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NEWS UPDATES Asean Affairs        29  June  2011

Thais uneasy about rest of year

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A series of key developments over the remainder of the year pose potential risks to the Thai economy, Phatra Securities managing director Supavud Saicheua on Tuesday.

Factors to watch in the second half will be the handling of the US government-debt situation, US monetary policy, the risk of a delayed recovery in Japan, the public-debt crisis in the euro zone, a rise in bad loans in China, and the aftermath of the Thai elections.

"Some investors have slightly underweighted and some have stayed neutral on the local stock market," he said.

Phatra forecast Thai economic growth of 3.8 per cent this year, while the market consensus is about 4 percent, he added.

Supavud expressed pessimism about the global economic outlook, any slowing of which would adversely affect Thai exports.

He said that at the beginning of the year, the market was optimistic about the global economy, but it had grown concerned over the past two months about a weakening of the US economy and the public-debt crisis in Europe.

The International Monetary Fund two weeks ago slightly lowered its growth projection for the global economy to 4.3 from the 4.4 percent estimated in April, and significantly downgraded its growth forecast for the US economy to 2.5 percent from the previous 2.8 percent.

Supavud predicted that the US Federal Reserve was unlikely to continue injecting easy money into the market when its "QE2" quantitative-easing round ends this month.

He said the injection of excess liquidity had proved ineffective, since it was not encouraging US banks to lend more, contrary to what the Fed had expected.

The easy-money policy has instead encouraged investors to take high risks and resulted in rising commodities prices, not least for gold and oil, Supavud said.

The market is now also worried about the US budget deficit. The currently unfunded US government has debt obligations amounting to about US$50 trillion (nearly Bt1.55 quadrillion). Supavud said the administration needs to raise taxes and reduce welfare spending on healthcare due to its ballooning costs as a result of a rising aging population.

On the local political front, should the Pheu Thai Party win the upcoming general election and form the next government, it may find it is unable to function, as happened to the Samak Sundaravej administration in 2008, Supavud said, referring to the views of political analysts.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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