Archive for May, 2009

Virtual reality : here we go again, the Bank Of Thailand sees “recovery”

They will never learn.

The Bank Of Thailand, the thai central bank, lost all credibility mid january, when it announced the recovery… When actually the thai economy was plunging, very deep !

Bank of Thailand (BoT) deputy governor Atchana Waiquamdee on Wednesday voiced confidence that the country’s economy this year would not experience negative growth, despite the world economic situation, saying the central bank began to witness signs of recovery in the first quarter.

It was the deputy governor, not a part time secretary…

Anyway. Four months after, and after the publication of a plunge of 7 % of GDP on Q1, the central bank does it again !

The Thai economy began signalling recovery in April despite political unrest and long public holidays, according to the Bank of Thailand (BoT).

BoT Local Economy Division senior director Amara Sripayak said Friday that economic data released in April was better than expected.

The industrial production index rose 7.6 per cent and private consumption index edged up 0.7 per cent from the previous month because there was an increase in purchase orders in the electronics and electrical appliance sectors.

However, private investment index shrank 16.4 per cent due to the economic slowdown as Thailand’s production capacity utilization stayed low at 59.7 per cent.

Additionally, the business confidence index edged down to 39.2 from 40 points in March because of concerns over the political and economic uncertainties.

She said the shrinkage in the country’s gross domestic product (GDP) of 7.1 per cent in the first quarter of this year announced by the National Economic and Social Development Board is a further contraction from the fourth quarter last year.

Still, economic indicators had picked up on a monthly basis. Even so, the central bank remained uncertain whether the economic recovery could gain momentum. It needed to monitor internal and external factors for a while.

April also saw private-sector loans increase by Bt29.4 billion after contracting for three consecutive months. Most are consumer loans and credit facilities extended by state-owned banks after the government had accelerated lending. (TNA)

The same non sense is starting again. Those brainless bureaucrats always mix up reality and wishful thinking.

Of course, we all would like to see the thai economy improving. Unfortunatly, the indicators we got for april (and not “indexes”) are still deeply depressed. I show it over and over on my blog :

-tax collections (VAT as a indicator of consumption) : in the black hole

-exports ? -27 % and no signs of recovery

-consumption and investments with sales of cars : still in deep red at -27 %

What else ? Investments by the government and public spending : excepted 20 billions THB given away in april (the famous “national bribe” designed by Abhisit), nothing real. The mega projects and all the Lalaland projects are still virtual.

So, I’m confident : the BOT, once again, will be humiliated in the coming 2 months.

GDP Q2 will be as bad as Q1.

And It will make my day when I will repeat the statement made by the bank announcing the “recovery” in april…

Chart, sales of cars : -27 % in april

Eventhough april was better for passengers cars (+5 % compared to april 2008), the whole market with commercial cars remains depressed : -27 % year on year, with a total of 39 713 units sold.

Here are the charts updated with the figures for april.



(source Bank Of Thailand)

Chart, GDP Q1 : recession is worsening and no bottom

The GDP report for Q1 has been published by the NESDB (here).

The main information is : the thai economy shrank 7,1 %, compared to the first quarter 2008. In Q4 2008, the drop was 4,2 %.

Therefore, we are in recession (classic definition is 2 quarters with negative growth).

The official analysis is that the thai economy has bottomed out, AKA it can only get better the following quarters.

This is wrong.

I wrote on my previous report :

On Q1 2009, deflator will be the same than on Q4 (more or less)… While the contraction of the economy is worsening… therefore the comparison quarter-on-quarter between Q1 2009 and Q4 2008 is going to be really bad (like in so many other countries).

Therefore, the annualized GDP growth rate is going to be really bad on Q1…

I was spot on : deflator on Q1 was 2,2 % (2 % on Q4)… So if we calculate the annualized GDP rate (difference between Q4 and Q1, times 4), we get a striking -13 % !

Now, let’s have a look on 3 components of the GDP (real GDP = inflation removed) :


We are diving. Even the private consumption is now in negative territory (-2,6 % compared to Q1 2008).

