Connect with us

Business

Finance Minister foreshadows slowing economy in 2019

The Thaiger & The Nation

Published

on

Finance Minister foreshadows slowing economy in 2019 | The Thaiger

“We expect the GDP growth for 2019 to be at least 4 per cent. However, the economic growth for 2019 is expected to be slower than 2018,”

Finance Minister Apisak Tantivorawong predicts Thailand will encounter slower economic growth in 2019,. The Minister cites uncertainty from the trade war between China and the US, the upcoming Thai election and a slump in tourism as the key factors.

The Nation reports that Apisak made the comments at an event organised by the engineering faculty of Chulalongkorn University.

“The peak of the current economic cycle was during the first two quarters of last year, followed by an acute slump in the third quarter. Given that consumption and private investment are still continuously growing, we expect the economy to continue to grow in 2019, but at a slower pace.”

The first two quarters of this year saw growth of 4.8 per cent year on year. The economy managed growth of only 3.3 per cent in the third quarter and a recovery is expected in the fourth quarter, but not at the pace seen for the first two quarters, Apisak said at the Chulalongkorn event, the Engineering Dinner Talk.

Growth in exports is also expected to slow in 2019. This is due to the lagging negative impact of the trade war between the US and China, with some of the consequences to be felt next year.

“Many have suggested that Thailand can gain from the trade war through replacing Chinese goods in the US market and manufacturers moving their production base from China to Thailand. However, in the long-term, the trade war will only hurt the Thai economy,” the minister said. This is because Thailand is deeply entrenched in the supply chain, which is affected by the tariffs imposed by the two economic giants, he said.

At the event, Apisak addressed the relationship between the upcoming election and growth in foreign direct investment in the Kingdom.

“After talking to many foreign investors, they have said that they are holding off investing in Thailand until after the election. This is because they fear that political stability will be damaged as a result of the election,” said Apisak.

The final key factor likely to contribute to slower economic growth in 2019 is the decline in tourism. Visitor numbers have slumped significantly since a boat accident near Phuket in the middle of this year.

In August, 867,000 Chinese tourists visited the Kingdom, down 11.7 per cent month on month. In September, only 648,000 came, marking an even steeper 14.89 per cent fall month on month, according to the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB).

Apisak said the boat accident – which claimed the lives of dozens of mostly Chinese tourists – had led many Chinese to question Thailand’s safety standards, but it was not the only cause of the fall in tourism numbers.

“Tourism has also fallen as a result of external factors which we cannot control,” he said.

“The slowing global economy has led key tourist groups visiting Thailand to decrease.

“The slowing of the Chinese economy as a result of the trade war and the weakening of the yuan currency have led to falls in the number of Chinese tourists globally.”

With the declines in exports and tourism, Apisak said investment in the Industry 4.0 policies championed by the government, with the Eastern Economic Corridor (EEC) as a major component, will be the key driver of growth in 2019.

“The EEC is expected to be a key focal point of investment in 2019,” Apisak said. “With strong private investment levels in 2018, we expect this trend to continue into next year. Public investment in infrastructure and transportation throughout the country will intensify in 2019.

“Meanwhile, foreign direct investment into the EEC is also expected to rise after the election in February next year.”

Finance Minister foreshadows slowing economy in 2019 | News by The Thaiger

Finance Minister Apisak Tantivorawong speaking at Chulalongkorn University

ORIGINAL STORY: The Nation



Do you need help with your business? Are you searching for a new job? Or an employer looking to hire? Try JobCute today.

Read more headlines, reports & breaking news in Thailand. Or catch up on your Thailand news.

Business

Thailand ‘slightly impacted’ from a no deal Brexit

Tanutam Thawan

Published

on

Thailand ‘slightly impacted’ from a no deal Brexit | The Thaiger

The EU has agreed to postpone Brexit from next Friday and give UK PM Theresa May time to get her deal approved in Parliament.

The PM had hoped to persuade the EU to delay the March 29 Brexit date, set in law, to June 30. But the EU country leaders have offered her two dates…

  1. A delay until May 22 if MPs approve her withdrawal deal in next week’s vote.
  2. 2. A shorter delay until April 12 if they reject it. But the UK will have to set out its next steps – another extension or leaving without a deal.

