Economic Crash re-run?

[BuffHello]

Thai Baht Declines in 2005 on Deficit; Taiwan Dollar Advances

 

Dec. 31 (Bloomberg) -- The Thai baht fell in 2005 as Southeast Asia's second-largest economy is set to post its first current account deficit since the 1997 Asian financial crisis.

 

Thailand's deficit in 2005 will probably be as high as $4 billion, the central bank said Oct. 28. A record shortfall of $14 billion in 1996 forced the nation to abandon the baht's peg to the U.S. dollar a year later and allow the currency to float, triggering the Asian financial crisis.

 

The baht this year dropped 5.5 percent to 41.06 against the dollar. It recouped some of its loss, gaining 0.3 percent this month, as the current-account recorded a surplus in the second half of the year. The currency was the fourth-worst performer among the 15 Asia-Pacific currencies tracked by Bloomberg.

 

``The deficit was worrying for the Thai economy but for the last month or so, the issue seemed to have eased off a bit, helping the baht,'' Leslie Khoo, a regional economist at Forecast Ltd., said in Singapore. ``The deficit issue will still be there,'' affecting the baht.

 

The current account is the broadest measure of trade as it covers the flow of goods, services and money across borders. A current account deficit, which occurs when import payments exceed export receipts, means more money is leaving the country than entering, weakening the currency.

 

The monthly current-account deficit widened to a nine-year high of $1.6 billion in April as rising global oil prices increased the country's fuel import bill. The current account balance for the full year will be released on Jan. 31.

 

 

 

Thailand had its second-biggest surplus in 2005 last month, increasing to $441 million from $69 million in October, the central bank said in a statement yesterday. That was less than the median forecast of $635 million in a Bloomberg survey of six economists.

[rickfarang]

According to the article, Thailand was short $4 billion now, and there were short $14 billioin in '96, so not nearly on the edge of collapse. Besides that, the recent trend has been improving, and the world had leared a lot since '96/'97 and we would probably see drastic intervention before anything like the last Asian meltdown again. But I'm no economist.

[OCgringo]

I do not see what a 5% drop in the Thai Baht has to do with an Economic crash ,

if anything the Thai baht should be 50-60 to the USA$ if it is to be competative trying to sell products against China.

 

Thailand may have cheap labour , but many other countries are cheaper

 

if there is an economic crash it will have more to do with oil prices and how that goes thru the economy.

 

Many places that use alot of energy are already feeling the pinch , foundries etc

 

OC

[whosyourdaddy]

It will all depend if he can finance the mega projects without bankrupting the country. You saw him trying to sell off the countries assests( Egat, TOT, CAT )in order to gain the capital. But now that that has not worked, he is trying for foreigner buyers. Hopefully they will not forget the "we are better than the IMF and dont need those damn foreigners" speech years ago.

 

I dont think oil will have anything to do with it. Sure prices have gone up recently ( ie pizza, milk, eggs, chickens, concrete, steel etc) but the rich are never bothered by the inflation and the poor are still poor and dont contribute that much to the 20th largest GDP in the world.

[gummigut]

I think pointing to one statistic as an explanation for an exchange rate is generally a bit iffy.

 

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