The Bank of Thailand issued a statement this week on the health
of the Thai economy (
). While the Southeast Asian nation is poised to outgrow many of
its peers, external factors remain a potential detriment going
[caption id="attachment_69498" align="alignright" width="300"
caption="Slowing growth is better than massive floods at least..."]
Thai economy has performed admirably
since disastrous floods disrupted the country's export sector last
year. Since then massive capital expenditures by the government
have powered Thailand through the financial crisis.
like with South Korea
), weak external demand may start to take a toll on the economy. As
the Bank of Thailand indicated this week, second and third quarter
growth will remain stable, but a return to strong growth won't
likely occur until the fourth quarter this year.
That said, downward revisions by the Bank of Thailand may
indicate the worst is not yet over. With second quarter numbers due
out in a few weeks, it remains to be seen if they will belie
increased weakness in the Thai economy. Some also fear a liquidity
crisis could materialize, although that would require a much
steeper downturn in the global economy.
Evidently external factors are increasingly putting more
pressure on the Thai economy, whereas before domestic spending was
sufficient. The Bank of Thailand explicitly warned of weakening
developed world and Chinese demand as potential hurdles
for the Thai economy over the next few months.
Bank of Thailand assistant governor Paiboon
, "(t)he euro-zone debt crisis has had a wider impact than expected
and the crisis is likely to drag on... We still don't see any light
at the end of the tunnel for the European crisis."
Investors should keep their eye out for upcoming developments in
Thailand. Those with a long-term time horizon could consider going
long THD on the back of any significant downward pressure.