Reminder : GDP report for Q4 2008 will be published monday

The NESDB will publish the GDP report for Q4 2008 monday morning.

I will update the charts as soon as possible.

Meanwhile, you can read my article about GDP Q3 here.

I used at that time the word “bad omen“… The report for Q4 is likely to be ugly…

Chart : VAT collections plunge by 18 % in january

-18,31 %. This is the striking plunge of VAT collections in january, compared to january 2008 (from 44,17 billions THB to 36,08 billions).

The fiesta is over. The clowns start to understand that the crisis is not virtual… it has direct effects on the real economy, on the consumption, on businesses, therefore on state’s revenues… etc… Exactly when the gvt needs more money for its “stimulus package”…

The vicious circle, the negative loop is on the move. Nothing, yet, can stop it.

Now, let’s have a look on the other items of the report for january.

The total (gross) is falling by 11,68 % (and – 17,20 % in net). Nothing surprising. It will continue to go down, while the crisis is deepening.

Source (report from the Ministry of Finances for january 2009)

For the first four months of fiscal 2009 from October to January, net government revenues stood at 363.7 billion baht, or 70.4 billion (16.2%) below target and down 13.9% from the same period the year before. For the period, Revenue Department collections were 5.6% below target at 302 billion baht, Excise Department revenues off 27.2% to 72.3 billion and Customs Department revenues 11.2% short at 30.3 billion.

Dr Somchai said that of the 70.4- billion-baht budget shortfall, 17 billion could be attributed to government policies on oil taxes. For fiscal 2009, he expects revenues to be short by 7%. (Bangkok Post)

- 7 % for the current fiscal year (ends 30 september) ? What a joke.

The clowns must understand that there is no bottom, yet. Consumers from Jupiter, Mars and other solar systems are not going to save the Earth’s economy. They are not going to buy the chinese stuff, the thai stuff, and the cars that GM, Toyota, Ford do not produce anymore.

Hope for a “recovery” in the second half of 2009 is nothing but a scam, an intellectual fraud to put the masses, the sheeps, the clowns, to sleep.

You don’t want to be a sheep anymore ? Open your mind. And point your browser on 2 major US blogs :

-Mike Shedlock
-Calculated Risk

Abhisit is diving deeper : “our GDP growth will not be the lowest… in the world”

Ladies and gentlemen… I call the God Of The Translation Mistake… If he doesn’t answer my prayer… then I’m afraid we might have the dumbest Prime Minister. Ever. Albeit… Samak was himself a world class winner.

Ready ?

Prime Minister Abhisit Vejjajiva on Wednesday expressed confidence that the country’s gross domestic product (GDP) growth will not be the lowest in the world. (Bangkok Post)

I know what you think. You think about Benny Hill.

But it’s not finished.

The premier said he also assigned investment agencies to gather more information from Thailand’s trading partners.

Sure… Trade is collapsing worldwide (look here)… But Abhisit needs more information. Of course.

There is only one interesting statement in this mountain of nonsense.

“Although some people want the baht value to be weaker, its value should be close to other regional currencies,” said Mr Abhisit.

That’s a clear different music from the regular thai politicians (who are calling for a weaker THB in order to boost exports).

By saying this, Abhisit is sticking to the official position of the Bank Of Thailand who said a few days ago (read my article) :

On exchange rate policy, Dr Tarisa said the baht had been stable relative to regional currencies. A policy to push the baht weaker would only hurt confidence.

“A weak currency shows that a particular country has a confidence problem,” she said.

This is interesting. Even though this kind of official harmony and agreement sounds to me highly suspicious…

It’s not really… normal.

The normality is when politicians ask for weaker currency and lower interest rates, and when the central bank resists such calls.

Manufacturing Production Index : unprecedented fall

The crisis is intensifying. It’s time to inaugurate a new chart : Manufacturing Production Index (source Bank of Thailand).

First, the definition :

Manufacturing Production Index (MPI) serves as an indicator for the volume of production as well as the direction of manufacturing sector.

MPI series, currently published by the Bank of Thailand (BOT), is
compiled on a monthly basis. It covers 76 products, accounting for 75.68 percent of total value-added of the manufacturing sector.

