Stalled growth for
Asia and Thailand
from stalled
consumption in US?
By Jon Fernquest
Last week a seminar on the
economic situation in Thailand and Asia was held at the Sasin
Graduate Institute of Business Administration in Bangkok.The transmission of the global economic downturn via trade was one topic covered (Read a VoxEU article part of the free ebook The Great Trade Collapse: Causes, Consequences and Prospects for a thorough treatment of this topic).
Today's article is an overview of what was discussed at the seminar.
The article follows the vocabulary:
stalled - not moving forward
or increasing anymore
Sasin Graduate Institute of Business Administration - top business school in Thailand with partnership arrangement with Kellogg School of Business in the US, part of Chulalongkorn University (See website).
transmission - sending to another person or place
downturn - fall suddenly by a large amount ตกต่ำลง, ตกต่ำ
economic downturn - a time with reduced income and increased unemployment and poverty เศรษฐกิจตกต่ำ
transmission of the global economic downturn via trade - the bad economy passed from one country to another country through a decrease in exports and imports
Sasin Graduate Institute of Business Administration - top business school in Thailand with partnership arrangement with Kellogg School of Business in the US, part of Chulalongkorn University (See website).
transmission - sending to another person or place
downturn - fall suddenly by a large amount ตกต่ำลง, ตกต่ำ
economic downturn - a time with reduced income and increased unemployment and poverty เศรษฐกิจตกต่ำ
transmission of the global economic downturn via trade - the bad economy passed from one country to another country through a decrease in exports and imports
Economics
Asia faces up to five years of weak growth
China can't substitute for tepid US demand30/11/2009
Parista Yuthamanop
Asian economies are likely to experience weak growth over the next five years as the financial crisis has reduced consumer wealth in the region's key export markets, says Joshua Felman, assistant director of the Asia and Pacific Department at the International Monetary Fund.
The financial crisis and the corresponding collapse in equities and house prices effectively sliced one year's income from the total savings of US consumers.
X faces Y - something
unpleasant Y is going to happen to X (Example: "The man faces a three
year jail sentence.")
up to five years of weak - weak growth could last 5 years (or less)
tepid - lacks energy and enthusiasm (slightly warm, not very hot)
demand - the need and desire of customers to buy goods and services อุปสงค์
aggregate demand - the desire and need for consumers to buy goods and services (in the whole economy of a country) อุปสงค์
tepid US demand - not very much demand in US for products and services
substitute for - be a replacement for, be used instead of
financial crisis - a crisis in the financial markets and the financial sector of a country, when financial assets suddenly fall in value (See Wikipedia)
wealth - how much money and assets a person or country owns
reduced consumer wealth - reduced value of the money consumers have been saving over the years (so they feel poorer)
collapse in equities and house prices effectively sliced one year's income from the total savings of US consumers - when the values of stocks and homes that families own fell by a very large amount the value of their savings fell by huge amount (one year's earnings at their job)
up to five years of weak - weak growth could last 5 years (or less)
tepid - lacks energy and enthusiasm (slightly warm, not very hot)
demand - the need and desire of customers to buy goods and services อุปสงค์
aggregate demand - the desire and need for consumers to buy goods and services (in the whole economy of a country) อุปสงค์
tepid US demand - not very much demand in US for products and services
substitute for - be a replacement for, be used instead of
financial crisis - a crisis in the financial markets and the financial sector of a country, when financial assets suddenly fall in value (See Wikipedia)
wealth - how much money and assets a person or country owns
reduced consumer wealth - reduced value of the money consumers have been saving over the years (so they feel poorer)
collapse in equities and house prices effectively sliced one year's income from the total savings of US consumers - when the values of stocks and homes that families own fell by a very large amount the value of their savings fell by huge amount (one year's earnings at their job)
"[The American] people have lost the equivalent of one year of work income [from the reduction in gross domestic product]," he said. "Let's say people want to replenish it. And we consider how long and the kind of savings risks they will take. I would say it would probably take 10 years to recover 100%.
"We expect consumption in the US to be subdued for a long time."
equivalent - the
same as
Gross Domestic Product (GDP) - a measure of economic activity in a country, the value of the country's output of goods and services. GDP is defined roughly as: GDP = Household Consumption + Business Investment + Change in Inventories + (Government Spending - Taxes) + (Exports - Imports) (See Economist Glossary)
replenish - make full or complete again
consumption - when households buy goods and services
subdued - not very active, not a lot happening
Gross Domestic Product (GDP) - a measure of economic activity in a country, the value of the country's output of goods and services. GDP is defined roughly as: GDP = Household Consumption + Business Investment + Change in Inventories + (Government Spending - Taxes) + (Exports - Imports) (See Economist Glossary)
replenish - make full or complete again
consumption - when households buy goods and services
subdued - not very active, not a lot happening
The modest rebound in Asian exports since July has been driven by US companies replenishing their inventories after freezing orders since September 2008. But the trend is only temporary as US consumers are likely to spend less, Mr Felman said at a seminar held by the Sasin Graduate Institute of Business Administration in Bangkok.
