Outlook
for economic recovery
in Thailand
What factors
could make it quick or slow?
By Jon Fernquest 
The chief economist for Siam Commercial Bank,
Sethaput Suthiwart-narueput, makes some interesting observations in
today's Bangkok Post on the future trajectory
of Thailand's economic
recovery.He also comments on the nature of improvement needed in Thailand's tourism sector:
"The real problem with the
Thai tourism sector is not on the demand
side but the supply
side. The current level of promotions and roadshows is not
enough. We need to develop
new destinations and improve on issues important to the quality of life and experiences
of tourists, such as
transport and water
management."
"Quality of life" issues for tourists might have to be extended to include acting on the so-called "King Power Scam" at Suvarnabhumi airport which seems to have been largely neglected by the Thai media (Read today's BBC report). Tourists may reduce purchases from duty free stores if they are afraid of extortion at the hands of the police.
Today's article also presents some interesting facts about the Thai economy. For example, Thailand's tourism sector is a much more important determinant of unemployment than the export sector. Even though the export sector accounts for the largest share of income, employment is greater in the tourism sector.
Today's article follows the vocabulary:
outlook - what
people think will happen in the future
economic recovery, recovery - when the economy gets better and starts growing again after an economic downturn
factors - one of the things that affects a situation or event
observations - something you have learned by watching and thinking about something
trajectory - the course that events follow over time (for example, the trajectory of her career)
King Power - the name of the company that owns the duty free concession at Suvarnabhumi airport
duty free - stores that do not add local or national taxes and duties to the price of goods sold in the store (See Wikipedia)
concession - government permission to run a certain kind of limited business, permission given in exchange for payments (for example, a telecommnications concession)
scam - an illegal trick with the purpose of getting money from people
neglected Y - failed to give Y the amount of attention that Y deserved
extortion - the crime of obtaining money from people by using threats and force
determinant of unemployment - thing that causes unemployment
X accounts for the largest share of Y - the largest percentage of Y is X
economic recovery, recovery - when the economy gets better and starts growing again after an economic downturn
factors - one of the things that affects a situation or event
observations - something you have learned by watching and thinking about something
trajectory - the course that events follow over time (for example, the trajectory of her career)
King Power - the name of the company that owns the duty free concession at Suvarnabhumi airport
duty free - stores that do not add local or national taxes and duties to the price of goods sold in the store (See Wikipedia)
concession - government permission to run a certain kind of limited business, permission given in exchange for payments (for example, a telecommnications concession)
scam - an illegal trick with the purpose of getting money from people
neglected Y - failed to give Y the amount of attention that Y deserved
extortion - the crime of obtaining money from people by using threats and force
determinant of unemployment - thing that causes unemployment
X accounts for the largest share of Y - the largest percentage of Y is X
Hopes for rapid recovery misplaced, says economist
DARANA CHUDASRI20/07/2009
Has the worst of the global economic crisis passed? Financial markets have rebounded strongly from lows set in March, while economic indicators across the globe show that massive fiscal spending and low interest rates have begun to show results.
But hopes of a rapid recovery may be misplaced, according to Sethaput Suthiwart-narueput, chief economist at Siam Commercial Bank.
Recovery, when will it happen?
Thai gross domestic product is unlikely to recover to pre-crisis levels before the fourth quarter of 2010, he said.How one defines recovery is the question, Dr Sethaput told business leaders at a British Chamber of Commerce luncheon on Friday.
Thai economic growth could return to a positive, quarter-on-quarter growth in the third quarter of this year, and positive year-on-year growth in the fourth quarter.
"But if you mean a return to pre-crisis levels, it might be the fourth quarter of 2010 at the earliest. And this would require growth of at least 4% for next year," Dr Sethaput said.
Impact of export and tourism sectors on unemployment
While much of the Thai economy hinges on export performance, in terms of jobs, the impact of the sharp decline in global trade on the local labour market has been much less.Dr Sethaput noted that Thailand's top three export industries - autos, electrical machinery and non-electrical machinery - accounted for around 41% of export value but just 1.4% of employment.
On the other hand, tourism, a major employer in the country, is likely to lag behind the overall economy due to not only the economic crisis, but also the political chaos earlier this year as well as the impact of the H1N1 flu pandemic.
Dr Sethaput noted that hotels, restaurants and domestic trade employ as much as one-fifth of the 37-million labour force.
The tourism slowdown
"The tourism slowdown remains the largest downside for the Thai economy in light of the linkages to the overall economy and the large employment footprint. Growth in 2010 is unlikely to grow by enough to take us back to pre-downturn levels," he said.Tourism arrivals in 2010 are expected to grow 6%, lagging the 8.4% average annual growth posted from 2006 to 2008.
While tourism across the region has fallen, arrivals to Thailand have dipped more than in other countries, reflecting factors specific to the kingdom, such as political confidence.
"The real problem with the Thai tourism sector is not on the demand side but the supply side. The current level of promotions and roadshows is not enough. We need to develop new destinations and improve on issues important to the quality of life and experiences of tourists, such as transport and water management," Dr Sethaput said.
