Annual Bank of Thailand symposium
discusses global economic
recovery
By Jon Fernquest 
The
global economic recovery that appears to be underway was the main topic
at the annual symposium held by Thailand's central bank this
week. (Photo on right of Bank of Thailand governor Dr. Tarisa Watanagase who observes that the "Global rebound is still fragile")
Economy faces lower growth
BoT sees higher baht, hiked funding costsPARISTA YUTHAMANOP
16/09/2009
The Thai economy will face challenges from low global growth, an appreciating currency and higher funding costs in the years ahead, according to economists at the Bank of Thailand.
Central bank economists at the bank's yesterday focused on future trends and policy challengesannual economics symposium in the wake of the global downturn.
Even with the worst of the recession apparently over, high household debt and wealth destruction in the US will constrain its consumer purchasing power for five years, while rising bad debt and the need to raise capital will also hamper the US financial sector.
funding costs -
money paid to borrow money (interest paid on money plus fees)
hiked funding costs - increased funding costs
challenges - new and difficult tasks that require great effort and determination
face challenges - meet or encounter new challenges in work or life
appreciating currency - a country's currency (like the Thai baht) which is increasing in value
symposium - a conference or large meeting in which experts and acadmics discuss a subject in detail
annual economics symposium -
X in the wake of Y - X happened after Y
apparently over - seems to be finished (but not sure)
high household debt and wealth destruction - households (families) have borrowed a lot of money and they have had their savings or "wealth" destroyed by the collapse in stock and housing prices
constrain - restrict or limit
constrain its consumer purchasing power - limit what consumers can buy
rising bad debt - more and more people and companies not able to pay back loans
hamper - prevent action
hiked funding costs - increased funding costs
challenges - new and difficult tasks that require great effort and determination
face challenges - meet or encounter new challenges in work or life
appreciating currency - a country's currency (like the Thai baht) which is increasing in value
symposium - a conference or large meeting in which experts and acadmics discuss a subject in detail
annual economics symposium -
X in the wake of Y - X happened after Y
apparently over - seems to be finished (but not sure)
high household debt and wealth destruction - households (families) have borrowed a lot of money and they have had their savings or "wealth" destroyed by the collapse in stock and housing prices
constrain - restrict or limit
constrain its consumer purchasing power - limit what consumers can buy
rising bad debt - more and more people and companies not able to pay back loans
hamper - prevent action
Slow growth in the US in turn will affect Asian and Thai exports, a concern given their heavy reliance on trade.
Central bank economists agree that policies to stimulate domestic consumption and investment are needed to minimise the impact of weaker exports. But domestic demand is unlikely to offset exports' contribution to job creation and technological development.
Meanwhile, private investors and central banks are likely to diversify from dollar-denominated assets to developing economies and commodities in search of higher yields, pushing down the dollar.
The US Federal Reserve might increase interest rates as inflation builds up from its aggressive policies to inject funds into the economy.
heavy reliance on trade - economy
depends on exports for income (rather than production for use in
country)
stimulate - cause to start working, moving, or increasing
stimulate domestic consumption and investment - cause people and companies to start buying things again
minimise the impact of - make bad effects as small as possible
offset - change in the opposite direction
diversify - increase variety
dollar-denominated assets - assets with value given in dollars
in search of higher yields - trying to make more profit on investment
pushing down the dollar - making the dollar worth less and making other currencies worth more
aggressive policies - strong policies determined to solve the problem
inject - put into
inject funds into the economy - put money into the economy (through loans, government spending, open market operations)
stimulate - cause to start working, moving, or increasing
stimulate domestic consumption and investment - cause people and companies to start buying things again
minimise the impact of - make bad effects as small as possible
offset - change in the opposite direction
diversify - increase variety
dollar-denominated assets - assets with value given in dollars
in search of higher yields - trying to make more profit on investment
pushing down the dollar - making the dollar worth less and making other currencies worth more
aggressive policies - strong policies determined to solve the problem
inject - put into
inject funds into the economy - put money into the economy (through loans, government spending, open market operations)
Tarisa Watanagase, BOT governor
Tarisa Watanagase, the governor of the Bank of Thailand, said the global recovery remained fragile, as seen through relatively high unemployment.But gains in consumption figures in the US and Europe have created optimism about the global recovery.
"The timely disbursement of public funds and a recovery of private investment will help to drive economic growth in the short term," she said.
The baht will be more volatile with capital inflows but the central bank sees no need to impose new measures to address speculation, she said.
In any case, central bank economists said the tight integration of trade today compared with the Great Depression in the 1930s spread the contagion faster, triggered by the downturn of the US sub-prime mortgage market.
But timely fiscal and monetary expansion in the industrialised economies helped lessen the overall impact.
Economist Chaipat Poonpipatpibul said domestic demand was unlikely to replace exports in economic growth and lifting productivity.
Over the past 10 years, exports contributed 2.7 percentage points out of 3.4% average national income growth. Net income from exports rose to 36% of GDP in 2008 from 21% in 1995.
