IS IT ALL DOOM AND GLOOM IN THAILAND?
Moody's, the credit ratings and research company, yesterday predicted that throughout Asia it will be Thailand that suffers most as a result of the global economic crisis. It's easy to look these and other similarly negative media reports and lapse into a mild state of depression.
Yesterday I interviewed the President of one of Thailand's top banks. He gave a refreshing alternative view to what's happening and openly admitted he wasn't too worried.
His view is that because of the political instability of the past three years Thailand and the Thai people have held back on investment and spending and are therefore not as leveraged as other nations in the region. He added that while Thailand's GDP is being dragged down by the export sector and jobs will be lost, those companies are largely owned by foreigners so the net effect to Thai people will not be that much.
It's good to hear some optimistic views, and from someone with far more knowledge and experience that me. This interview, along with others, will appear in a new book which is set to be published in early April.
6 comments:
Can you confirm if the bank that your interviewee is the president of are not one of those bank in the Network Monarchy's Camp? They are Bangkok Bank and Kasikorn Bank. Also, it is not wise for people from government-owned bank to say too much negative things about the economy in general and the administration's policy in particular.
Saraburian. Thanks for your comment.
In this case I can confirm this interview was not with either Bangkok Bank or Kasikorn Bank. I'm sorry I cannot say more at this stage.
The book, which will be in English and is set to be published in the week prior to Songkran, will feature interviews with executives from all of Thailand's major banking organisations. I can guarantee it will be interesting.
I will, of course, have lots more about it in due course.
His comments sound like the sort of thing Tarisa Watanagase, Governer of the Bank of Thailand, would say - only to be taken back later.
Many of the companies whose exports are being significantly affected by the financial crisis may be owned by foreigners (or more accurately, are subsidiaries of foreign companies). However, the majority of employees (95%+) are Thais - who are suffering pay cuts and job losses.
65% of Thai GDP comes from exports, at least 7% from tourism (the bit that can be measured). That leaves domestic industries and construction. Well, construction is also being badly hit by the downturn, in particular the deepening glut of unsold condo units. It's estimated that the current overcapacity, including this years completions, will take three years to sell.
I think one of the reasons the President of a major Thai bank can feel so comfortable is because Thai banks are notoriously uncompetitive. They hold large reserves and maintain high lending rates to discourage borrowing.
'...while Thailand's GDP is being dragged down by the export sector and jobs will be lost, those companies are largely owned by foreigners so the net effect to Thai people will not be that much.'
'...the majority of employees (95%+) are Thais - who are suffering pay cuts and job losses.'
I'm glad I'm not the only one who has a problem with the first statement...
Yes - I agree with you.
I promise I've not taken that quote out of context, but once the book is published I can say more about what this person, and others, are saying in interviews with me.
I'm making sure I keep a digital copy of this particular one as I think there's a chance what he said might come back to bite him.
"IS IT ALL DOOM AND GLOOM IN THAILAND?"
Of course not. In the face of uncertainty, some people will speculate about worst cases, others will remain positive because that is part of their job description.
As economist Robert Shiller observes "Talk of a depression can lead to a depression."
http://www.nytimes.com/2009/02/22/business/economy/22view.html
This has nothing to do with Thai politics. This is the case in every economy on earth. Definitely a topic to broaden one's perspective on.
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