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.]

18 Responses to “Thunderstorm : GDP shrank -3,5 % in Q4 (first estimation)”

  1. 1 Insanity 29 January 2009 at 5:55 pm

    “as well as weakening the baht to raise the nation’s competitiveness” = DEVALUATION

    And why not? So man other countries have already devalued their currencies against the US dollar!

  2. 2 ThaiCrisis 29 January 2009 at 5:58 pm

    Of course. The point is : the same day, the Governor of the Bank of Thailand is… saying… exactly the contrary !
    Ah ah ah ah ! I love this country.
    Read my article.

  3. 3 Insanity 29 January 2009 at 6:07 pm

    TC – I think it will soon be time to replace the ‘dildo’ with the ‘cattle prod’!

  4. 4 ThaiCrisis 29 January 2009 at 6:13 pm

    Nice suggestion. Even though the “Dildo” is certainly the symbol of 2009.

    However, the sense of it might change.

    From “being stimulated” to… “being fucked”, people will see a change. 😉

    Believe me.

  5. 5 Insanity 29 January 2009 at 6:27 pm


    In the biggest decline ever, global international cargo traffic plummeted 22.6 percent in December compared with a year earlier, according to the International Air Transport Association. Asia-Pacific carriers, accounting for 45 percent of international cargo, led the December decline with a 26 percent contraction compared to the previous year.

    “THE 22.6 PERCENT FREE FALL IN GLOBAL CARGO IS UNPRECEDENTED AND SHOCKING. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9 percent,” said Giovanni Bisignani, IATA’s director general and CEO.” Air cargo carries 35 percent of the value of goods traded internationally.

  6. 6 ThaiCrisis 29 January 2009 at 6:41 pm


    Yeah. I wrote something about it. For tomorrow.
    Indeed, All the data point to only one direction. Only the dreamers and the stupid people (that’s a very large group) don’t understand this. It’s scary.

  7. 7 Cally Mente 30 January 2009 at 5:16 am

    I’d just like to say thank you for your blog as it is most interesting and informative. I don’t know if English is your 1st language but if it isn’t you do a wonderful job. I have noticed one word you use a lot which is incorrect though, “loosing” when you mean losing ie. The Baht is losing value.
    Once again I love your blog especially the charts please keep up the great commentary.

    A loyal reader. 🙂

  8. 8 chinesethai 30 January 2009 at 6:06 am

    Obama today says the U.S. needs another $2,000,000,000,000 – $3,000,000,000,000 to shore up the American banking industry. Who are going to shoulder such historic public debts?

  9. 9 ThaiCrisis 30 January 2009 at 6:10 am

    I take note for “losing”. Thanks.

  10. 10 Prokster 30 January 2009 at 6:29 am

    In terms of numbers on the SET (and US markets for a laugh) we will see the local market break a new low by May, from where it will probably go straight to 350.
    The Dow will fall to 6000-6200 within Q2, and unless there is a miracle and the credit cycle unwinds very fast ( in the US think 3 trillion more….probably nearer 5-6 trillion US$, me thinks the SET will see go to 280 or so next year. Huge bargains will be there for the taking.
    PTT @ 80 ish… Siam Cemet … 50-60 …TTA 5-6 ….
    The Dow will go to 4500-5000. Next year or 2011

    The Baht will surely hit 39.. maybe 40 or so this year.
    There is massive overcapacity in manufacturing, and this will effect TH far more than almost anyone is willing to admit. Most think TH will come out OK… like most of Asia. I however think we will see a huge change in the nature of TH’s economy, and it seems very doubtfull a Thai Gov will ever be able to take the necessary steps to counter it. Structural changes. be it land rights…technical education or indeed the rigged nature mf the local game.

    The trouble is things wil get bloody this time, with the catalyst coming out of left field….from recent issues brushed under the teak floor boards.

    Sell THB now, look at smal cap stocks for the time being, stay clear of property untill prime BKK reverts to nearer replacement cost + 5-10% …( now looks nearer R+ 60-80%)

    Might however be wise to buy some V cheap Isan land, dig a huge hole and take physical deleivery of some oil.

    Great Blog BTW>

  11. 11 ThaiCrisis 30 January 2009 at 6:58 am

    Prokster, I can’t say that I disagree with your scenario. 😉
    Even yesterday, a reader, obsessed with PE ratios said on this blog that stocks were “cheap”… As you see, the virus of blindness is hard to kill.

  12. 12 Insanity 30 January 2009 at 7:56 am

    Signs of Sanity?

    This collapse is occurring with stunning speed. Public statements that the banking system is insolvent have become commonplace, and the discussion over closing the zombie banks, instead of merely bailing them out, is now spilling over into the press. Nobel Prize winner Paul Krugman has called publicly for closing zombie banks, instead of keeping them open via financial “voodoo.”

    “Many influential people, including Federal Reserve officials, bank regulators, and, possibly, members of the incoming Obama Administration, have become devotees of a new kind of voodoo: the belief that by performing elaborate financial rituals we can keep dead banks walking,” Krugman wrote in his column in the Jan. 19 New York Times. He used as an example “GothamGroup, or Gotham for short,” a deliberately transparent reference to Citigroup, saying it “is a zombie bank: it’s still operating, but the reality is that it has already gone bust.”

    “Many—perhaps most—big banks are essentially insolvent and have been for a long time,” Frank Partnoy wrote in the Financial Times, the day before. “It is incredible that they lost so much money on derivatives but even more amazing that they stayed alive for so long afterwards.”