Firms included are based on those registered with the Ministry of Industry and those receiving investment promotion privileges from the Board of Investment. Target group includes firms with high production capacity or market share. About 440 firms were selected as sampling units.

In december, the MPI dropped to 157,47 points from 176,77 in november, and 194,78 in october …

(click on the image)

On the second chart, you see the drop in percentage in december, compared to december 2007 : -18,75 % ! In november, the trend was already negative : -7,68 %.

Such drop is unprecedented.

Abhisit : “I guess we are technically in recession”

Well done Abhisit ! You’re reading conscientiously ThaiCrisis.

And you definitely have the sense of… euphemism.

Check his latest statement about the state of the thai economy, made in Davos.

Thai Prime Minister Abhisit Vejjajiva said on Saturday his country’s economy is probably technically in recession, but he hopes fiscal stimulus measures will keep growth positive for the year as a whole.

The economy would probably continue to shrink in the first three months of 2009, after contracting between 2 or 3 percent in the last quarter of 2008, Abhisit told journalists at the World Economic Forum in the Swiss resort of Davos.

“We believe that negative growth will carry over to the first quarter of this year. I guess this makes us technically in recession,” he said, noting that Thai tourism and exports had been hit hard in recent months by the global slowdown.

He said stimulus measures the government has passed should start to take effect from March, so the rest of the year should be better, although Thailand might seek external help to take further steps if the economy does not pick up.

“We hope that the second and third quarter will be an improvement on the first and we still aim for the whole year to keep growth in positive territory, or at least not in negative territory,” he said. (Reuters)

“I guess this makes us technically in recession” ? It’s huge.

I guess, it makes him technically a clown ?

In any case, he probably fitted well with all the other clowns in Davos…

As for the fantasy of the recovery… later… during the second half… like a miracle that would save the whole year 2009 from a recession… It’s pointless to comment.

Finance Minister : “Govt has money to pay salaries”… really ?

Finance Minister Korn Chatikavanij Saturday insisted that the government will have enough cash to pay salaries of government officials and finance on-going projects although the treasury reserve dropped to Bt52 billion.

He said the Finance Ministry has several tools for cash management so the government would not become cash-strapped.

The permanent secretary for Finance Ministry disclosed on Friday that the treasury reserve dropped to Bt52 billion at the end of December.

Korn said the government would receive huge amounts of cashes from taxes in May. (Nation)

You know already that taxes revenues are going down (read my article).

Now… what about the gvt’s employees wages ?

Point your browser on the NESDB (the agency that calculates GDP figures for Thailand). And download the Excel file.

As for the “huge amount of cash” scheduled for may… Yes, it’s corporate taxes (may and september).

But Korn is a clown because he relies on a ressources that is going down, and will continue to do so… Businesses will make less and less profits.

As for the other ressources, they are decreasing too (personal income taxes, VAT, etc. Read my article).

The thai government is running a budget deficit since several years. The Junta, Samak, Somchai and now Abhisit… they have all added some “extra budget”… spreading money around them like Santa Claus.

State coffers are empty.

And it’s going to get worse.

The best proof : they want to borrow money… abroad (read here).

Gvt revenues : VAT continues to fall in december

No recovery in sight (read what I wrote in december).

VAT collection dropped 6,91 % in december, compared to december 2007 at 36,86 billions THB (in november, it was -6,56 % y-o-y).

A negative % of change year on year… 2 months in a row (november and december) is unprecedented. Like many other data.

And now a view per quarter.

Overall the situation is not catastrophic. Yet. We are back at the levels of end 2007…

But it’s bad reasoning… because inflation. With higher prices, the VAT should increase. Mechanically. If it doesn’t, then you have a problem.

In any case, it’s going to be long.

You have to figure the long process at work here : a company looses its exports customers... the company is going to cut its costs first, then it will use its cash on hand, its bank will probably cut its support… still no new customers… the company chokes, then it starts to downsize… employees lose their job… those people can’t find new jobs (because the situation is deteriorating around too), therefore they cut their expenses, consume less (VAT collections are going down), invest less (no new house, car) … the State loses money… etc.

It’s the vicious circle of a recession.

