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Thailand’s economic forecast among Asia’s worst: central bank governor to step down

Jack Burton

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Thailand’s economic forecast among Asia’s worst: central bank governor to step down | The Thaiger
PHOTO: Bank of Thailand Governor Veerathai Santiprabhob - Chiang Rai Times
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The governor of the Bank of Thailand will step down when his term ends in September. Veerathai Santiprabhob announced yesterday that he has decided against seeking a second 5 year term for “family reasons.” His departure comes as Thailand sees its economy contracting as much as 6% this year, mostly as a result of the impacts of lockdown provisions to protect citizens from the coronavirus, including closing the borders. Thailand’s economy is among the worst in Asia as Covid-19 has shattered its vital tourist sector.

Last week, the head of the BoT’s selection committee said said the application period for the next chief will run for 15 business days, from today to June 16, and the shortlist of candidates will be announced by July 2. The committee will meet on June 18 to compile the list of applicants, who will each present their vision for the central bank in late June. The candidates will not be announced until the selection process is finished, and if there is only one, or no candidates, the application period will be extended.

With the bleak economic outlook due to the the Covid-19 pandemic, the next BoT governor will face a challenging task.

Thailand’s gross domestic product is expected to shrink 5%-6% in 2020, according to the National Economic and Social Development Council. Yesterday’s estimate is “based on a limited outbreak in the second quarter,” a spokesman told journalists, adding that “the situation is still hard to predict.”

The new projection follows data showing GDP shrank 1.8% in the first quarter from a year ago, the first contraction since 2014. That was lower than the median estimate for a decline of 3.9% in a Bloomberg survey of economists and compares with revised growth of 1.5% in the fourth quarter.

Thailand relies heavily on tourism and trade, both of which have taken a severe blow as countries around the world imposed restrictions to contain the virus. Official data show a 74.6% plunge in tourist arrivals in March compared to last year.

“We don’t really see the full impact in this quarter yet. The worst is coming in the second quarter, and most of the population will be affected.”

SOURCES: Chiang Rai Times

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4 Comments

4 Comments

  1. Avatar

    Clydel James

    Tuesday, May 26, 2020 at 12:50 pm

    Thousands of foreign national ex-pats with Thai families are locked out of Thailand, yet they are a lifeline for many members of the Thai family. Isolated and ignored ex-pats are dutifully sending money home to help support children, grandchildren, brothers and sister inlaws, and mother inlaws. The unemployment in tourist areas is so bad that children are going hungry and parents are standing in charity lines just to survive. Please do what you can to reunite families.

  2. Avatar

    Karl

    Tuesday, May 26, 2020 at 1:50 pm

    Thailand should be happy that the dirty and showers avoding farang stay away. It is sufficient if they send money.

  3. Avatar

    James Johnson

    Wednesday, May 27, 2020 at 2:16 pm

    Good. Very good. Thailand needs to suffer. Too proud and too stupid. BeggarLand. And just look at all those so-called “Thais” at the Bank of Thailand. ALL CHINESE!!!!

  4. Avatar

    Peter

    Monday, November 23, 2020 at 10:39 am

    The Thai government should be thankful their economy is facing a contraction of only 6%, a LOT of countries in the west would be delighted if they were only facing a similar contraction. Economies are suffering worldwide, due to the covid 19 pandemic.

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Jack Burton is an American writer, broadcaster, linguist and journalist who has lived in Asia since 1987. A native of the state of Georgia, he attended the The University of Georgia's Henry Grady School of Journalism, which hands out journalism's prestigious Peabody Awards. His works have appeared in The China Post, The South China Morning Post, The International Herald Tribune and many magazines throughout Asia and the world. He is fluent in Mandarin and has appeared on television and radio for decades in Taiwan, Mainland China, Hong Kong and Macau.

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Future of Thai department stores is being redefined

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Future of Thai department stores is being redefined | The Thaiger

While department stores have been a familiar destination for Thai people for many decades, CBRE, an international property consultant, is witnessing a decline in popularity and stunted growth, particularly in 2020 when Covid-19 adversely impacted the sector. CBRE believes that to adapt to e-commerce disruption and the changing consumer behaviour, department stores in 2021 (and beyond) will have to fine-tune their business model in terms of customer shopping experience, inventive activities and value-added programmes to continue their status as the second home for Thai shoppers.

Jariya Thumtrongkitkul, Head of Advisory and Transaction Services – Retail, CBRE Thailand explained… “While department stores offer shoppers convenience, saving them time with many varieties of goods grouped in different departments and allowing the shoppers to find and compare products and choose what they want, the traditional department store model does not fit the needs, lifestyle and behaviour of its shoppers anymore, especially the new generations.”

According to CBRE Research, the total retail supply in Bangkok as of Q4 2020 increased to 7.8 million square metres, a 1.16% increase year-on-year. Out of this, only approximately 3% was reported within the department store format. The department store market in Thailand is mainly dominated by two domestic retail giants, with Central Group and The Mall Group holding the largest market shares. They do not only concentrate in Bangkok, but have also opened department stores in many major cities throughout the country which allowed them to build bigger networks and grow their customer base.