He said Asian consumption and business expansion were driven mainly by international trade, making the region highly sensitive to the downturn in global markets. The IMF estimated investment in Asia would fall by half of the degree of the decline in exports.
.
rebound - rise again
after falling
driven by - caused by
freezing orders - customers stop ordering goods
inventory - goods that a company has bought and stores for future use or sale (See Wikipedia) สินค้าคงเหลือ
replenish inventories - add goods to inventory after inventories reduced to low levels
replenishing their inventories after freezing orders - start adding good to their inventory again after a period when their were no orders and goods added to inventory
Asian consumption and business expansion were driven mainly by international trade -
X sensitive to Y - change in Y causes big changes in X
driven by - caused by
freezing orders - customers stop ordering goods
inventory - goods that a company has bought and stores for future use or sale (See Wikipedia) สินค้าคงเหลือ
replenish inventories - add goods to inventory after inventories reduced to low levels
replenishing their inventories after freezing orders - start adding good to their inventory again after a period when their were no orders and goods added to inventory
Asian consumption and business expansion were driven mainly by international trade -
X sensitive to Y - change in Y causes big changes in X
China's huge stimulus spending helped trigger an investment boom, but its consumers still could not match those of the US and Europe, he said.
fiscal stimulus -
temporary increases in government spending and also tax cuts in order
to get the economy moving again and end an economic downturn
stimulus spending - temporary increases in government spending to end economic downturn
trigger - cause
stimulus spending helped trigger an investment boom - increased government spending helped cause an investment boom
stimulus spending - temporary increases in government spending to end economic downturn
trigger - cause
stimulus spending helped trigger an investment boom - increased government spending helped cause an investment boom
China mainly imports materials to serve demand for consumer goods that it then exports. Asian firms will have difficulty shifting markets from the US to China because its has a different set of demands for goods.
"Asian exports to China were highly negative in the first half of the year. They have improved over the past few months but are still negative compared to last year's average. China is too small in the world," Mr Felman said.
Apart from the resumption in imports by the US, Asian exports also benefited from the easing of the global downturn, improved investor sentiment and economic stimulus measures.
The tightening of lending by US and European banks further dampened sluggish consumption and investment, he said. The financial crisis in the US and Europe sent Asian exports into free-fall in the final quarter of last year and the first half of this year.
The Thai economy shrank by 2.8% in the third quarter from the same period last year, the National and Economic and Social Development Board announced last week. Authorities expect a full-year contraction of 3%.
consumer goods -
products and goods such as food, clothing, home appliances...etc used
by families and individuals สินค้าเครื่องอุปโภคบริโภค
resumption - begin again (after stopping)
resumption in imports - when a country begins to import a lot again (after economic downturn)
slump, downturn - fall suddenly by a large amount ตกต่ำลง, ตกต่ำ, ทรุดลง
economic downturn, economic slump - a time with reduced income and increased unemployment and poverty เศรษฐกิจตกต่ำ
easing of the global downturn - when economy begins to improve and economic downturn ends
investor - a person or organisation that puts money into a company in exchange for a future profit นักลงทุน
sentiment - an attitude or belief that people have based on their thoughts and feelings อารมณ์ทางความคิด
investor sentiment - the current feeling of investors about inevsting in businesses
economic stimulus measures - ความต้องการบริโภคภายในประเทศที่ลดลง ทำให้เศรษฐกิจของไทยยังคงซบเซาต่อไปอีกในปีนี้
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tightening of lending - reduction of lending
dampen - reduce, reduce intensity or energy
sluggish - moving much slower than usual ซบเซา
dampened sluggish consumption and investment - reduce already slow consumption and investment, even more....
free-fall - fall very quickly and suddenly without stopping (like a person jumping off a bridge)
sent Asian exports into free-fall - caused Asian exports to fall quickly and suddenly (without stopping)
National and Economic and Social Development Board (NESDB or "Sa-pa-pat") - Thai government planning agency for economic development, creates five year plans with an agenda of: 1. Alleviation of Poverty and Income Distribution problems, 2. Enhancing Thailand’s Competitiveness, 3. Promoting Social Capital Development, 4. Promoting Sustainable Development (See Wikipedia)
resumption - begin again (after stopping)
resumption in imports - when a country begins to import a lot again (after economic downturn)
slump, downturn - fall suddenly by a large amount ตกต่ำลง, ตกต่ำ, ทรุดลง
economic downturn, economic slump - a time with reduced income and increased unemployment and poverty เศรษฐกิจตกต่ำ
easing of the global downturn - when economy begins to improve and economic downturn ends
investor - a person or organisation that puts money into a company in exchange for a future profit นักลงทุน
sentiment - an attitude or belief that people have based on their thoughts and feelings อารมณ์ทางความคิด
investor sentiment - the current feeling of investors about inevsting in businesses
economic stimulus measures - ความต้องการบริโภคภายในประเทศที่ลดลง ทำให้เศรษฐกิจของไทยยังคงซบเซาต่อไปอีกในปีนี้
tightening of lending - reduction of lending
dampen - reduce, reduce intensity or energy
sluggish - moving much slower than usual ซบเซา
dampened sluggish consumption and investment - reduce already slow consumption and investment, even more....
