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Don’t mention the ‘R’ word – world’s biggest economies at risk of recession

Tim Newton

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Don’t mention the ‘R’ word – world’s biggest economies at risk of recession | The Thaiger

CARTOON: Financial Times

Five big economies are at risk of recession – Germany, Italy, Mexico, Brazil and the UK. A recession is usually defined as two consecutive quarters of contraction in an economy. Locally Singapore and Hong Kong are teetering on technical recessions, both vital regional business hubs.

The UK economy shrunk in the second quarter, and growth has flat lined in Italy. Germany’s economy, the world’s fourth largest, contracted in the second quarter.

The causes? A lot of economists say there’s a war of confidence in the markets with background noises of the US-China trade war, the Brexit farce, and a perfect storm of a global manufacturing slump and wounded business sentiment.

A global economic shakiness bordering on mild panic.

China’s towering economy is growing at the slowest pace in nearly three decades as the protracted trade war with the US intensifies sending even more shockwaves around the globe.

Now it’s been announced that the US will impose new taxes on Chinese exports in September and December. With the trade imbalance as it is, the US has more weapons to throw at the trade spat. But China’s resolve and deep commitment to spreading it’s economic wings over the last decade – principally its Belt and Road program – will allow it to absorb a lot of the short-term pain.

Chinese businesses are already well into the process of finding other export options (finalisation of RCEP, the largest trade bloc in the world will be wrapped up by the end of the year) and alternatives to US suppliers for specific parts for local manufacturing.

The International Monetary Fund cut its forecast for global growth this year to 3.2% last month, the weakest rate of expansion in a decade. It also downgraded its expectations for 2020 to 3.5%.

More than a third of asset managers surveyed by Bank of America expect a global recession in the next 12 months and the sentiment in bond markets is for contraction in most economies.

With fears of a chaotic Brexit helping to drag down the German and some European economies, the most pain is being felt in the UK, where the economy is shrinking for the first time since 2012. If the UK PM Boris Johnson does what he says – a ‘no deal’ Brexit on October 31 – a recession would be unavoidable.

In Italy, it’s a very local problem of weak productivity, high youth unemployment, huge debt and political turmoil contributing to its sluggish economy. Mexico and the country’s services sector are under pressure causing a loss of investment, and further south in Brazil, the largest economy in Latin America, weak industrial production, rancorous politics and high unemployment are killing off potential for growth.

Locally, the central banks of India and Thailand have slashed interest rates – in Thailand the effort is to curb its strong currency – and more cuts are expected.

The good news, if there is any, is for local expats and Thai importing anything into the country or travelling overseas. The Thai baht one of the few shining lights in the world economy at the moment.

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Tim Newton has lived in Thailand since 2012. An Australian, he has worked in the media, principally radio and TV, for nearly 40 years. He has won the Deutsche Welle Award for best radio talk program, presented 3,900 radio news bulletins in Thailand alone, hosted 360 daily TV news programs, produced 1,800 videos, TV commercials and documentaries and is now CEO and writer for The Thaiger - Website, Radio, TV, Facebook, Instagram and Twitter. He presented for CNN, Deutsche Welle TV, CBC, Australia's ABC TV and Australian radio during the 2018 Cave Rescue and provides stories for Feature Story News as the south east Asian correspondent.

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Bangkok

Central opens first luxury outlet at Suvarnabhumi on August 31

The Thaiger & The Nation

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Central opens first luxury outlet at Suvarnabhumi on August 31 | The Thaiger

Central Village, “Thailand’s first international luxury outlet”, located near Suvarnabhumi Airport in Bangkok, will officially open on August 31.

The Nation reports that the design of the 5 billion baht facility, owned by the Central Pattana group, will “highlight Thai architecture and cultural identities” and shoppers will find at least 130 well known international luxury and lifestyle brands.

“More than half of the brands are opening their first outlet shop in Thailand, and over 60 have chosen to open their exclusive outlet store only at Central Village, with discounts of 35-70% every day.”

Dr Nattakit Tangpoonsinthana, the executive vice president for marketing at CPN, says that Central Village is pioneering the new segment of ‘Luxury Outlet’ for the first time in Thailand.