    Economist Nouriel Roubini told a conference in Dubai Jan. 20, that financial losses could reach $3.6 trillion, and that if so, “the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

    The bankruptcy of the system is no longer a secret, whispered in the inner sanctums of the banks. It is out in the open as is the debate what to do next.

    The system needs to be put through bankruptcy proceedings. However, writing off the quadrillions of dollars of unpayable derivatives bets and debt, is not for the timid. Some would rather go down with the ship than admit that the system in which they believed was a fraud, that they were fools, and that the pile of money they love is a fiction.

  13. 13 ThaiCrisis 30 January 2009 at 8:01 am

    The first who made the “insolvency” call (for banks, but also… states in the US) was Mike Shedlock.
    Roubini has followed.

    Anyway : there is only one solution : write-off the debts, create not a bad bank but a “good” bank.

    Problem : in our world, “assets” are “debts” and vice et versa… It means that millions of people of the world elite would be totally wiped out.

    It won’t happen…

    Instead, you can be sure that they will go on the “zombie path”. It’s less explosive, it’s less painful (for them)… And this is why this crisis is going to last… years. Decades ?

  14. 14 Insanity 30 January 2009 at 9:17 am

    Yes it is finally recognized that the toxic waste must be removed, but how? Two choices: 1) have the governments buy that waste, and the game continues; or 2) put the system through bankruptcy. The first approach is folly, and it will never work, because having the governments buy the paper merely moves the un-payable claims from the books of the banks to the books of the governments, bankrupting the nations. The second approach, bankruptcy reorganization, begins with the understanding that most of this paper is worthless and must be written-off, in a manner that protects both the citizens and the essential components of the banking system.

    Trillions of dollars have been spent so far and the problem remains unsolved! Bernanke admitted that “more capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets.”

    The process is akin to the actions of a junkie, who knows in the deep recesses of his mind that he must quit, but can’t. “One more fix,” he says. “Let me feel better for a while, and then I’ll stop.” He never does, until it kills him. We are now at the point where the money junkies are unable to control themselves. It is time to stop feeding the junkies’ habit, before it kills us, too.

  15. 15 chinesethai 30 January 2009 at 10:24 am

    No doubt …. Obama, the American people, and much of the world have chosen Option#1.

  16. 16 Prokster 31 January 2009 at 1:28 pm

    Many good points Insanity.

    Events in recent days including the NE England strikers spell very bad things to come. And quickly too. Race issues will spark up all too soon in many countires, and when it happens in the States, it wil be all the worse because there is an underclass of crack-heads who have no limits to their madness. In a crowd…. nasty.

    In TH , there is a risk of reactive policies if (when) a key idustry or two are hammered (autos & electronics….tourism as a far off 3rd …) . Business law re-writes anyone?

    It is so very hard to have faith in the leaders of pretty much anywhere….country central bank…. you name it.

    I predicted (in public) that Thailand was entering a long term downtrend in Feb 06. I dont speak in public anymore. Bad vibes. Somchai called. I’m one of those selfish stock market types, and as far as I am concerned, I look forward to the SET falling to 280 or so again, becasue trying to run an honest business in TH is so damned hard…..taking money off the market seems a good choice if I am to avoid a life of crime.

    BTW, you blog would bring in a good USD 3-5k a month elsewhere. You could start a charity.

    Fine work by the way.


  17. 17 Insanity 31 January 2009 at 7:44 pm

    Prokster you are totally correct.

    The world is going through a transition the likes of which no one is prepared for. The coming situation will be worse than the Great Depression.

    In the next few years America & Europe will become undeveloped, there will be uprisings marked by tax revolts as people can’t afford to pay any kind of tax, job marches, food riots, squatter rebellions. Holidays will be more about obtaining food, not gifts.

    It’s going to be very bleak. There will be a lot of homeless, the likes never seen before. (Tent cities are already sprouting up around America.)

    There will massive crime. And the crime will be a lot worse than it was in the 1929 Depression because people’s minds weren’t wrecked on all these modern drugs. So we will have a huge underclass of very desperate people with their minds chemically blown beyond anybody’s comprehension.

  18. 18 Prokster 1 February 2009 at 4:02 am

    Security issues ( the kind that effects people online)

    It is true to say TH does not yet have a very sophisticated proxy servers scanning all Internet traffic. They have some, but nothing like the black-box farms employed by most (rich) Middle East states. In simple terms, if the Thais had what Saudi has, this blog and millions of other sites would be down within 2-3 days max.
    Put it up again on a different server… I’d give you 48hrs before it was blocked.

    Now this is just the top layer of online control. Keyword scanning, artificial intelligence pattern recognition algorithms….relationship mapping ( with IP’s mobile numbers , HDD ID’s etc) and automated data extraction (from you) are all just a small wad of $’s away. The more compliant the ISP community the better of course, and the local lot likely to roll over like a small cuddly hound.

    Now we have the catalyst for such systems to be put in place now. And if and when it is, the opportunity for abuse of the intel & reports it generates will be huge here.

    Just thought I would bring this up, as have seen the systems first hand, from both sides.

    IMHO, it might be wise for allgoodblogs to take precautionary steps in light of the fresh clampdown on net activity…which might get smart sooner rather than later. A zealous Somchai at the helm would be V scary.

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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