It’s impressive. It’s the first time that someone, within the Samak’s government, states something about the economy that makes sense.
Here is the quote :
The Thai economy was now highly unbalanced, with up to three-quarters of economic growth driven by exports.
“Under the current imbalance, even if gross domestic product increases, people don’t feel there is any more money in their pocket. Added revenues are held by exporters, including foreign multinationals,” Dr Surapong said. (Bangkok Post)
The Finance Minister is right. This is why Thailand can show off its GDP growth (5,7 % on Q4, and 4,8 % in 2007) but as I wrote :
-thoses figures are linked to exports and… government spendings
-and those figures do not mean nothing for the people at grass root level : for them, the reality is totally different.
Their reality is flat income and… inflation, therefore their buying power diminishes.
Thaicrisis,
I think you should have focused more on the politics in the event of Thaksin’s return from exile. I believe it is one of the biggest factors that will answer why the Thais are in no mood to spend. There is going to be a high risk of instability, and probably bloodshed, for the next 6-7 months. Thaksin is working behind the scene to intervene in the judicial process with an aim to turn the result of the prosecution in his favour. Many high-ranking officials have been removed abruptly and replaced with Thaksin’s cronies.
Whatever court decisions, it is going to be very messy.
It is the biggest mistake of the coup mastermind not to get rid of Thaksin and cronies in the first place.
The people are paying the price!
You’ve got a point. And indeed, political risks are high (the first one and the larger liability is of course the… succession regarding the King).
However on the short term, I’m not sure that we should over emphasized the return of Thaksin.
Regarding the mood to spend, we should remember that the majority of the population… doesn’t have this mood, because they don’t have the means to spend … !
You should look my chart (here) about the deposits/savings in commercial banks… That are going down, particularly up country.
If people were afraid, they would save more… Or if they were over confident (unlikely) they would spend more…
My point : they are struggling to meet ends of months…
Politics, sometimes, unfortunatly, is a luxury…
Is inflation seen as a good thing in Thailand?
Cut taxes, cut interest rates, stimulus to spend looks like a recipe for inflation, asset bubbles etc
Any guesses for what happens next?
(and who will bear the worst effects)
Yes Hobbby, we are walking on the head.
This has to do with the obsession of the new government to “succeed” on the economic front.
easy to understand : people remember Thaksin 1 and 2. The good old times, if I may say… Therefore, the expectations are very high.
But problem : the situation in 2008 is of course totally different than in 2001… And much more dangerous and unbalanced.
Therefore, they have to “show” the money.
Thaksin, behind the scene, needs a “quick success”, in order to organize new elections, win a landslide victory, and become PM again.
So, you can be sure that it’s going to be “open the checkbook” season !
The global economics situation in 2008 and 2001 is totally different indeed.
IMO, the saying that “Populism will lead to ruin” will be proven (or disprove) in this government.