Government spending
Government spending, meanwhile, will have only a minor impact on economic growth, considering that the fiscal budget deficit of 3.8% of GDP or 350 billion baht actually reflects a primary deficit of just 134 billion, or 1.5% of GDP.SCB forecasts an economic contraction of 4-4.5% for 2009. Second-quarter GDP is projected to fall 4.5% year-on-year, but should improve in the third quarter with a rebound in exports.
(Source: Bangkok Post, business, Hopes for rapid recovery misplaced, says economist, DARANA CHUDASRI, 20/07/2009, links)
recover to pre-crisis levels, return to pre-crisis levels
- not just a recovery, but growth is the same or better than before
downturn
misplaced hopes - meaning: better not hope for it because it is unlikely to happen
rebounded - increased after decreasing (bounce = go down and then go up)
economic indicators - economic statistics that change before the economy changes (leading indicators), at the same time as the economy is changing (coincident economic indicators), after the economy changes (lagging indicators) (See Wikipedia)
fiscal spending - government spending
GDP, Gross Domestic product - 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)
quarter-on-quarter growth - the percentage change in GDP compared to the same quarter last year
year-on-year growth - usually means: "Year-on-year growth rates are rates of change expressed over the corresponding period (month or quarter in relation to the frequency of the data) of the previous year." (Source: OECD), but here it seems to mean growth for the whole year as contrasted with growth for a quarter (three months)
hinges on - depends on, is determined by
export performance - ho much export goods are sold to other countries (depends on competitive price and quality)
impact - effect
local labour market - domestic labour market, labour market within Thailand
H1N1 flu - an outbreak of a new virus that began in Mexico and was identified in April 2009 (See Wikipedia)
an epidemic - a widespread outbreak of an infectious disease (See Wikipedia)
a pandemic - an epidemic of infectious disease spreading through a large region or the whole world (See Wikipedia)
domestic trade - trade within Thailand, buying and selling of goods within Thailand
labour force - the group of all people who work in an economy or a company
the largest downside for the Thai economy - the most important bad thing that could happen to the THai economy
X in light of Y - X given facts Y
linkages to - connections with
footprint - the impact or trace of something that remains after an event happens
the large employment footprint - the impact on employment (of the crisis), the unemployment that resulted
dipped - go down slightly, then go up again...
political confidence - when people feel that the political system is functioning well now and in the future
Thai tourism sector...the demand side - tourists, the consumers who purchase tourism services and goods
Thai tourism sector...the supply side - hotels, restaurants, transportation,
roadshows - shows or events to encourage investors to invest in the company
develop new destinations - do all the things necessary to attract large numbers of wealthy travellers to a place where people don't travel to much now
quality of life - a statistic that tries to measure the liveability, life-satisfaction, or well-being of the people living in a place (See Wikipedia)
fiscal budget deficit - when the government spends more than it receives in taxes, so it must borrow the difference
rebound in exports - when exports start increasing again after they decrease
misplaced hopes - meaning: better not hope for it because it is unlikely to happen
rebounded - increased after decreasing (bounce = go down and then go up)
economic indicators - economic statistics that change before the economy changes (leading indicators), at the same time as the economy is changing (coincident economic indicators), after the economy changes (lagging indicators) (See Wikipedia)
fiscal spending - government spending
GDP, Gross Domestic product - 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)
quarter-on-quarter growth - the percentage change in GDP compared to the same quarter last year
year-on-year growth - usually means: "Year-on-year growth rates are rates of change expressed over the corresponding period (month or quarter in relation to the frequency of the data) of the previous year." (Source: OECD), but here it seems to mean growth for the whole year as contrasted with growth for a quarter (three months)
hinges on - depends on, is determined by
export performance - ho much export goods are sold to other countries (depends on competitive price and quality)
impact - effect
local labour market - domestic labour market, labour market within Thailand
H1N1 flu - an outbreak of a new virus that began in Mexico and was identified in April 2009 (See Wikipedia)
an epidemic - a widespread outbreak of an infectious disease (See Wikipedia)
a pandemic - an epidemic of infectious disease spreading through a large region or the whole world (See Wikipedia)
domestic trade - trade within Thailand, buying and selling of goods within Thailand
labour force - the group of all people who work in an economy or a company
the largest downside for the Thai economy - the most important bad thing that could happen to the THai economy
X in light of Y - X given facts Y
linkages to - connections with
footprint - the impact or trace of something that remains after an event happens
the large employment footprint - the impact on employment (of the crisis), the unemployment that resulted
dipped - go down slightly, then go up again...
political confidence - when people feel that the political system is functioning well now and in the future
Thai tourism sector...the demand side - tourists, the consumers who purchase tourism services and goods
Thai tourism sector...the supply side - hotels, restaurants, transportation,
roadshows - shows or events to encourage investors to invest in the company
develop new destinations - do all the things necessary to attract large numbers of wealthy travellers to a place where people don't travel to much now
quality of life - a statistic that tries to measure the liveability, life-satisfaction, or well-being of the people living in a place (See Wikipedia)
fiscal budget deficit - when the government spends more than it receives in taxes, so it must borrow the difference
rebound in exports - when exports start increasing again after they decrease