The NESDB writes :

the first reduction in 10 years since 1Q 1999 owing to a fall of real sector in line with world economic slowdown. This dampened consumer’s confidence and purchasing power, which resulted in a decrease in expenditure on durable, semi-durable, and non-durable goods, particularly on passenger car, and motorcycle.

As for the Gross Fixed Capital Formation (investments) the fall is even worse : -15,8 %.

Here are the values (in millions THB, nominal GDP = at current prices), for each components so you can juge their relative importance.


Private consumption = almost half of GDP (1 195 billions). The Government spending is a tiny part (270 billions).

Exports and imports… Now this is something that people have often some problem to understand… For the GDP calculation, imports are deducted from exports (because you obviously don’t produce what you import).

So what is important is the difference (exports – imports).

On Q1, imports dropped at a furious rate (-30 % !), much more than exports… Therefore, the trade balance is positive, therefore the contribution for GDP is positive (5,2 %).


And what about the change in inventories ? A big drop (-7,5), that depresses the GDP growth rate.

2 explanations :

-companies have cleared their stock. Normal reaction during a recession.
-and gold. The NESDB writes :

In addition, export of gold increased significantly due to higher price in the world market. This caused the stock of gold declined nearly Baht 100,000 million.

Indeed, my readers already know this anomaly (that showed up in the february exports figures, read here).

Inventories changes accounted for -156 billions… and gold is responsible for two thirds…

So let’s try to recap and to make a reasonable forecast for Q2. It means not a forecast to please people but a forecast that takes the reality into account.

-exports : no change. We are still 25 % down. Confirmed in april (first month of Q2, with a crash of 26 % read here). There is absolutly no reason to believe that exports could increase (a lot) on may and june. Furthermore, don’t forget the base effect… The Peak Exports was july 2008… It means year on year comparisons are going to get uglier and uglier !

Furthermore, we can see that oil prices are going up again… That could increase imports… and therefore, reduce the trade balance… and therefore reduce the positive contribution for GDP growth…

-investments : no change. The situation is even worsening. Very simple to understand : the longer the crisis lasts, with a depressed global demand, the more businesses are going to postpone their investments projects. It’s just insane for a business manager to try to increase (today) his production capacities !
It makes no sense. Furthermore, the psychology is starting to crack, and this is precisely why the authorities are stepping up their idiotic PR campaign about “Green Shoots” and “Recovery”. It shows their desperation.
The longer the crisis lasts, the more the fools who believe that it would be short timed, change their minds… And they join the recession club (cut of investments, cut of spendings, etc.). Not good to fuel a recovery.

-government spendings. Ah ! The best part for the Lalalanders… They believe that gvt can buy its way out from the crisis. Sorry folks, the government is broke, and I really don’t believe Thailand can act like USA (= to borrow like there is no tomorrow).

-Private consumption : worsening. Let’s ask the clowns how they think Mister and Miss Somchai, who started to reduce their expenses on Q1, are going to change totally their behavior and will spend like crazy on Q2 ?

Allo ? What ? I can’t hear the clowns anymore. Oh yes, I’ve just had an idea : let say that the 66 millions of thais are going to win lottery next week. Give them 1 billion THB each, case closed, problem solved. 😉

It’s of course just a fantasy. And why it could even get worse ? Well, again, the longer the crisis lasts, the more companies will close, downsize, the more people will lose their jobs… the more they will be afraid of the future etc. It’s of course a basic negative loop. But the clowns can’t understand this very simple idea.

So, with such depressed conditions, GDP on Q2 will be as bad as Q1. Simple as crystal clear.

Now, what are the positive items that could curb and change this reality, a little bit and on temporary basis ? There are some.

-government spendings : a little boost (like the 20 billions national bribe given by Abhisit in april) could soften the negative trend. But it would be a blip on the radar. Absolutly not a sign of recovery. Abhisit is just unable to launch and manage really the mega projects. Even though he would sign all the contracts and would get all the financing tomorrow, the money would not be injected into the system before several months.

