot
up 23.8% in November, the highest rate of increase in more than four
years.
With just over 53,000 units rolling off
the lots in November, the third month in a row of rising sales, the
automotive sector is looking to see a reversal of some of the losses
it posted earlier in the year, though even with the better figures for
the last few months of 2009, overall sales could be down around 14%
for the 12-month period.
At least some of the growth being seen
can be attributed to the $3.5bn stimulus package announced in January
and rolled out by the government across the first half of the year,
which aimed to increase spending through a mix of cash payments to low-income
earners, tax cuts, education loans, and subsidies for transport and
utilities.
Even more significant to bolstering the
longer-term health of the economy was the $39bn spending programme that
the government launched in October.
Set to run for three years, the scheme
foresees major investments in transportation, logistics, health care
and education projects, which will strengthen Thailand's economic infrastructure
for the future while creating direct jobs and boosting capital flows.
Help for Thailand's economy is also coming
from abroad, with export orders starting to increase again after a sharp
drop in the first half of the year.
With the economies of the U.S., Japan
and Europe all moving out of recession in the latter part of 2009, experts
are now predicting that the year-end drop in overseas sales of goods
and services will be 15%, rather than the 20% or more forecast earlier.
Thailand’s October export figures
showed sales of $14.8bn, a 3% decline over the same month in 2008, continuing
the trend of recovery.
With exports contributing up to 60% of
the country's GDP, this upward movement is the precursor of increased
employment and a stepping up of private investment.
In late November, the commerce minister,
Porntiva Nakasai, said exports could rise by 3% to 5% in the last quarter
of 2009, meaning the year-end rate of contraction could be as low as
13%, and post growth of 10% to 15% in 2010.
Another boost from overseas came via Thailand's
crucial tourism industry.
Hard hit late in 2008 by waves of protests
that caused many prospective visitors to think twice about holidaying
in the country, as well as by the global recession eating into the trade,
the tourism sector was showing signs of solid recovery as the year came
to a close.
By the end of November, Thailand had recorded
12.44m foreign arrivals, with the Tourism Authority of Thailand (TAT)
raising its 2009 projections to 14.1m on the back of strong bookings
for the final month of the year.
Though still 500,000 down on the 2008
figures, if the TAT estimates are correct, it would be a good result
after a slow start to the year.
However, while there are strong indicators
that the Thai economy is moving towards recovery, there are also a number
of factors that could slow this progress in the coming year.
Is Map Ta
Phut Kaput?
Row At Map Ta Phut
At the end of September, a court issued
an injunction ordering work on projects being built or those already
completed at the Map Ta Phut Industrial Estate in Rayong province,
south of Bangkok, be halted, as they did not comply with existing
environmental and health regulations.
The ruling, in response to a petition
tabled by local residents and non-government organizations, directly
affects at least 65 separate projects, with a total value of around
$12bn.
Various reports showed the damage
to the economy, including an analysis by the state's Fiscal Policy
Office in early December suggesting that shutting down Map Ta Phut
could cut Thailand's GDP by between 0.5% and 1% and cost as many
as 100,000 jobs.
As the year closed, the saga was no
clearer to resolution, with the committee set up by the government
to draft new industrial development guidelines still to table its
findings.
On December 2 the Supreme Administrative
Court upheld the lower court's ruling on suspending work at Map
Ta Phut.
The cabinet has approved a draft proposal
to help establish an ad-hoc independent health and environment advisory
body, which could help, resolve the Map Ta Phut dispute.
As we go to (virtual) press The PM's
Office has drafted regulations on how the planned body should advise
the government on environmental and health related issues.
The four-party panel tasked with resolving
the Map Ta Phut dispute has called for a 19-member coordinating
committee to be set up to help work out how the ad-hoc independent
advisory body would be formed and what its exact role would be.
Once established, the ad-hoc body
would advise the government on the approval process of projects
deemed harmful to the environment and public health.
Also threatening to tarnish the achievements
of the economy is the issue of political stability. With the supporters
of ousted former premier
Thaksin Shinawatra at times taking
to the streets in protest against the government of Prime Minister
Abhisit Vejjajiva throughout the year, and with further large-scale
rallies already announced for January, there could be disruptions
to economic activity.
While there is cause for optimism
as Thailand heads into 2010, this should be optimism tinged with
an element of caution, with the country facing a number of external
and internal risks in 2010.
Gordon |
|
Frankfurt-based
general sales and service agent Cismat GmbH (pronounced Chismat) has
begun 2010 with a big bang by announcing the opening of new offices
at eleven Indian airports. 
A
friend of ours is taking it tough this week but he is a tough guy who
will not be overcome and has vowed to fight back.