free-fall - fall very quickly and suddenly without stopping (like a person jumping off a bridge)
sent Asian exports into free-fall - caused Asian exports to fall quickly and suddenly (without stopping)
National and Economic and Social Development Board (NESDB or "Sa-pa-pat") - Thai government planning agency for economic development, creates five year plans with an agenda of: 1. Alleviation of Poverty and Income Distribution problems, 2. Enhancing Thailand’s Competitiveness, 3. Promoting Social Capital Development, 4. Promoting Sustainable Development (See Wikipedia)
Mr Felman said the global economy was currently in an "exceptionally uncertain environment". As a result, Asia will face challenges in planning its stimulus measures and then in scaling some of them back.
"[Asia] needs to formulate an exit plan gradually by seeing whether private demand can substitute [for stimulus spending]," he said. "But the prospect is so unclear. The global recovery has no fundamentals in the beginning. And the underlying problem has not been resolved."
exceptionally
uncertain environment - very uncertain situation, don't
know what is going to happen next
scale back - reduce size
scaling some of them back - reduce size of some of them
formulate a plan - create a plan
formulate an exit plan - create a plan to stop what they are doing (here: end the stimulus and massive government spending)
private demand can substitute [for stimulus spending]," -
fundamentals - underlying factors in an economy that make it healthy or unhealthy (despite factors outside of its control)
the underlying problem - the more basic (deep, unseen) problem that causes the problem we see on the surface
resolve a problem - solve a problem
underlying problem has not been resolved - have not solve the more basic problem (so the surface problem we see cannot be solved either)
scale back - reduce size
scaling some of them back - reduce size of some of them
formulate a plan - create a plan
formulate an exit plan - create a plan to stop what they are doing (here: end the stimulus and massive government spending)
private demand can substitute [for stimulus spending]," -
fundamentals - underlying factors in an economy that make it healthy or unhealthy (despite factors outside of its control)
the underlying problem - the more basic (deep, unseen) problem that causes the problem we see on the surface
resolve a problem - solve a problem
underlying problem has not been resolved - have not solve the more basic problem (so the surface problem we see cannot be solved either)
Mr Felman said Asian economies underwent more severe contractions than the US as a result of the global recession because, they were more heavily dependent on global trade.
"Asia was the hardest hit from the crisis, but it also has had the strongest recovery in the world. The export rebound, however, concentrated on IT goods," he said.
Economic stimulus packages in Asia have helped reduce the recession's impact by 1% since last year. The fact that Asian employers avoided mass layoffs prevented the labour market from being gripped by panic, he said.
contractions,
economic contractions -
when in a bad economy business fall and everyone has lower incomes
economic stimulus packages - government projects with temporary spending increases to lift the economy out of an economic downturn
reduce the recession's impact - reduce the negative effect of an economic downturn on people's lives
layoffs - job cuts, people losing their job because company loses orders and business layoffs การปลดคนงาน
mass layoffs - large amounts of job cuts at many companies
panic – a sudden strong feeling of fear or worry that causes you to be unable to think clearly or calmly ตื่นตกใจ
gripped by panic - experiencing a sudden panic
economic stimulus packages - government projects with temporary spending increases to lift the economy out of an economic downturn
reduce the recession's impact - reduce the negative effect of an economic downturn on people's lives
layoffs - job cuts, people losing their job because company loses orders and business layoffs การปลดคนงาน
mass layoffs - large amounts of job cuts at many companies
panic – a sudden strong feeling of fear or worry that causes you to be unable to think clearly or calmly ตื่นตกใจ
gripped by panic - experiencing a sudden panic
(Sources: Asia faces up to five years of weak growth, China can't substitute for tepid US demand, 30/11/2009, Parista Yuthamanop, link)
‘‘[Asia] needs to formulate an exit plan gradually by seeing whether private demand can substitute [for stimulus spending],’’ says then IMF’s Mr Felman. ‘‘But the prospect is so unclear.’’ SAROT MEKSOPHAWANNAKUL