Ask yourself : do you see any probability of an improvement in the world, in the next 6 months ? One year ? No you don’t. Of course you don’t.

Even if you’re watching CNBC all the day… you start to doubt…

The poison of doubt, supported by more and more data from the ground, is getting into your brain.

Nothing is going to stop the vicious circle, the vicious negative loop that fuels itself.

Look at the details for december…

Everything is going down : total collections for Revenue Department, down by 9,65 % y-o-y. Personal income tax, corporate tax (don’t forget, it’s a lagging indicator… taxes paid now are the mirror of… last year results)… etc.

Source (report from the Ministry of Finance for december 2008 )

Thunderstorm : GDP shrank -3,5 % in Q4 (first estimation)

The Finance Ministry’s Fiscal Policy Office or FPO reported the expansion rate of Thailand’s Gross Domestic Product or GDP for the fourth quarter of 2008 at minus 3.5 percent, a consequence of the weakening global economy causing lower exports and declining private consumption and investments inside the country.

FPO Director-general, Somchai Sujjapongse admitted that Thailand’s GDP is likely to continue to shrink in the first quarter this year if the allocation of the state’s fiscal budget is delayed. He says the government must enhance the economy by using fiscal and monetary measures, as well as weakening the baht to raise the nation’s competitiveness in trade and to prevent a higher current account deficit. (TOC)

Watch out. This is a first (early) estimation… The official GDP report for Q4 will be published on february 25, by the NESDB.

It’s a blow. A blow to the suckers, the lalalanders, the liars, the daydreamers, the “bottomers”…

I was right. Read my article on GDP Q3.

I know : it wasn’t difficult. Just plain common sense.

But the past is the past. The real burning question is : what will happen in 2009 ?

The call -again- is easy. Negative growth, AKA recession. For the whole year.

Due to base effect (+ public spending are going to be frozen in january and february because of the new government), Q1 2009 will be under pressure.

However, because of the deflator... they could save the day. Inflation is crashing, that will help to present better figures (for real GDP, AKA at constant prices).

In any case, the pathetic “stimulus” package and other lunatics policies decided by the Abhisit government won’t change the reality.

The harsh reality of the first truly global economic and financial crisis.

Of course, the “bottomers” are going to tell you (they have started) that we are going to “rebound” during the second half of 2009.

Sure. Demand from Mars and Jupiter’s inhabitants is going to save our exports. And our economy.

Welcome to the Rabbit Hole.

[exactly like I said... the pressure for a "weaker THB" is going to increase. A lot. Read my article on the Bank Of Thailand... It's tasty.]

BOT : “Thai economy could contract 5% if global economy worsens” ?

At last, the Bank Of Thailand shows some guts… And starts to talk about the worst case scenario… Far away from the rosy projections of the government (economic growth between 0 and 2,5 % in 2009).

BoT assistant governor Duangmanee Vongpradhip said the latest projection for the Thai economy, which already includes the government’s latest economic stimulus and economic package to assist the poor showed that the Thai economy could contract approximately 5 per cent in the worst-case scenario if world economy performs even more poorly than earlier forecast.

Thailand’s economy will show signs of recovery in 2010 in line with high expectation that the global economy would improve, said Miss Duangmanee, adding that the country’s gross domestic product would grow between 2-4 per cent.

She said Thailand’s exports would contract between 5.5 – 8.5 per cent if global economy and Thailand’s trading partners suffer contraction of 1 per cent and the United States by 3.1 per cent. If world economy worsens, Thai exports could contract by more than 8.5 per cent. (TNA)

I would like to add something : “if global economy and Thailand’s trading partners suffer contraction of 1 per cent and the United States by 3.1 per cent”… The point is : it’s already happening.

Same with the thai exports… The contraction throughout 2009 is almost a certainty (base effect, read here).

Take the latest data from UK (published friday) :

The U.K. economy shrank more than economists forecast during the fourth quarter in the biggest contraction since 1980 as the financial crisis crippled the banking industry and mired Britain deeper in the recession.

Gross domestic product fell 1.5 percent from the previous quarter, the Office for National Statistics said in London today. Economists had predicted a 1.2 percent drop, according to a Bloomberg News survey. The economy has now shrunk in two quarters, the conventional definition of a recession. (Bloomberg)

All Europe is in recession. USA are in recession. Japan too. And many other countries.