“We intend to establish this new retail platform, filling the gap in the market, by making it one of the world’s leading shopping destinations, similar to other popular tourist cities such as Japan, South Korea and Hong Kong, which also have leading outlets in Asia.”

“We are expecting to attract 6-10 million customers per year, which can be divided into 65% domestic, focusing on the young and mass affluent nationwide, and 35% international tourists, focusing on those who fly into Bangkok.”

The facility will also boast restaurants, a Tops Market, a children’s playground and tourist service points.

CPN also plans to promote creative Thai brands at the Thai Pavilion Zone, where Thai products and contemporary art fairs will be held throughout the year, promoted as “Thai Signature Cultural Events”. CPN will join hands with governmental organisations led by the Ministry of Culture and the Department of Internal Trade to hold events in a modern Thai theme presenting gifts and souvenirs, and local handicraft or OTOP items will be on sale.

Central Village will also provide convenient transportion to and from the facility, which located near Suvarnabhumi Airport, using a shuttle-bus service available at three pick-up points: CentralWorld, Udomsuk BTS Station and Novotel Suvarnabhumi Airport Hotel. Tourists will be at ease in dropping by at Central Village on their way to and from the airport, according to a release on Wednesday.

SOURCE: The Nation

Central opens first luxury outlet at Suvarnabhumi on August 31 | News by The Thaiger

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Business

Former finance minister says government shouldn’t bail out Thai Airways

The Thaiger

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Former finance minister says government shouldn’t bail out Thai Airways | The Thaiger

Former Thai Finance Minister and current Democrat list MP Korn Chatikavanich is voicing his concerns over the financial crisis gripping Thai Airways and objects to any plan to use taxpayer money to rescue the ailing legacy airline.

Korn says Thai Airways’ financial current troubles are similar to the situation in 2008, when the company struggled to find money to repay its debts.

He says he agrees with Banyong Pongpanich, a veteran investment banker, that the national carrier must cut costs.

Korn, when acting as Finance Minister a decade ago and asked by Thai Airways to help bail them out, said at the time he would not guarantee new loans, that the company must have a rehabilitation plan and that they must cut costs.

The Democrat MP said the government at the time brought in a new management team and professional board members to Thai Airways and the airline made profits in 2009 and 2010, but the airline went back into the red a year later and has remained in debt ever since.

He noted in a Thai PBS World article that tourist arrivals in Thailand have increased every year and other local airlines have made profits, except Thai Airways.

Former finance minister says government shouldn't bail out Thai Airways | News by The Thaiger

Democrat MP Korn Chatikavanich – Facebook

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Business

Executives at Thai Airways asked to take pay cut

May Taylor

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Executives at Thai Airways asked to take pay cut | The Thaiger

PHOTO: Thai Airways and Thai PBS World

“An unnamed source in the Transport Ministry says the airline’s financial predicament is very serious and puts it at risk of bankruptcy.”

The country’s national flag carrier, Thai Airways, could be in deep financial trouble and may need to delay repaying its debt or seek new loans.

Thai PBS World reports tat the airline’s president Sumet Damrongchaitham says he has asked senior executives at the airline to voluntarily reduce their meeting allowances and salary in order to help the airline survive this latest challenge.

Mr Sumet includes his own remuneration in the proposed cuts.

“This is just one of the measures to cut costs so that THAI will be able to compete in the aviation industry. The spirit of the board and executives will inspire others in our organisation to realise that it is high time that we join forces in all ways to survive this crisis. Whatever can be sacrificed must be sacrificed.”

Mr Sumet also reassured staff that the cuts would be applied to management only and would not affect the quality of Thai Airways’ services.

An unnamed source in the Transport Ministry says the airline’s financial predicament is very serious and puts it at risk of bankruptcy. The source puts Thai Airways’ total debt at around 245 billion baht.

Purchasing a new fleet of planes, worth an estimated 156 billion baht, would make it the world’s most indebted airline, should permission for the purchase be granted.

SOURCE: Thai PBS World

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