Nation publishes an interesting interview of Tarisa, governor of the Bank of Thailand. I guess it has been reviewed so we can understand this interview as official (sometimes Nation takes some “creative liberty” with reports and facts…).
It’s like Being Tarisa. 😉 And it explains the way the BOT is seeing the world… Like all the other central banks around the world… The Rabbit Hole and the Wonderland are never far away.
A few quotes.
The impact on exports will be evident in the new year, as well as the impact on tourism of the recent political problems. These are issues for which we must find a solution, as exports and tourism are vital to sustaining the economy.
Right. With the base effect, exports will show truely ugly figures in 2009. But what does “find solutions” mean ? When there is a global slowdown, with a global lower demand, how Thailand could “find solutions”, new markets for its exports ?
The moon perhaps or some other solar systems ?
Monetary policy cannot bolster spending, but helps to lower interest expenses. Fiscal policy has limits, as it takes time before it can be approved. We think it can boost the economy, but consumers might still not spend.
Bingo. At least, the BOT understands this universal rule : You can take a horse to the water but you can’t make him drink. Even with interest rates at zero, with free money, if people don’t want to buy new cars… you’re toasted.
US, Europe face this problem.
Don’t be panicky: it will not be like that. We experienced a 10 percent economic contraction in 1998, but it will certainly not be like that this time around for many reasons.
The problems did not originate here; we have only been affected [by outside events]. We are currently strong enough [to withstand the shock] and are not staggering as we did during the 1997 crisis. We have adjusted ourselves both in terms of the macroeconomy and financial institutions.
A nice nonsensical fireworks… The problem didn’t started in Thailand, therefore the country would be insulated ? It’s totally meaningless. The crisis is global. And Thailand rely on exports, like all the asian countries.
As for the “strong enough”… she should add “until now”. What if the crisis is worsening ?
More importantly, we do not have a bubble economy problem in either the property sector or the stock market. The impact of the crisis will not be large if the economy does not bubble up. If a bubble were to develop and burst, then the economic situation would abruptly worsen – but it is not like that now.
Sure there is no bubble in the stock market… because it has already exploded (read “5 years wiped out“) ! As for the property sector… again what is important is not now… but tomorrow. I’m still wondering who is going to live in the thousands of new condos under construction in Bangkok…
In 1997, the economy contracted by 10 per cent, pushing the overall unemployment rate to 6 per cent. Unemployment will certainly not reach 6 per cent this time, but it does stand at about 1 million people. There is a similarity with the 1997 situation in that the business sector is affected and unemployment is rising, but the degree of the problem is different.
Last time, the unemployed went back to the rural areas, but they did not [have the opportunity to] do much farming. This time the sector’s ability to cope with the crisis is higher. Although many farm prices, such as rice, rubber and corn, have declined, they are still higher than in the past.
Nonsense. In 97, people lost their job and went back upcountry but had problem to do farming… Tarisa should explain us how 10 years later, such reversed exodus would be easier !
In 10 years, a lot of people started to work in industry… and actually it would be much more difficult for them to go back now to farming !
This is a sign : the thai elite is overconfident and believes in a “thai model” that simply doesn’t exist anymore… They think that if unemployment explodes, mai pen rai, they will send back the people in the fields to grow rice, and all the problems will be solved.
It’s wishful thinking.
If it is necessary, yes, as has been experienced in many countries such as the United States and Japan. But if it’s not necessary, this should not be done. A near zero rate has many disadvantages. If we do anything, it is like the bullet is already away. We then have no tools [left] and must find others, which has many disadvantages and is impractical.
This is a pearl… What a nice ingenuity. Indeed, zero interest rate has “many disadvantages and is impractical”. 😉