Saturday, April 18, 2009

Stock Exchange of Thailand index down 0.2%

Submitted on Saturday, 18 April 2009 Stock Exchange of Thailand index down 0.2%

Stock Exchange of Thailand (SET) on Thursday closed at 452.97, down 0.91 or 0.20% in trade worth 22.14 billion baht.

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SET index down 0.2%

Thailand’s economic growth is falling by more than earlier expected amid a sharp and continuing decline in global trade.

With unemployment on the rise, the number of people living under the poverty line will likely increase. Employment opportunities for workers in the urban informal sector, such as contract workers in manufacturing, in construction, and in tourism are shrinking, and it is unclear if they can go back to agriculture. As the government plans another economic stimulus program, considerations should be given to measures that will boost employment and specifically target these workers.

The Thai government announced an economic stimulus program totaling 117 billion baht ($3.34 billion). The program included a host of short-term measures to boost household consumption and assist lower-income families. The government is now preparing a second stimulus package worth 1.6 trillion baht ($45 billion). Among other initiatives, this package focuses on public investment in infrastructure projects, which the government hopes will help create 1.6 million jobs. “The infrastructure investments, if implemented, will help generate growth and improve Thailand’s competitiveness,” said World Bank. “However, it is worth noting that financing for infrastructure has been available for the past few years. What has suppressed investment was not funding, but rather political and institutional constraints.” While the impact on the real sector has been larger than expected, the global crisis has not shaken the Thai financial sector. The World Bank attributed this to Thailand’s strong macroeconomic fundamentals; low external debt coupled with high international reserves; and a sound financial sector, which has undergone a series of reforms following the 1997 crisis.

In December 2008, the overall economy in Thailand contracted from the same period last year. On the supply side, manufacturing production and tourism sector continued to contract, while farm income slowed down as a result of the deceleration in both major crop production and price. On the demand side, export, investment as well as import also contracted, while private consumption slightly improved from last month due to the cease of political turbulence as well as extended New Year holidays. Overall economic stability remained sound in Thailand . External stability was upheld by high international reserves, while trade and current account were close to balance. Regarding internal stability, inflation rose from last year in line with higher oil prices, despite a downward trend during the second half of the year. Unemployment rate in Thailand remained low but employment started to deteriorate in the forth quarter, particularly in the production sector affected by economic slowdown.

SET index down 0.2%

SET index down 0.2%

From September 15th to November 25 th before the takeover of the airports, the baht has depreciated by 2 percent against the US dollar. It has, however, appreciated against regional currencies by 6 percent. Similarly, the nominal effective exchange rate (NEER) had appreciated by 2 percent.

Loan growth in Thailand, however, will slow down next year. As the economy slows down, liquidity in the global markets tightened, and corporate balance sheets weaken, commercial banks have signaled that they will focus more on risk management than on loan growth. Commercial banks’ loan growth next year will likely be in a single digit after registering 11.2 percent growth as of October this year.

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