Economics: Yingluck orders “All” Thai economic related units to be prepared for potential “Euro Crisis” deterioration

Most guys can handle “Exposure to the Euro Crisis” but exposure to Thai chicks is a different matter

  • By Pooky, Thai Intel’s economics journalist

Local press reports that Thailand‘s prime minister have ordered all of Thailand’s economic related units to be prepared for potential impact from the Euro Crisis, if it deteriorates further.

  • “The prime minister is concerned about the Euro Crisis impact on Thailand,” local press reports.

A few days back, the Thai King, officially endorsed Yingluck‘s approval for her economic guru to chair Thailand’s central bank. Her guru and the Thai central bank governor differs at times, but local press reports the latest is that both have met “Un-Officially” to discuss a wide range of issues, including interest rates.

Earlier, there was a great fear that Thailand’s inflation rate would spiral out of control, as a result of inflation becoming a political tool by Thailand’s opposition, that promoted a campaign that everything is expensive in Thailand, giving merchants the opportunity to increase price.

  • However, latest food price figures, indicates prices are falling rapidly.

Meanwhile, Thailand’s economics minister, Kittirat, a former head of an investment fund, was ordered by Yingluck to hold a meeting every week, specifically, to follow the global economic situation.

  • Foreign fund flow into Thailand wise, it is a mixed picture at this point.

Thailand is highly dependent on exports, however, Kittirat have been attempting to switch Thailand’s reliance on exports, to internal Thai situation to drive growth, in the short-term, and re-structure the Thai economy fundamentally to rely less on exports.

Thailand’s GDP figure for this year, is highly uncertain, with the World Bank giving a figure of about 4.5%, while many other units, project it to be close to 6%.

Local economist says manufacturing in Thailand is returning to normal operation mode rapidly, however, a rainy seasons looms, and if Thailand is hit again by a severe flooding, apart from Thailand’s economy, Yingluck’s government may lose the legitimacy to govern. Service sector wise, such as banks and tourism, local economist says Thai banks will benefit more from reduce tax rate while local tourism industry is being hit hard by the wage increase compounded by the weak global economic outlook.

  • Most global press, such as Reuters and Bloomberg, have taken an extremely anti-Yingluck position on her economics management of Thailand, particularly related to her policy on wage increase and rice policy.

Thailand’s TDRI says higher wage will force Thailand’s SMEs to shift gear out of the low-end product trap, while Yingluck says higher price of rice is benefitting rice farmer, which is her priority, and that Thailand is willing to sell rice to the global market at a loss from what it bought from Thai farmers-to get rid of the growing stock.

Local economist and business leaders, are mostly anti-Yingluck, and part of the Thai establishment, and apart from critical of her economics policies, have been calling on Yingluck to focus more on economics and less on politics-pointing to a money laundering bill that is critical to Thailand’s economy.

  • The Thai Parliament is currently discussing the bill.

Politics wise, Yingluck have averted a political crisis that have the potential to plunge Thailand into another civil war, however, that crisis looms in the future, if the Thai establishment and the Yingluck can not come to terms-with a future election, being the potential outlet for a troubled Thai politics.