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Thailand economic monitor : April - June 2009 (English)

A solid financial armor could not protect Thailand against the impact of the global financial crisis on its real economy. Despite a sound banking system and low external vulnerabilities, the Thai economy contracted 5.7 percent between October 2008 and March 2009, as the magnitude and speed of the contraction in foreign demand, and resulting shock to the real economy, has been greater than anticipated. There continues to be little impact of the global financial crisis on Thailand's banks: liquidity remained adequate as financial institutions did not face solvency concerns given their adequate capitalization and lack of exposure to 'toxic' assets or risky derivative contracts. The combination of a sound financial sector, low external roll-over and balance-of-payment financing requirements, and, more recently, large current account surpluses, has led to capital inflows, build-up in reserves and an appreciation of the Baht relative to other currencies in the region. However, the impact of the global crisis on the real sector was far more severe than expected. Export volumes contracted by 8.9 percent in the fourth quarter of 2008, compared to the World Bank's forecast in December of a 3.0 percent expansion. Exports contracted a further 16 percent in the first quarter of 2009. The aggravation of Thailand's political crisis, which had been dampening investor and consumer confidence since 2006, compounded the shock to the real economy. As a result, real gross domestic product (GDP) contracted in the fourth quarter of 2008 and first quarter of 2009 after 38 quarters of growth, and is expected to contract for 2009 as a whole, the first annual contraction since the Asian financial crisis of 1997-1998.

Details

  • Author

    Gil Sander, Frederico Bhaopichitr, Kirida Sirimaneetham, Vatcharin Triratanasirikul, Nattaporn Anantavrasilpa, Ratchada

  • Document Date

    2009/06/01

  • Document Type

    Working Paper

  • Report Number

    56862

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Thailand,

  • Region

    East Asia and Pacific,

  • Disclosure Date

    2010/10/04

  • Disclosure Status

    Disclosed

  • Doc Name

    Thailand economic monitor : April - June 2009

  • Keywords

    information and communication technology;bank for international settlement;global financial crisis;small and medium enterprise;Public Debt Management;bank of thailand;Securities and Exchange Commission;Public Sector and Governance;low levels of capacity;foreign demand;stimulus package;private investment;state owned enterprise;asian financial crisis;public investment program;global trade volume;current account surplus;export of goods;debt sustainability analysis;gdp growth rate;Fiscal Stimulus;global economy;signs of recovery;farm income growth;high technology product;short-term external debt;elasticity of demand;state financial institution;bill of exchange;increase in consumption;interest rate volatility;demand for import;exchange rate fluctuation;public debt sustainability;variable interest rate;Social Safety Nets;quality of education;consumer price index;standard of living;reduction in unemployment;Capital Adequacy Ratio;expansionary fiscal policy;urban informal sector;implementation of reform;lack of exposure;public sector reform;chamber of commerce;balance of payment;positive multiplier effect;state of emergency;credit default swap;emerging market currency;high growth rate;import of goods;public debt stock;fiscal stimulus package;errors and omission;prudent fiscal policy;political uncertainty;contingent liability;capacity utilization;real gdp;external demand;industrial production;export sector;consumer confidence;private consumption;Fiscal Sustainability;budget deficit;political crisis;contingent liabilities;domestic borrowing;corporate sector;household consumption;domestic demand;Capital Inflows;financial account;Financial Sector;core inflation;vat receipt;raw material;financing need;asset quality;capital flow;fiscal stance;manufacturing production;fiscal space;long-term growth;goods export;net inflows;energy price;binding constraint;income inequality;skill shortage;manufacturing sector;external vulnerability;projection period;fiscal consolidation;asian countries;thai baht;Labor Market;primary balance;political unrest;trading partner;positive growth;political imperative;credit growth;capital good;import volume;commodity price;lending rate;domestic financing;Fiscal policies;international environment;regional market;export volume;water sector;international reserve;agricultural employment;reduced work;net outflow;overseas markets;portfolio investment;crop production;capital control;long-term competitiveness;inflation target;rising trend;nominal depreciation;high financing;export performance;export demand;merchandise export;working capital;export market;technology export;public transfer;debt indicators;agricultural price;employment prospect;downside risk;index data;employment data;import growth;import value;rural transportation infrastructure;monetary authority;effective frameworks;consumer good;Financing plans;equity security;direct loan;state enterprises;commodity import;principal repayment;supplementary budget;tax reduction;real wage;consumption measure;public consumption;domestic economy;unemployment rate;monetary expansion;economic slowdown;monetary policy;debt composition;external shock;consumer goods;large corporation;imported inputs;external factor;urban employment;Rural Poor;fixed investment;global demand;vehicle operation;mature market;supplier credit;trade pattern;employment indicator;social impact;financial system;import contract;world trade;foreign investor;food price;poor household;Public Spending;fuel price;limited income;limited prospects;political risk;dollar term;rural area;investment outflow;urban worker;anecdotal evidence;banking sector;asset growth;commercial bank;individual bank;adequate liquidity;foreign-currency debt;sound financial;real sector;minimizing risk;baseline scenario;fiscal balance;conservative assumption;political instability;Travel Receipts;occupancy rate;overseas visitors;alternative scenarios;rural population;marginal borrower;high commodity;precautionary saving;price decline

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Citation

Gil Sander, Frederico Bhaopichitr, Kirida Sirimaneetham, Vatcharin Triratanasirikul, Nattaporn Anantavrasilpa, Ratchada

Thailand economic monitor : April - June 2009 (English). Thailand economic monitor Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/482501468312354406/Thailand-economic-monitor-April-June-2009