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Thursday , June 26 , 2008

Thailand Country Report Summary 2008

Posted by Tawan , Reader : 1112 , 00:01:27

The current IMF Country Report on Selected Issues for Thailand shows some very interesting new developments. In addition to past studies that show a 1% slowdown in the US equals to a 0.9% slowdown in Thailand, some new outcomes are being predicted that shows different scenarios for Thailand. There are two new scenarios for Thailand in this new report that shows a 0.6% slowdown for Thailand and a final scenario of only a 0.135% slowdown. There is a minor irritation for this IMF report that was completed on May 2^nd and the BOT’s press release of June 21^st. This is almost a two month delay of vital information release to the public. This un-timely delay seriously dilutes any value of leading indicators significance that citizens can use to develop strategy for future changes. We do not expect economic reports in Thailand to be as efficient as the US one day prior release to officials and the following morning’s 30 minute review prior to public release to a select few journalist under heavily armed guards during the 30 minute communication black out in a DC military bunker. The main shocks for the Thai economy for 2008 are external. The US slowdown, long-term commodity price increases and the resulting inflation. The monetary policy required to fight inflation is in direct opposition to Thailand’s growth goals for 2008. Thus, the call from the BOT for a fiscal spending spree for Thai government to release 94% of its budget if the growth goals are to be reached. Thanks to the leadership of Khun Tarisa at BOT the external factors pressuring Thailand can be minimized. First scenario of a delayed monetary response for past US output slowdowns remains the same if the BOT takes two quarters to respond to the corresponding fall in Thailand output will be 0.9%. The second scenario of an immediate monetary policy response by BOT will produce a 0.6% slowdown in Thailand output. This also allows the BOT to gradually increase interest rates by a quarter of a percentage point at a time while monitoring the results on output. The third scenario of monetary response takes into account the effects of Thailand’s successful export diversification away from the US from past levels of 40% to the current level of 15% thanks to last years quick response from Thai export leader’s efforts to diversify from the US. In addition the call for a fiscal response to release 94% of the budget produces the best outcome of only a 0.135% fall in output. Khun Tarisa’s leadership in foreign exchange management, local financial instruments developments and identifying risk-based banking regulatory framework, risk management products like options and futures and preparing Banks to move to Basil II requirements for 2008 are expected to continue without political influence as Thai citizens continue their progress in government accountability and transparency rights.

The current IMF Country Report on Selected Issues for Thailand shows some very interesting new developments. In addition to past studies that show a 1% slowdown in the US equals to a 0.9% slowdown in Thailand, some new outcomes are being predicted that shows different scenarios for Thailand. There are two new scenarios for Thailand in this new report that shows a 0.6% slowdown for Thailand and a final scenario of only a 0.135% slowdown.

There is a minor irritation for this IMF report that was completed on May 2^nd and the BOT’s press release of June 21^st. This is almost a two month delay of vital information release to the public. This un-timely delay seriously dilutes any value of leading indicators significance that citizens can use to develop strategy for future changes. We do not expect economic reports in Thailand to be as efficient as the US one day prior release to officials and the following morning’s 30 minute review prior to public release to a select few journalist under heavily armed guards during the 30 minute communication black out in a DC military bunker.

The main shocks for the Thai economy for 2008 are external. The US slowdown, long-term commodity price increases and the resulting inflation. The monetary policy required to fight inflation is in direct opposition to Thailand’s growth goals for 2008. Thus, the call from the BOT for a fiscal spending spree for Thai government to release 94% of its budget if the growth goals are to be reached.

Thanks to the leadership of Khun Tarisa at BOT the external factors pressuring Thailand can be minimized. First scenario of a delayed monetary response for past US output slowdowns remains the same if the BOT takes two quarters to respond to the corresponding fall in Thailand output will be 0.9%.

The second scenario of an immediate monetary policy response by BOT will produce a 0.6% slowdown in Thailand output. This also allows the BOT to gradually increase interest rates by a quarter of a percentage point at a time while monitoring the results on output.

The third scenario of monetary response takes into account the effects of Thailand’s successful export diversification away from the US from past levels of 40% to the current level of 15% thanks to last years quick response from Thai export leader’s efforts to diversify from the US. In addition the call for a fiscal response to release 94% of the budget produces the best outcome of only a 0.135% fall in output.

Khun Tarisa’s leadership in foreign exchange management, local financial instruments developments and identifying risk-based banking regulatory framework, risk management products like options and futures and preparing Banks to move to Basil II requirements for 2008 are expected to continue without political influence as Thai citizens continue their progress in government accountability and transparency rights.