The black swan is coming. So a negative growth for Thailand should not be unthinkable…. Anymore.

NOTE
Don’t ask my why… but TNA has removed this article from its website… And I can assure you : I didn’t write it myself.

So what happened ? To have fun, have a look at the report from Nation of the same press conference…
Sounds totally different, right ?

Eventhough we find some identical figures (minus 5,5 to 8,5 for exports)… Nation does not speak about the “contraction of 5 %” as the worst case scenario… And TNA gives more details (“if trading partners suffer contraction of 1 %”)… Strange, isn’t it ?

And even funnier : today, TNA put on line another version of the article…

So, the reporter from TNA was on heavy drugs ? What Duangmanee really said ? Or is it a little cover up ?

I love this country.

Chart, tax revenue : -12,8 % compared to last year

Somchai Sujjapongse, director general of the Fiscal Policy Office, yesterday said government revenue last month had missed the target by 10.6 per cent, and was 6.3 per cent lower than the same month last year.

The government collected taxes totalling Bt114.42 billion, due to the sagging economy and a cut in oil taxes.

Tax revenue in the first two months of the 2009 fiscal year (October and November) fell short of target by 10.7 per cent, ending at Bt201.9 billion - 12.8 per cent lower than the same period last year. (Nation)

I love when they mix “targets” with reality. Nobody give a rat shit about their “targets“, made by lunatics politicians and civil servants one year ago… It’s totally irrelevant.

What is important is : money that goes into the coffers.

The explanation given by Nation is a usual a little bit short. Totally short. Those guys are even unable to visit the official website of the Ministry of Finance.

The culprit is not only the lower taxes on oil (decided by Samak end of july for six months, read here). If we look at the details : almost everything is going down :

-VAT (-6,56 % compared to november 2007 !)
-tobacco, liquor, beer, car, battery… all the taxes related to consumption
-imports and exports duties, etc.

(report from the Ministry of Finance for november 2008, pardon them for their awful color taste… in yellow, the negative values)

The fall in VAT collections is a hard blow. Look at the chart… We had previously (from september 2004) only 2 months with a negative percentage of change y-o-y (may 2007 and september 2006)…

Personal tax and corporate are still displaying a positive % of change y-o-y. But for how long ? We all know that those taxes suffer from a time lag effect…

VAT, exports duties are better indicators, because more real time.

Now ask yourself : is the situation going to improve ? Are the people going to consume more, boosted by some economic euphoria ?

Will the VAT collection increase ? Will the new Prime Minister have any margins to spend more, or to cut taxes…. ?

Thaksin must be smiling : with a worsening economy, his opponent, Abhisit The Hobbit and his “Frankenstein Coalition” are going to have a real hard time.

Stay tuned : monday, big day, the House should elect the new Prime Minister.

Official : the “R” word has been said… Recession

After months of denial… the ugly face of reality is coming back with a vengeance.

A thai minister has pronounced the infamous “R” word… For the first time !

We can’t blame him : the clowns in the US (Bush, Bernanke, Paulson) spent one freaking year to deny that the US were in recession. Elections were of course more important. Back luck. They lost the elections. And the country was indeed in recession !

The US entered a recession in December 2007, according to the National Bureau of Economic Research (NBER). Although a private sector body, the NBER has been dating the business cycle since 1929. (BBC)

So back to Thailand.

Thailand’s economy in 2009 may suffer a negative growth and up to 1.2 million people could be unemployed, if the political turmoil and the closure of airports prolong, Deputy Prime Minister and economy czar Olarn Chaipravat said on Monday.

According to the deputy premier, the present crisis is worse than the economic recession in 1997. (Bangkok Post)

Thank you Minister. I bet you’re a regular reader of ThaiCrisis.

However, the Minister is wrong : the airport closure is of course not the cause of the problem. It’s a mere symptom.

Even with 20 airports, the thai exports would go down. And even 20 airports couldn’t change the ugly GDP report we had on Q3 (read here).

So cut the crap. And fasten your seat belt (if we can still fly)…