-inventories : I think some companies have cut their production… too fast and too deep… They will have to produce again, even at lower levels. And the gold mania is probably over (unless prices explode, that would convince many thais to sell their gold).

Voila. And all my comments at the end of my report about GDP Q4 remain valid.

The longer this crisis lasts, the more the negative effects will increase : compound effect, negative loop, you name it.

The system (with many shock absorbers) can’t sustain a long crisis.

Thunderstorm : GDP shrank 7,1 % during Q1

It was supposed to be the Abhisit’s Day, AKA The Slap In The Face Day (read here). Well… “mission accomplished” !


GDP in 1Q 09 drastically contracted by 7.1%, compared with a decrease of 4.2% in 4Q08, due to world economic crisis which severely affected goods and services exports, a main contributor of Thai economy.

Export value of goods in dollar terms decreased by 19.9%, whereas import value reduced dramatically by 38.3%. Moreover, investment shrank by 15.8%, along with household consumption expenditure which reduced by 2.6%.

However, government expenditure expanded slightly by 2.8%. (NESDB)

It’s a striking fall. But it’s absolutely not a surprise… Only fools, AKA the whole government and all the bureaucrats, could be surprised. The same people told us that the “recovery” was on its way (read here).

Central bank began to witness signs of recovery in the first quarter.

When did they say that ? January 16 !

There is a word for this kind of simple minded people and liars : clowns.

Anyway, you’ll find all the figures (statistical tables) and the official report here.

I will update the charts as soon as possible. Meanwhile you can still read my report about GDP Q4 2008.

It’s so predictable : the same clowns who were wrong and/or who lied 3 months ago, started the new tune today : “bottom out… Q2 will be better”.

It’s funny because when we look at the indicators for april (the first month of Q2)… well… we see the exact same patterns than the previous months : exports down (25 %), sales of cars down, investments dropping, VAT collections falling, etc…

Anyway. I will give more details on my report (just need a little bit of time to write it). 😉

1 + 1 = 2 : because of the recession, profits of companies listed on SET plunge by 48 %

Another Green Shoots Story. Another 1+1 = 2 equation that any child at school would have been able to understand… All but the stupid politicians, bureaucrats and Lalaland inhabitants of course.

Listed companies posted first-quarter net profits totalling 80.27 billion baht, a 48% decline from the same period last year, according to the Stock Exchange of Thailand.First-quarter sales totalled 1.35 trillion baht, a decline of 24% from the same period last year.

Of the 468 companies reporting results, 325 posted a net profit and 143 a loss, said SET president Patareeya Benjapolchai. (Bangkok Post)

Recession = sales down = profits down = corporate taxes down = investments down = unemployment up = consumption down etc.

It’s a text book.

In february, Korn, the alleged Finances Minister, was thinking that corporate taxes would save the day… and replenish quickly the state’s coffers. Wishfull thinking, plain stupidity or plain lie. Pick up your choice…

I can hear already some people saying : “wait a minute, and what about the comparison with Q4 2008 ? It looks much better !” Okay, let’s go.

But profits were up sharply from the fourth quarter of 2008, when listed companies posted a net loss of 83.6 billion baht, said Ms Patareeya.

A Green Shoot ! A Green Shoot ! At last, we have found one ! Sorry folks but it’s not.

The dramatic drop of profits on Q4 was mainly caused by inventories and the drop of crude oil prices

The Q4/2008 net loss was THB83.40 billion, vs. Q4/2007 net profits of THB104.82 billion. The rapid drop in crude oil prices led to inventory losses in the Resources Industry Group. This sector accounted for 77% of net losses of all listed companies. Exchange rate losses also affected operating performance in Q4/2008. (Asean Affairs)

77 % ! So my point : Q4 was abnormal

Q1 2009 is the first normal quarter with normal recession results… AKA sales and profits are going down.

Sales for the whole 2008 year were still up 22 % ! On Q1 2009, sales are falling by 24 %…

So it’s only the beginning.

When profits are falling with sales, companies cut costs and reduce, cancel or postpone investments projects… that lead to further economic downturn.There is no point, currently, to increase capacities… Demand is still depressed.