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comment 11
Tawan date : 30/06/2008 time : 09.41
http://blog.nationmultimedia.com/tawan3

That is very good. Was your professor Australian too?

comment 10
wch date : 30/06/2008 time : 09.10

Economy has been borne from an ethnic necessity and faiths with a little external influence. Capitalistic or communistic economy systems have also transformed to the ethnic necessity today as seen in Russis, China and Vietnam.

Japanese style of economy can be called Negotiable Economy despite of their likes or dislikes.
However such Japan-atic style is one model that succeeds to fit in. And many of western economists try to learn it despite of their likes or dislikes.

WHY ?. because Japanese always won and win. European economy collapses and so their civilization in view of the futurist's view. WHY ?, Europe does not have what Japan has.

Many of jealous western economists named Japanese economy with any names, even they used "Economy Animal'. However Japanese sneers them off.

PRC's China now enjoy the success. They modelled S.Korea to develop each ethnicity economy (Shinzun, Shanghai, Tenzin), they modelled Japan to manage central plan economy.
They are very strict to punish economy crimes committed by officials - public execution on firing squad.

Someday these three economies federate among them and rule the world.

What is the essence of the many essences ? and what is the principal difference from western, confused values from the feudalism, capitalism to communism and now mixed form ?.

The north eastern Han civilization has been tested all of possible human economy system since last 2,500 years. First BC millenium economy of Tangsan civilization was the mixed form of capitalism and communism in each of autonomous city-states - 5 of confederation.

In a word, their economy has been developed in parallel with ethics of merchant-ship. Famous Kobe merchantship of Japan, Kangsang merchantship of Korea and Peking-Tenzin merchantship of China are vivid evidences of the co-existence in economic activity with strick rule of the ethics and the morality.

This is called, some people do, Confuscious Enonomy. Before talking this, I like to raise the fundamental critical thinking of the northerners.
In their consciousness, the laws exists in two tiers.

The laws of ethics and morality (koonatarm and jariyatarm).
The laws being written in the laws books.

How to use both ? look at this trial case.

"A man killed his close friend. He was sentenced to death by primary court.
The secondary court judge overturned his death sentence to life imprisonment.
The final supreme court overturned but to 5 years jail term". Why ?.

1. Killing somebody is worthy to life imprisonment in this global non-death sentence environment but he killed his close friend, so he is worthy to die.
This judge gave some weight about 'killing close friend' in their traditional value.

2. Secondary judge reduced because the man is at same time, a husband to a, pretty unrelated party, his wife. The judge thought, any sovereign power can not deprive an innocent wife of her beloved husband. He added ' the wife hold the right to have every monthly visit on her husband in prison.(a overnight). He also interpreted the same principle toward the man's children.

3. The supreme judge for 5 years was based on the independent law clause, that in the civil law of being a family and being spouse, if a couple separate longer than 5 years, the marriage can be nullified. Any sovereign power has no right to destroy the marriage. So only 5 years.
Instead, the man must support the mother of the killed friend for life.

This is the faith of their how to look at an incident and the same in looking at economy.
There is no such HOSTILE UNDERTAKE of other's business in those world. it is regarded sin.
In those economy, if a founder, owner of a business failed on managing, the sovereign power deprive him from the business and allow all of the employees to run instead. After certain period of confinement for penitence, the employee receive back the founder. The company can then stand on strong corporate morality.

This kind of business ethics can not be understood by Americans or Europeans, even for next 1000 years.

They will lose.
Now the technology is saying another. US tried 50 times to launch rockets but devastating blasts and loss of people, Still today it continues.
Japan did only 5 times and so did China.
Korea did once without failure with small rocket and the big one is stemmed in the last quarter.
Many of scientists do not worry the shooting success but worry the vehicle can carry nuke warhead in the future. What is their tech ?.
The physics of 'Bang Fai' of Yasothorn !.
If the pressure gas flows through long hollow inner cylinder, the body (rocket column) can stand straight !. None of American scientiests (mainly German, Dr Braun) could reach this simple wisdom !. (fyr, still they use controllable pitch nozzles of 4-5 in order to hold the balance of upper long body of rocket).

In conclusion, the northerner's economy activity is played by strong morality and the laws.
And it is Non-Negotiable Economy, than negotiable economy (meaning threatened by power, easily detoured, beyond-law, confused form).

comment 9
Tawan date : 29/06/2008 time : 11.38
http://blog.nationmultimedia.com/tawan3

Economic History Part II. The Enlighten Age 1980’s to Present.

The Founding Father that ushered in the Enlighten Age of “Masters of the Written Word” was the Honorable Vice President Cheney. As a young man in the Nixon administration he witnessed the terrible and humiliating events that were forced upon President Nixon. He vowed that the horrible experience would never again happen to any US President, the undisputed leader of the Free World, Free Markets and Democracy.