But the EU says a further extension beyond April 12 is only possible if the UK agrees to hold EU elections on May 23.

As to how British lawmakers can sort things out in a few weeks after two years of debate remains to be seen.

But economists are warning Thailand to brace for some fallout from the UK exit from the EU because it is more likely to happen than not, just a matter of when.

First of all, no-deal Brexit means the UK will no longer be a part of the EU bloc and will have to revert to World Trade Organisation rules on trade. Made-in-UK goods will be subject to EU tariffs, like that of other non-EU nations. Meanwhile, the price of the EU-made merchandises in the UK may become more expensive as they will have to bear the cost of imported tariffs as well.

According to SCB Economic Intelligence Centre, a no-deal Brexit will impact the UK economy and, consequently, affect British purchasing power overseas. British demand for Thai exports, namely automobiles and parts, and processed chicken meat may reduce.

British expats will also have to face a worsening rate of exchange with the Thai baht, lessening the power of the British pound they bring into the Kingdom for living, retirement or holidays.

Nonetheless, the overall impact on Thai exports should not be significant because the Thai outbound shipment to the UK represents only 1.5 percent of total Thai exports, according to the the think tank of Siam Commercial Bank.

Brexit may also prompt Thailand and the EU to renegotiate some trade deals such as import quota to the EU. Thailand may have to renegotiate the export quota with the EU on processed chicken, as an example. And Thailand may also have to negotiate another chicken export deal with the UK separately after the UK separation from the EU.

Auramon Supthaweethum, Director-General of Department of Trade Negotiations, said Brexit could complicate the process of Thai-EU free trade negotiation, which is scheduled to resume in the second half of this year.

“At any rate, after the Thai general election, Thailand is set to continue to negotiate with the EU on the Thai-EU free trade deal regardless of the UK decision.”

On the bright side, Brexit may prompt the UK investors to pay more attention to potential markets beyond the EU border. At present, direct investment from the UK to Thailand is small, accounting for only 3.5 percent of the total foreign direct investment, according to SCB.

Kasikorn Research Centre note that in addition to Brexit, Thai investors should take into account the consequences of the EU and Japan’s Economic Partnership Agreement which came into force last month.

The EPA could affect the exports of Thai automobile which is part of the Japanese’ supply chains. The EPA will end tariffs of auto and parts between Japan and EU by 2026.

Kasikorn Bank’s think tank says, in light of Brexit, some Japanese automakers will likely relocate some of their car production from the UK to other EU countries to maintain the EU trade privileges. Nissan and Honda have already flagged this probability.

Thus, the destinations for Thai exported automobiles and parts, which are part of the supply chains of Japanese automakers, may also change in accordance with Japanese automakers’ revised business strategy.

While the actual impacts on trade and investment remain to be seen, Brexit has been chiefly attributed to the volatility of the British pound since the referendum in 2016.

The SCB Economic Intelligence Centre say the weaker British pound could dampen the sentiment of British arrivals. They note that UK holidaymakers are among the high spenders in Thailand with 77,600 baht per trip.

“At any rate, since the receipts from British travelers represent only 2.1 percent of the total, the impact on the Thai tourism industry will be insignificant.”

Continue Reading

Bangkok

Doubt over ‘majority support’ in survey about drilling near Si Thep historical park

Tanutam Thawan

Published

on

Doubt over ‘majority support’ in survey about drilling near Si Thep historical park | The Thaiger

Locals are up in arms about results from a public hearing into oil drilling project near the Si Thep historical park in Phetchabun province (just north of Bangkok). They are expressing doubt and concern over results of a public hearing that appear to show support for the project.

Thai PBS reports that Mr. Prachuab Narkthien, chairman of the club of village headmen and kamnan in Si Thep district, says he doubted the credibility of the result, which shows 62.6 percent are supportive of the drilling project near the ancient temple.

Since most people in Phetchabun province, especially in Si Thep district, have opposed the project from the beginning, Mr. Prachuab said he wondered where the 62.6 percent figure had come from.