In the past few decades, Japanese investors had also shown interest in entering the Thai market and offered local features that are well-known in Japanese department stores: simplicity, premium quality and services. However, with strong competition many Japanese department store operators have ceased their expansion plans. Some have exited the country due to the fierce competition against the local players, their performance in Thailand and the shrinking Japanese department store business, especially in overseas countries.

“The department store concept as a one stop shopping place is still in demand for certain groups of customers. However, with the e-commerce disruption and changing consumer behaviour, department store operators need to adapt their models, offerings and value-added services to their customers to cope with the challenging economic and market conditions.”

Adaptability of department stores can be highlighted into 3 main parts: customer shopping experience, inventive sales and marketing activities, and value-added programmes. While more and more younger generations prefer to shop online to save time and money, the brick-and-mortar store is still believed to be the second home for Thai shoppers. Department stores should be more agile in the era of e-commerce and adopt some technological innovations such as in-store automation and mobile payment solutions to reach the younger crowds.

Design is another aspect that plays an important part in customer shopping experience. Department stores can be more creative in remodelling traditional department store space into some ingenious and interactive space with a great design and right product portfolio mix for their customers.

The Mall Group, for example, has launched its first “Lifestore” concept at The Mall Ngamwongwan at the end of 2020 by redesigning and renovating its traditional department store space to enhance customer shopping experience and enjoyment.

The second part to be considered for the adaptability comprises inventive activities related to sales and marketing. The prices of products being sold in a department store are normally set high to cover the higher establishment and operating costs by operators, narrowing their target to only upper- to high-income customers.

Brand offerings may also no longer meet fast-changing customer needs since today’s shoppers have more choices in buying products online, not to mention the declining footfall due to the growth of e-commerce. CBRE Research has seen domestic players pushing hard to drive sales growth via numerous promotions, marketing campaigns and activities and collaboration with credit card companies during seasonal sales.

The third part consists of value-added programmes such as personal shopper, customer loyalty programme, on-demand solution and service personalisation, which have become a new trend as customers, including the aging population, are now more sophisticated and demanding.

The retail landscape has changed drastically in the past few years from various factors like technological advancement, consumer behaviour and preference as well as Covid-19. Cookie-cutter strategy will be a thing of the past, especially for department stores where the format and offerings have remained the same for decades.

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Can Phuket survive? Interview with Bill Barnett | VIDEO

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Can Phuket survive? Interview with Bill Barnett | VIDEO | The Thaiger

Interview with Bill Barnett from c9Hotelworks. Phuket has now been hit with a 3rd major crisis, each one more profound than the long-term effects from the 2004 tsunami. Now the island has new restrictions imposed on arrivals on the southern island, imposed by the Phuket Provincial Authority.

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US jobs market stumbles back into decline

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US jobs market stumbles back into decline | The Thaiger

The labour market for the world’s largest economy is heading back into reverse mode after slowly chugging back into gear over the past 8 months, following the March stock crash and initial impacts of the US state lockdown measures.. The December report was the first drop since April figures, providing the strongest evidence of the impact of the huge number of Covid-19 infections weighing on the economy.

“Nonfarm payrolls” in the US fell by 140,000 in December, the data published by the US Bureau of Labour Statistics showed yesterday. This reading follows November’s increase of 336,000 (revised from 245,000) and missed the market expectation of +71,000 by a wide margin.

Further details of the publication revealed that the Unemployment Rate stayed unchanged at 6.7% and the Average Hourly Earnings rose by 0.8% on a monthly basis.

“Nonfarm payroll employment is a compiled name for goods, construction and manufacturing companies in the US. It does not include farm workers, private household employees, or non-profit organisation employees.”

The weakness in the US jobs market largely reflects job cuts at restaurants and hospitality venues impacted by revised restrictions.

The President-elect will inherit an economy that’s down almost 10 million jobs compared with before the pandemic. The pace of hiring will be hard-pressed to accelerate until a meaningful portion of the general population is vaccinated, with distribution in the US running slower than planned and potentially holding back the recovery.

Other parts of the US labour market held up in last month’s figures. Retail, professional and business services, construction and manufacturing all posted job gains, indicating much of the economy continues to stagger back to economic health. The number of unemployed Americans who permanently lost a job declined to a four-month low of 3.37 million.

Michael Gapen, chief U.S. economist at Barclays says parts of the US economy continue to show some resilience.

“Outside of consumer-facing sectors the remainder of the economy continues to show resilience. It does show that if we can get control of the pandemic, then we can restore economic activity and labor market conditions over the course of this year. It’s a pandemic-driven number, a pandemic-driven composition.”

“The pace of hiring will be hard-pressed to accelerate until a meaningful portion of the general population is vaccinated, with distribution in the US running slower than planned and potentially holding back the recovery.”

A new viral strain of Covid-19, that led to new or extended lockdowns in the UK and Germany, has now been identified in the US, which risks spurring more restrictions that could hinder hirings over the coming months.

In December, there was an average of 1.5 million new cases per week in the US and Covid-related deaths continued to rise at a record pace, forcing some states to ramp up business restrictions leading to an uptick in layoffs.

Private-sector payrolls, excluding government jobs, decreased by 95,000 last month following a 417,000 gain in November.

SOURCE: Bloomberg | USA Today

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