The Founding Father reasoned that the most important corner-stones of a Democracy must be the “Rule of Law”. No one is better suited for the “Rule of Law” than a lawyer a natural born “Master of the Written Word”.

Unfortunately, the 1970’s were terrible times with double digit interest rates and inflation rates. During this time the children of the “Master of the Written Word” graduated from law school but the terrible economy had not jobs for the natural born children of the “Master of the Written Word” in the private sector. The children were forced to become waiters and fast food workers in the last world dominate economic sector of the US economy.

The Founding Father had plans for the children and a great mission. He ushered them into the Public sector the largest employer in the US economy. The children with a mission entered Public Service by the thousands.

Finally, the Founding Father had the solution to all US problems the child lawyers would become “Masters of the Written Word”. There would never again be a successful impeachment of a Leader of the Free World even the “It depends on your definition of sex” impeachment grandly failed because of the great vision of the Founding Father and his children’s mastery of the written word.

Globalization entered in the 1980’s as the “Masters of the Written Word” matured in their linear logic many foes appeared in the form of trade agreements but none as great as the greatest of all “Negotiable Economies” rose on the world stage Japan Inc. This glorious battle continues today “ganbatte”.

Sorry wch San that is all the economic history I can remember from class. As I have told you before I was not a good student and I do not listen well. Ganbatte, Ganbatte, Ganbatte.

comment 8
Tawan date : 29/06/2008 time : 09.45
http://blog.nationmultimedia.com/tawan3

My reference to Senator Proxmire who in the 1970's was more fameous than President Nixon. The President had a bad habit of withholding economic reports from the public. The US economic reports went easily to the highest bidder who made millions from them. During this dark ages of corruption Senator Proxmire had all economic reports controled by armed guards thus ending the dark ages of corruption and entered into the enlighten period of Master of the Written Word that dominates today.

comment 7
wch date : 29/06/2008 time : 09.29

Negotiable Economy. Senator Proxmire will come.
Yes, Thai people has blind faith if its farang.
Anyhow a farang Phuyai is neeeded here badly then they will listen to.

Anyhow, isn't this man ? who sat in the senate monetary committee or in FED who supported 'interest-initiated .....' one of primary cause of credit crunch ?

comment 6
Tawan date : 29/06/2008 time : 09.22
http://blog.nationmultimedia.com/tawan3

I think the term Arrogance Economy is too narrow. A broader description would be a Negotiable Economy. But Senator Proxmire will come to Thailand and that will be the end of the negotiable economy.

comment 5
wch date : 29/06/2008 time : 08.46

Thai Economy is ARROGANCE economy.

Seemingly there are many 'Phuyais' in today's Thai economy steerings.

This, US bank analysist apparently tries to prove things by the US's devastating failure of interest-initiated, control of money market. "While the music flows, you cannot stop dance ". They were over-danced and squating down now with dizziness, like Tana, the lawyor of somebody.

An economy chief of Thai business group, advises BOT and 'Students with knife in their hands ", about SUPPLY side management. He insists more supply will lower the price hike and so inflation.

A blogger makes another suggestion - a formula of the linkage of US economy to Thai economy in concept of dominant economy and subordinate economy.

This of all is belonging to the Keynesian Schoolers and their academic faith, the faith of global great recession of 1930s'.

However they seem not to realize non-Keynesian economies, including the arrogance economy of this south east Asian countries.

I will not talk about Japan, Korea economy styles that are heavily central managing economy with different ideas of such, Growth-oriented initiative, Bench marking of prime mover for the future, Tech-initiative consumption, Culture content-initiative, IT culture transcience and demand or 2020's life style and its preparedness.

I like to talk about Thai economy - Arrogance Economy here today.

Chavalit-Thaksin government of mid 1990s had implanted an arrogance in Thai economy
- Foreign Exchange Liberation. Of course this idea was not overnight brain child. Many of traders wanted this since post-Anand era.
Many of expatriate executive started harnessing the risk of currency volatility since of 1996 first quarter and refrained to entering any contract.

July 2, 1997, th expected one happened, Baht currency crunch and several inside informants heavily enjoyed currency speculation from 27 baht to 54 baht, just double by remitting out 400m dollars, and returning them back in September, into 54 baht. Their baht wealth 10,000 m baht became 20,000 m baht, just within several months. This continues in the time-change of baht 42 - 32 uptil today. Currency speculators are Thais, not Aliens.

This morning's Financial Time reported, "26 years-ever, grand slump (if not the panic ),of world stock market". American economy does not offer any bright clue and many foretells 'grand recession'.

Global stagflation (price hike in recession) seems quickly spreading, not except Thailand.

