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Finance Minister foreshadows slowing economy in 2019

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Finance Minister foreshadows slowing economy in 2019 | The Thaiger
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“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

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Business

Bank of Thailand takes action to curb Thai baht’s strength

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Bank of Thailand takes action to curb Thai baht’s strength | The Thaiger

The Bank of Thailand has moved forward measures, originally meant to begin early 2021, but most of which will now take effect from end of this month. The end result is that the new rules will make it easier for Thais to shuffle money overseas and invest in foreign assets. It will also make is easier for Thai citizens to hold foreign currency in local banks. The new rules will also require the registration of local and overseas bond investors.

“Following the U.S. elections and positive news on Covid-19 vaccine development, investors have turned toward investing in emerging markets, including Thailand. The situation has resulted in strengthening the baht quickly and can impact economic recovery.”

“The registration of bond investors will allow close monitoring of investor’s behaviours and thereby enable the implementation of targeted measures in a timely manner.”

Last week the Bank of Thailand assessed that the Thai baht’s recent rapid gains could affect the country’s “fragile” economic recovery. The Thai government has called on the central bank to do its best to use what tools it has at its disposal to restrain the baht to protect exports.

Khoon Goh, head of Asia research at ANZ Banking Group, says that he central bank also will continue to resort to direct intervention in foreign-exchange markets.

“The issue here is that local investors have a very strong home bias. Making it easier to invest overseas may not actually encourage them to do so.”

The Thai baht has been the 2nd best performer in Asia this month after foreign investors turned net buyers of almost $2.4 billion of bonds and stocks as appetite returns for riskier emerging-market assets amid a weak dollar, according to Bloomberg.

The Thai baht had recently rallied 8.8% from this year’s low in April, hitting a 10 month high last week.

SOURCE: Bloomberg

This morning, Thai time…

Bank of Thailand takes action to curb Thai baht's strength | News by The Thaiger

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Technology

Hotel investment group launches world’s first “green” hotel fund

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Hotel investment group launches world’s first “green” hotel fund | The Thaiger

Destination Capital, a hotel investment group in Bangkok, has announced that it will launch the world’s first ever “green” hotel fund. The fund will acquire hotels and implement sustainability systems and procedures to promote long term environmental and financial sustainability in investments using the EDGE certification programme. EDGE, an online platform, is an innovation of the International Finance Corporation, which helps property developers to build and brand “green” establishments in a fast and affordable way. EDGE is used by more than 170 countries and reportedly has kept almost 230,000 tonnes of carbon dioxide annually from entering the atmosphere.

DC’s fund, titled Descap I, is part of its efforts to acquire freehold, 4 star hotels in prime destinations all over Thailand. James Kaplan, the CEO of DC, says he sees opportunities to renovate hotels to accommodate “green” technology and systems due to the current Covid pandemic that has ravaged the tourism sector in the kingdom.

“Destination Capital’s adoption of the EDGE certification program will provide the Descap I with the opportunity to gain a competitive advantage by differentiating our products and improving carbon emissions of the hotels.”

“If there is one thing we have learned during Covid-19 it is that the environment and nature recover quickly from poor resource management practices. Our participation in EDGE will serve to encourage the hospitality industry to adopt best practices with respect to better managing our scarce resources, raise broader consciousness about global warming and stem the tide of environmental degradation. We will implement operational elements to reduce water consumption, reduce waste emissions, reduce electricity use, and to the best of our ability eliminate plastic usage.”

Descap I, is a Thai Private Equity Trust. The company partners with Private Equity and Institutional Funds to source hotel acquisition opportunities and manage assets in the Asia Pacific region, turning its main focus to Thailand.

SOURCE: Pattaya Mail

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Economy

15 Asia-Pacific countries form the world’s largest trade bloc, the great RCEP reset

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15 Asia-Pacific countries form the world’s largest trade bloc, the great RCEP reset | The Thaiger

After 8 gruelling years of negotiation, 15 countries have signed onto the largest free trade bloc in history. In a joint statement, the leaders of the countries, signatories of the trade deal, say RCEP (Regional Comprehensive Economic Partnership) will form a crucial part of economic recovery once the pandemic is over.

The deal excludes the US, which withdrew from a rival Asia-Pacific trade pact 3 years ago. President Donald Trump pulled his country out of the Trans-Pacific Partnership in 2017. That deal would have involve 12 countries and was supported by Mr Trump’s predecessor Barack Obama as a way to counter China’s surging power in the region.

Now, the leaders of China, Australia, Japan, New Zealand, South Korea and the 10 ASEAN nations, have signed the free trade agreement which covers 2.2 billion people and 30% of the world’s economic output. The new free trade bloc will be bigger than both the US-Mexico-Canada Agreement and the European Union.

The deal sets the terms of trade in goods and services, cross-border investment and new rules for increasingly important areas such as electronic commerce, telecommunications and intellectual property.

The leaders’ statement said the landmark trade pact “demonstrates our strong commitment to supporting economic recovery, inclusive development, job creation and strengthening regional supply chains as well as our support for an open, inclusive, rules-based trade and investment arrangement”.

The combined GDP of the signatories was about 30% of global GDP, covering nearly 28% of global trade.

India pulled out of negotiations last year because of concerns it would not be able to protect its domestic industry as well as its agricultural sector. India’s exclusion from the bloc reduces its size by some 1.4 billion people. But the statement from the signatories says the door is still open for India to join in and it would be “welcome”.

The deal is being seen as a significant step towards removing Asia Pacific trade barriers, and brings China under the fold of a larger regional bloc as its massive economy looks elsewhere for trading partners after the bruising US-China trade war.

Li Keqiang, the Chinese premier, says the deal is “a victory of multilateralism and free trade”. Australia’s PM, Scott Morrison, says the deal will “open up new doors for Australian farmers, businesses and investors”.

The trend for a more integrated trade flow around the region has suddenly accelerated amid the feuding between the US and China. The 2 economic superpowers had imposed billions of dollars of punitive trade tariffs on each other’s exports.

Analysts hail the RCEP agreement, saying that it’s flexible enough to stretch to fit the “disparate needs of member countries as diverse as Australia, Myanmar, Singapore and Vietnam”. But the agreement doesn’t establish unified standards on labour and the environment or force countries to open services and other vulnerable areas of their economies.

Donald Trump pulled the plug on negotiations when he pulled out of the Trans-Pacific Partnership, a deal previously which was seen as a way of curbing China’s economic influence. He later initiated the heated US-China trade war in 019 maintaining he wanted to reduce the amount of imports from China, saying the goods could be built back in the US.

15 Asia-Pacific countries form the world's largest trade bloc, the great RCEP reset | News by The Thaiger

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