Author Topic: BoT: Consumption eroded by high debt  (Read 124 times)

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Offline Johnnie F.

BoT: Consumption eroded by high debt
« on: November 17, 2017, 01:12:52 PM »

People using state welfare cards at a shop in Nakhon Ratchasima. The household debt ratio is 77-78% of GDP. PRASIT TANGPRASERT

Swelling household debt is a major factor diminishing the purchasing power of lower-income earners, despite the improving economic recovery, says the Bank of Thailand's chief.

"Despite the rebounding economy, most Thais are not experiencing improvement because their debt burden is pressuring their purchasing power. The Bank of Thailand is working on this problem," Bank of Thailand Governor Veerathai Santiprabhob said at a seminar hosted by the Thammasat Economics Association.

The country's household debt-to-GDP ratio was at 80% in 2015 before declining to 77-78% at present.

The central bank recently raised the country's GDP growth rate to 3.8% this year, in line with the IMF and local economic and research house predictions.

For next year, the central bank has projected the country's GDP growth at 3.8%, partly because of a high base effect.

Economic expansion next year is expected from all economic engines, including export, government and private investment, domestic consumption and tourism. Private property investment has shown positive signs both in higher capacity utilisation and productivity investment.

Pipat Luengnaruemitchai, assistant managing director of research and financial institutions analyst at Phatra Securities, said even though Thai economic growth is expected to approach 4% this year, the recovery remains fragile as some sectors, particularly the low-income segments, have not benefited from the pickup in momentum, while farm product prices remain low and purchasing power is still weak.

It will take time for the economic rebound to trickle down to lower-income groups, he said.

A raft of risks is threatening economic recovery, including asset price fluctuation from prolonged low interest rates, financial bubbles in several countries, changes in monetary policy of major economies, US trade policy and geopolitical tensions, said Mr Pipat.

Fast-changing technology and ageing society are also threats to economic progress in the long run, he said.

Whether Thailand can attract investment in new technology and how to handle the obsolete technology in the country's production base are also challenges, said Mr Pipat.

Demographic changes also threaten the not-insignificant number of labour-intensive industries. The working-age population is reducing while retirees are growing in number, which will take a toll on welfare and economic growth, he said.

The stronger baht can be attributed largely to the country's current account surplus, expected to be close to 10% of GDP, and the US dollar retreat, he said.

To strike a balance, the country needs outbound investment, he said.

He ruled out a cut in interest rate as economic growth will help inflation return to the Bank of Thailand's inflation targeting band.

While the economic recovery is gaining traction around the world, inflation is still weak, which this could be a reflection of structural change.

Meanwhile, Amonthep Chawla, head of research at CIMB Thai Bank, said that export and tourism sectors are the main engine driving the economic growth but domestic demand and consumption remain tepid as people are repaying debt instead of spending.

Private investment is also subdued as companies delay their investment plans due to uncertainty about future policies, leaving production capacity unused and inventory left over.

Even though exports have picked up, the growth is the lowest pace in the region, he said, adding that merchandise shipment prospects next year will not be as robust as it was this year, and how much strong exports can help boost domestic consumption and investment warrants monitoring.

Mr Amonthep forecasts that the economic growth in 2018 would be at the similar pace to this year as domestic demand will play a greater role and offset softer exports and tourism.

Local interest rate is likely to be kept unchanged until next year, but the central bank needs to oversee financial stability, he said.

Bangkok Post
Fun is the one thing that money can't buy
 

Offline thaiga

Re: the poor are getting poorer in Thailand - the rich are getting richer
« Reply #1 on: November 19, 2017, 06:56:19 PM »
Poor really are getting poorer in Thailand



 ACADEMICS SAY CURRENT WELFARE POLICY IS COUNTER-PRODUCTIVE, MAKING RICH RICHER

THE POOR are getting poorer, while the rich are getting richer due to the government’s policy approach to welfare and social enterprise, according to academics who presented at a seminar on civil state policy held at Thammasat University yesterday.

 Official statistics show a trend in which the rich tend to get more benefit from the government’s policies than the poor, which is in sharp contrast to the policy’s intent to fight poverty, said Decharut Sukkumnoed, an economics professor at Kasetsart University.

 Decharut cited statistics from Office of the National Economics and Social Development Board, which indicated that the number of people below the poverty line increased by nearly 20 per cent in 2015-2016.

Some 5.81 million people lived in poverty last year, defined as having an income below Bt2,920 per month.

“From the statistics, we also found that the number of poor people is on the rise, because the daily expenses of the poor, especially food prices, are increasing.

“But on the other hand their income is getting lower, especially the income of poor people in the agriculture sector,” he told the seminar, sponsored by the People’s Party for Freedom.

In comparison, said Decharut, statistics showed “the richest group of people in Thai society … have increasing income, especially after the coup three years ago”.

Decharut warned that this phenomenon indicated a serious problem in Thai society.

It clearly shows a structural problem in society and that the civil state policies are making the situation worse, he said.

He said the civil state system allowed big conglomerates, which compose the highest income group of society, to get more economic benefit than do the poor from the government’s projects intended to help the poor.

The policy is giving the rich an opportunity to take advantage of the poor, he said.

 Another academic, Surawit Wannakrairoj, a professor from Faculty of Agriculture of Kasetsart University, pointed to the civil state’s farming policy as an illustration of what is wrong. The policy intends to modernise Thailand’s agriculture and boost farmer incomes, he said.

In practice, however, many policies and laws, such as the big plantation policy or Plant Varieties Protection Act, are instead helping big conglomerates in the agriculture sector to tighten their grip on farmers and force them to use only the conglomerate’s supplies.

Decharut said that welfare does not much help the poor. The government is now facing its biggest budget deficits in modern history, accounting for up to 23 per cent of its total revenues.

He said the government budget was over-spending on many items instead of diverting more funds to help the poor.

One of the key policies championed by the government is to help low-income people whose annual earnings are less than Bt100,000 per year.

A social welfare card system was recently introduced for a total of more than 11 million people nationwide who had earlier registered to get state benefits.

These cardholders are entitled to subsidies on purchases of necessary goods at government-sponsored retail shops as well as free but limited public transport on Bangkok’s Skytrains, subway and buses among other benefits.

Those earning less than Bt30,000 per year will also get vocational training to increase their opportunities to get better jobs as a means to tackle poverty in the long run.

The Nation
Anyone who goes to a psychiatrist should have his head examined.
 

Offline Johnnie F.

Those earning less than Bt30,000 per year will also get vocational training to increase their opportunities to get better jobs as a means to tackle poverty in the long run.

Sure, they'll be trained to work better, so the business owners can get higher profits out of their work, teaching them how to do business on their own would help them more.
Fun is the one thing that money can't buy
 

 



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