However, they are in full nerves of the imminent calling list of new econo-guru, the frog toads in deep well, ir order to get the ticket of Not-Guilty coupon out of their past guilt. Time is good becasue every posts are on deal now.

Again those mandarins of BOT bench, it is really the peacy and tranquility. No one comes out and say " Our economy is doing well', the rhetoric having been heard since post Gen Prem era.

Thailand is still in the steam of Gen Prem's Jump Start Economy Initiative that demaned tight central management by well-trained technocrats.

There is no 'usable financial technocrats' left.
Change the laws, bring back Dr Somkit and his teams, Please !

Your arrogances never pay a single satang.
wch
(related BP forum regarding to
http://www.bangkokpost.com/280608_Business/28Jun2008_biz36.php)

comment 4
Tawan date : 28/06/2008 time : 12.17
http://blog.nationmultimedia.com/tawan3

That is ok. But have no language problem with Khun Ian because he has a face.

My concern is with BOT because Thailand has not a Senator William Proxmire to protect from Ministers a main reason we are always in the lower 25 percentile and never any trickle down economics in reality does not work.

comment 3
wch date : 28/06/2008 time : 08.27

Hello, Tawan, Are you there ?

I think both of us has a permanent language problem, like Ian.

This is 0809 hours June 28 2008, the half has passed and I am talking about its performance of economy, while you are talking about "scenarios".

Your scenario may continue until December 31 eve for new year, the great 2009. Maybe the dear BOT officials may cajole the scenario, together with,
while the potatoes are spoiled in sack.

In fact, I made conclusion about the performance and tactics of BOT's already in my earlier post.

"Although inflation is triggered by raw material cost increase, mainly of oil price, BOT tries to harness it by monetary control, say, interest hike."

This is very the objection posted by the opposite, Democrats in recent parliamentary debate ( I agree with them).

FPO or Fiscal Planning Office of Ministry of Finance announced the half-year performance and forecast of the second half (yesterday Nation and Bangkokpost).
They ignored the US GDP contraction that is regarded insignificant to Thai economy because major trading partner nation such as Japan performs well and consequently Thai export is basking.
In other word, in the formular, + (export - import) is okay.
(Gross Investment) is okay even though the government keep their habitual rhetoric, 'Investors are away because of PAD'.
GE's 2 billion dollars investment into Thailand, this news are very much encouraging.

(government spending) is okay. Cash coupon will excite the northerners for another debt-party in this second half. Also many shows are ready to take away after 2009 budget rounding today tomorrow,
THEN election comes around December and the last quarter may enjoy Election fever and Election party.

(consumption), this is problem.
--------------------------------------

comment 2
Tawan date : 27/06/2008 time : 11.48
http://blog.nationmultimedia.com/tawan3

Sorry wch San for this exercise your formula is not used.

This analysis is conducted using a small New Keynesian macroeconomic model
with rational expectations, adapted from the framework developed by Berg, Karam
and Laxton (2006). The model is estimated with Bayesian techniques which are based on Schorfheide (2000) estimation of open economy DSGE models include Lubik and Schorfheide (2003) and Justiniano and Preston (2004).

These models are the centre of policy-making analysis in many Central Banks in the World.

The formula is:

YGAPr=B1YGAPr-1 + B2YGAPr+1 – B3(RRr-1-RRr-1*) + (Zr-1 – Zr-1 – Z*r-1) + B5YUSGAP

You are welcome to run the numbers yourself. If you come up with a different outcome we would all be interested to see it.

comment 1
wch date : 27/06/2008 time : 10.09

1st para of text.

GDP = consumption + gross investment + government spending + (exports − imports)
(* plus non-trade sector revenue.)

US's 1% diminution of its consumption (contraction of c-) or 1% GDP contraction, would cause a diminution of GDP of Thailand by 0.6 - 0.9 %, ???

The analysis must start from the fomula above.
I listened carefully the parliamentary debate between incumbent finance minister and the opposite democrats.

The opposite alleges that the current inflation of Thailand is mainly caused by the situation of US economy.

One blogger advises me 'Where did wch learn the economics ? Look at the reality".

In the definition of GDP, I isolated "Non-Trade sector revenue" because it is very much important economic scale to measure and forecast, the tourist bound, expatriate earning, Thailand. This sector generates 20 billion dollars net earning, out of 250 billions GDP.

Thai inflation of present 30% is not caused by overflow of trading currency in market but by the hike of raw materials - oil price, but BOT tries to remedy it by increasing interest rate.

I am pretty much confused, not about the nature of economy but about those people who send out signals of "nonsensical analysis" and forecasts.

Including Tawan here, What means the slowdown of 1 % ?

(I will not conclude anything in this entry para and will continue further)
wch

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