pro-growth and investments Yingluck hits a brick wall at the Thai central bank
- By Pooky, Thai Intel’s economics journalist
As debate in Thailand between the Thai central bank head, appointed by the previous Thai government, and the new government “Rages Out of Control,” Indonesia is increasing its spending by about 19% or US$20 billion.
- Thailand Troubles Continue:
In Thailand, the latest report is that the Thai central bank has affirmed its position of keeping inflation at low rate, no matter how that impacts Thailand’s GDP growth-with a policy tool of higher interest rate to kill both growth and inflation.
However, while the Thai central bank is putting a break on growth, Kittirat, head of the new Thai government economic team-said he is targeting a Thai GDP growth that is 1% higher than what the Thai government election campaign said-and made calls to the Thai central bank to keep interest rates low-to keep business cost low.
Meanwhile, Thailand finance minister, Therachai, is trying to “Negotiate” with the Thai central bank to adjusts its inflation target-however, on-top of inflation target, the central bank have thrown the question about Thailand’s future debt profile for Therachai to consider-relating to government spending.
“The battle to see who runs the Thai economy,” some Thai media is reporting of the relation between the Thai central bank and the government.
Meanwhile, many Thai economist told local press that to shield Thailand from global economic environmental risk, Thailand needs to turn more to internal Thailand as the engine of growth, and focus on ASEAN integration.
- Indonesia on the move:
According to wire service, Indonesia plans to boost government capital spending by 19 percent next year with President Susilo warning a global slowdown may disrupt growth.
The spending will amount to about US$20 billion, expecting to push economic growth to quicken to 6.7 percent, Susilo told parliament in Jakarta today.
“The financial crisis in Europe, inflation and the risk of overheating in China and India, and the ongoing fiscal crisis in the United States are additional risks for the global economy this year and next year………All this we must watch out for and anticipate so that it won’t disrupt the economy of our country,” said Susilo.
- CIA’s Analysis:
Meanwhile, sources told Thai Intel that the CIA had made an analysis that said the leader in the global economy in the next decade, will be India, China and ASEAN-based on a variety of factors, specific to each country-but also on a fast economic integration of ASEAN-China-India, where the CIA says, currently, China is the biggest trading partner of ASEAN, with India fast competing for ASEAN trade and investments.
The following is from Reuters:
ASEAN to deepen trade relations
By John Ruwitch
HANOI | Mon Aug 8, 2011 9:08am IST
(Reuters) – Asian trade officials will try to tighten the ties that bind their economies when they meet in Indonesia this week in the face of falling demand and quickly fading confidence in developed world economies, exacerbated by the U.S. downgrade.
Officials from the 10 members of the Association of South East Asian Nations (ASEAN) are expected to try to advance plans to form an ASEAN Economic Community by 2015, and for further integration beyond that date, at the meeting on the tropical island of Sulawesi.
So far in its goal of integration, ASEAN has eliminated 95 percent of tariffs and non-tariff barriers, and is working on deepening transport links and on a common visa.
With the U.S. recovery in increasing doubt and Europe neck-deep in a debt crisis that could worsen, the stakes are clear for Asian policymakers, economists say.
“Intra-regional trade that’s improving clearly provides a buffer for the region itself against headwinds which may develop in other parts of the world, primarily the developed countries,” said Prakriti Sofat, economist at Barclays Capital in Singapore.
GRAPHIC on Asia’s U.S. export exposure, click link.reuters.com/xem82s
GRAPHIC on Asia’s financial exposure, click r.reuters.com/sex82s
GRAPHIC China-ASEAN trade, click link.reuters.com/wem82s
The ASEAN states will also hold discussions in the Sulawesi city of Manado with regional dialogue partners including Australia, China, India, Japan, New Zealand and South Korea. The United States and Russia will attend for the first time, too.
They will all be keen to boost business in the region.
“Probably, there will be a lot of concerns about uncertainty in the global economic outlook. If anything, I think there will be increasingly more efforts to promote domestic demand at a regional level,” said Donna Kwok of HSBC in Hong Kong.
HARDER ISSUES
China helped Asia lead the global post-2008 recovery, although some wonder how much more weight Beijing will be willing to pull as it grapples with inflation at a three-year high.
Chinese demand has softened, but remains key. And for Beijing, the health of the rest of the region is important, said Zhang Ling, a researcher at the Chinese Academy of Social Sciences, a top government think tank.
“Chinese exports to ASEAN nations rebounded very strongly after the global financial crisis, much faster than to traditional markets,” she said.
“China will lean towards big developing economies, including the ASEAN nations and BRIC countries, to forge trade and economic relations in the next step, as economies in these markets are growing much faster than its traditional partners.”
ASEAN has a combined GDP of $1.5 trillion and is home to nearly 600 million people, rich raw materials, natural resources and cheap labour. But it is widely diverse.
Its members comprise Singapore, Indonesia, Malaysia and the oil-rich kingdom of Brunei among the wealthier nations, Thailand and the Philippines in the middle and Cambodia, Laos, Myanmar and Vietnam making up the rest.
A recent Asian Development Bank report said ASEAN so far only partly has free trade in goods, services and capital, but no labour mobility, no convergence of laws on competition, and no common monetary or fiscal policy.
“The focus now is on harder issues and how to move things forward to meet the 2015 goal for AEC,” the Manila Bulletin (mb.com.ph) quoted Philippine Trade and Industry Secretary Gregory Domingo as saying last week.
(Additional reporting by Langi Chiang in Beijing; Editing by Ron Popeski)
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