It’s a negative loop. But a healthy one : this process destroys over capacities and bursts bubbles and puts pressure on prices… It’s healthy. It’s a normal step within the economic cycle.

Painful but healthy. But all the clowns, the politicians and the bureaucrats in the world are currently doing everything they can to… postpone, cancel, reduce this process !They want the dream of increasing assets prices, bubbles and growth to continue for ever and ever.

It’s childish.

And with their actions, the pain will be stronger. And will last longer.

Green Shoots Story : exports crashed 26,1 % in april

The first figures for exports and imports in april have been published (details will follow on may 31, by the Bank Of Thailand).

It’s another Green Shoots Story…

Exports in April nosedived 26.1 per cent while imports plunged 36.3 per cent, Commerce Ministry permanent secretary Siripol Yodmuangcharoen said on Wednesday.

The export value last month was US$10.429 million while the import value stood at US$9.834 million, resulting in a trade surplus of US$ 595 million, Mr Siripol said. (Bangkok Post)

Here is the chart.


Where are the clowns ? Where are Abhisit and Korn ?

If exports stay at the same level in may… the % of change year on year would be -34 %.

However, I expect a small rebound. In any case, we should keep the pace of a minus 25 % year on year.

Shoot at the “green shoots” : historic y-o-y drop of government’s revenues in april

Shall we eat the Green Shoots ? Or shoot at them ? Hum… It’s tax day. And therefore it’s time to analyse the april report, from the Finances Ministry.

First, the headline from the thai press :

Thai govt revenue in first seven months of fiscal 2009 down 16.67% from projection (TNA)

First comment : nobody gives a rat shit about “projections“, made a year and half ago (for the budget), by some bureaucrats and politicians. We have to compare revenues to… revenues from the previous year. A year on year comparison. Everything else is fantasy.

Second comment : before to look at a summary of the seven months of the fiscal year, let’s have a look on… april.

-VAT collections went down 19,35 % compared to april 2008. Hum… Green shoots are cracking under my teeth. Tasty. In march ? We were at minus 18,81 %.

the pace of the drop is accelerating for corporate taxes (-21 %), that’s a bad sign. I don’t understand : the clown Korn, alleged Finances Minister, told us that corporate taxes would save the day… Hum… sorry folks, that was in february… Like a century ago.

-but overall, the very bad sign is the historic drop of total (net and gross) of government revenues in april : -28 % (net) compared to april 2008 ! One expression is coming to my mind : punch. A punch into the face.

[mistake on the chart : units are not “millions” THB. Multiply by 1000. Example : april corporate tax = 15 589 000 000 THB = 15,58 billions THB]


Let me put in another way : in one year, almost 30 % of the government’s revenues have just vanished… Into som tam, into thin air, into the Chao Praya River… who knows ?

Now, from a budget point of view, this is a serious problem… 😉

Particularly when the alleged government, led by Abhisit, is doing everything it can to increase the damages (by following inane policies, giving money away, subsidies, by political games… and of course by sheer stupidity, I mean lack of competences).

Anyway. Here is the chart about VAT.


What a nice salad of Green Shoots. And let me remind you (like the mustard touch into the vinaigrette), that the Clown Abhisit (a very bad chef) gave 20 billions THB, as a national bribe… in april

A large chunk of this money was spent in shops. Generating VAT of course…

Let’s make a quick calculation : 7 % of 20 billions = 1,4 billion… hum… 😉

Anyway. Let’s finish with the official report for april, with amounts and % of change year on year, and types of tax.

Enjoy the corporate tax, the excises taxes… Speaking about excises… you’ll notice a striking +50 % for tobacco taxes. 😉 That’s smoking… And what do you think about the fact that the increase of tax on tobbaco… has just been approved by the House… I mean today ? Now, you are smoked. And in the Rabbit Hole. 😉

And don’t worry about the minus 46 % for car taxes. Everything is sabai. Everything is green.


Go in peace.

And remember : may 25, it’s GDP Q1 report day…

Nicknamed : Abhisit’s Day. Nicknamed : The Slap Into The Face Day.

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.