The fact that high-technology products account for 63% of exports has also made the economy more sensitive to changes in global economic trends.
fragile - easily
damaged or broken
recovery, economy recovery - when the economy gets better after bad economic times
recovery remained fragile - recovery might be short, followed by more bad economic times
optimism - a feeling that the future will be good
disbursement - paying out money or funds for a project
timely disbursement of public funds -
volatile - sudden and unexpected large movements (unpredictable)
baht will be more volatile - baht will move around more and become more unpredictable
capital inflows - investment money coming into a country
impose new measures - take new limiting actions (regulations) to solve a problem
tight integration of trade [worldwide] - lots more trade between countries makes countries more integrated and dependent on one another
Great Depression - the worst global economic crisis of the century during the 1930s (See Wikipedia)
contagion - a disease or something bad that is spreading (negatively affecting many people)
spread the contagion faster - the bad thing or disease is affecting more and more people (accelerating)
triggered - caused
sub-prime mortgage - a risky loan made to people who don't normally qualify for the loan
timely - doing quickly, doing in time (while effect can still be felt)
fiscal and monetary expansion
industrialised economies - rich developed economies (US, Europe, Japan, Australia)
more sensitive to - small changes have bigger effect
recovery, economy recovery - when the economy gets better after bad economic times
recovery remained fragile - recovery might be short, followed by more bad economic times
optimism - a feeling that the future will be good
disbursement - paying out money or funds for a project
timely disbursement of public funds -
volatile - sudden and unexpected large movements (unpredictable)
baht will be more volatile - baht will move around more and become more unpredictable
capital inflows - investment money coming into a country
impose new measures - take new limiting actions (regulations) to solve a problem
tight integration of trade [worldwide] - lots more trade between countries makes countries more integrated and dependent on one another
Great Depression - the worst global economic crisis of the century during the 1930s (See Wikipedia)
contagion - a disease or something bad that is spreading (negatively affecting many people)
spread the contagion faster - the bad thing or disease is affecting more and more people (accelerating)
triggered - caused
sub-prime mortgage - a risky loan made to people who don't normally qualify for the loan
timely - doing quickly, doing in time (while effect can still be felt)
fiscal and monetary expansion
industrialised economies - rich developed economies (US, Europe, Japan, Australia)
more sensitive to - small changes have bigger effect
Economist Kessarin Tansuwanarat
Economist Kessarin Tansuwanarat said the dollar would fall gradually as developing economies have yet to fully develop their financial sectors. Emerging economies, including Brazil, Russia, India and China, are considering shifting from dollars to other currencies to settle trade."It remains to be seen whether there is a surge of capital inflow as in the past. But we must continue to develop our financial market to reduce the impact of the flows so that it does not affect our exports," she said. "Economic policy will be in a more difficult environment in the near future. Fiscal stimulus should aim at lifting productivity and strengthening the private sector so that we can rely less on exports."
settle trade - make
the payments necessary to complete an international purchase
considering shifting from dollars to other currencies to settle trade - change from the US dollar which is currently used in international transactions (either to the Chinese currency or IMF currency for example)
surge of capital inflow - a sudden increase of investment money flowing into the country
reduce the impact of the flows - decrease the negative effects of capital flowing suddenly into the country
fiscal stimulus - temporary increases in government spending or tax cuts to get the economy moving and growing again
considering shifting from dollars to other currencies to settle trade - change from the US dollar which is currently used in international transactions (either to the Chinese currency or IMF currency for example)
surge of capital inflow - a sudden increase of investment money flowing into the country
reduce the impact of the flows - decrease the negative effects of capital flowing suddenly into the country
fiscal stimulus - temporary increases in government spending or tax cuts to get the economy moving and growing again
Supavud Saicheua, Phatra Securities
Supavud Saicheua, managing director of Phatra Securities, said equities investors subscribed to the view that the global economy had firmly recovered."The stock market is confident that there will not be a double dip, as it seems the US government and central banks have been underwriting the recovery. We need to see if it is too far, too fast," he said.
The US government might even subscribe to its own bonds, causing inflation to increase if there is not enough demand, he said.
subscribe to a view -
belief in one view (among many possible views)
equities investors subscribed to the view that - investors in stock believed that
double dip, double dip recession - when the beginning of a recovery ends, and yet another recession begins
underwrite Y - pay for the costs of Y
underwriting the recovery - pay for the costs of the recovery
subscribe to its own bonds - buy its own bonds
equities investors subscribed to the view that - investors in stock believed that
double dip, double dip recession - when the beginning of a recovery ends, and yet another recession begins
underwrite Y - pay for the costs of Y
underwriting the recovery - pay for the costs of the recovery
subscribe to its own bonds - buy its own bonds
(Source: Economy faces lower growth, BoT sees higher baht, hiked funding costs, PARISTA YUTHAMANOP, 16/09/2009, link)