Oil drilling by ECO Orient Resources was put on hold due to strong opposition from the Fine Arts Department and the public for fear that vibrations caused by drilling may damage the fragile ancient ruins, which await recognition by UNESCO as a World Heritage site.

Mr. Prachuab said that the public hearing was unusual because only selected people were invited to attend and he was not invited, despite the fact that he represents the district’s cultural network. He went on to say that only officials at provincial and district levels support the project while the general public is against it.

The Fine Arts Department earlier proposed the creation of a buffer zone to project the ancient ruins, believed to be those of a city of some 80,000 people at its peak during the first millennium AD.

Doubt over 'majority support' in survey about drilling near Si Thep historical park | News by The Thaiger

Continue Reading

Business

People have short memories. Why the Boeing 737 MAX will survive the current crisis.

Tanutam Thawan

Published

on

People have short memories. Why the Boeing 737 MAX will survive the current crisis. | The Thaiger

If history is anything to go on people’s current fears about the Boeing 737 MAX jets will be short-lived.

The make0ver of the venerable 737 plane, the most popular passenger jet in history, was supposed to set Boeing on a path to success. Airlines said it was the plane they wanted – perfect for short-haul, cheap to run, new efficient engines.

Boeing didn’t go down the path of coming up with a new single-aisle jet to compete with the new Airbus 320 Neo series, instead they decided to come up with a revised 737. The revised plane has slightly larger and more powerful engines, is a little higher off the ground, features some new hi-tech construction materials making it lighter, upgraded avionics and, importantly, new software that was meant to make it even safer.

You can identify a 737 MAX because of the two-spoke winglets at the end of the wings.

Now two of the new series 737 MAX have crashed within six months with investigators speaking about ‘similarities’ in the early days of the crash investigation.

Travel site Kayak even added an option to screen out flights using the 737 Max jets.

If panic persisted, the media kept writing stories about it and airlines were unwilling to buy it, the future of Boeing would be in jeopardy.

That’s the current situation. But it also reflects a similar time during a four-month period in late 1965 and early 1966 when four new Boeing 727 jets crashed. Three of the crashes occurred while the planes were attempting to land at US airports. Two of them happened within three days of each other in November 1965. The 727 was the first commercial jet to fly with less than four jet engines.

Like the 737 MAX crashes, the US regulator, the FAA, defended the planes’ safety and refused to ground the 727s at the time. It issued a statement the day after the third fatal 727 crash, saying that it could find no pattern in the crashes. It declined to ground the jet.

At the time Boeing was still riding on its reputation built around the Boeing 707 jet, the first successful commercial passenger jet (the British Comet was the first commercial passenger jet in 1952 but had a series of catastrophic crashes from which it never recovered profitable sales).

Eventually the Civil Aeronautics Board, which was created in the wake of the crashes, cleared the 727 and blamed pilot error for the accidents. Pilots were not prepared to fly the 727, and that led to the crashes. The new wings of the revolutionary (for the time) 727 made the plane descend much faster than was possible in the past, giving pilots the chance to slow the planes down faster and land on much shorter runways than the jets of the time, a big selling point.

But the pilots at the controls of the four doomed jets in the 60s were apparently unprepared for how quickly the planes would descend with the new wings.

But Boeing did get past the 727 crisis. Increased training led to safer operation of the plane, and these kinds of crashes ended. Customers soon forgot.

The 727 went on to become the bestselling jet of its time for Boeing. It eventually sold 1,831 of the jets, a lot when flying in jets was still mostly reserved for the ‘jet set’ and people able to afford the expensive ticket prices of the time.

“I don’t know that people will care that much for very long,” says Shem Malmquist, a Boeing 727 and 777 Captain.

“They only worry about the price of the ticket.”

People have short memories. Why the Boeing 737 MAX will survive the current crisis. | News by The Thaiger

The Boeing 727 suffered four high-profile crashes in the mid 60s and went on to become a flying favourite.

Continue Reading

The Thaiger Newsletter

Keep up with all the day’s news. Subscribe here.

The latest news and information from Thailand.

* indicates required

Trending