Quarterly Economic Review III October 10, 2013 Bhanupong Nidhiprabha Thammasat University.
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Transcript of Quarterly Economic Review III October 10, 2013 Bhanupong Nidhiprabha Thammasat University.
![Page 1: Quarterly Economic Review III October 10, 2013 Bhanupong Nidhiprabha Thammasat University.](https://reader035.fdocuments.us/reader035/viewer/2022072013/56649e5e5503460f94b5815e/html5/thumbnails/1.jpg)
Quarterly Economic Review IIIOctober 10, 2013
Bhanupong NidhiprabhaThammasat University
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Main themes
• Growth and vulnerability• Global slowdown and Business Cycle
Synchronization• Future risks: Fed tapering • China slowdown• US budget politics• Risks from bad policy responses
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1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-15
-10
-5
0
5
10
Volatile GDP growth pe
rcen
t
Mean = 3.2, SD = 4.6 SD/Mean = 1.4
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4
IMF World Economic Outlook(GDP Growth)2013 2014
Advanced Economies
1.2 2.0
Global Growth 2.9 1.2Japan 2.0 1.2EU -0.4 1.0USA 1.6 2.6
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Impact of global slowdown
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
-1.3
4.4
-6.8
7.4
19.3
-6.6
4.6
17.420.6
15.016.9
18.615.5
-14.3
28.1
2.0-0.3 -0.4
3.8 3.2-0.6
3.9
12.5 12.7
8.1 8.4
12.89.8
-5.1
8.5
Thai Export VS World GDP in Dollar
Export (%change) World Income (%change)
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6
20002001
20022003
20042005
20062007
20082009
20102011
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Synchronization of ASEAN-5 Growth Rates
IndonesiaMalaysiaPhilippinesSingaporeThailand
perc
ent
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20002001
20022003
20042005
20062007
20082009
20102011
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
Exports of ASEAN 5
IndonesiaMalaysiaPhilippinesSingaporeThailandpe
rcen
t
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Risk Exposure to Global Slowdown
Myanmar
Indonesia
Philippines
Cambodia
Thailand
Viet Nam
Brunei D
arussa
lam
Average SEA
Malaysia
Singapore0
50
100
150
200
250
0.2
31.2 42.659.1 66.4 68.5 72.1 73.5
105.7
210.4
Outward vs. inward oriented Southeast Asian economies: 2000-2011
Average exports share in GDP
Source: ADB
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High Time for Rebalancing
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Private consumption
Indonesia Philippines Singapore Thailand
perc
ent
Source: Asian Development Bank
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How to boost private investment
JAN 2007
APR 2007
JUL 2
007
OCT 2007
JAN 2008
APR 2008
JUL 2
008
OCT 2008
JAN 2009
APR 2009
JUL 2
009
OCT 2009
JAN 2010
APR 2010
JUL 2
010
OCT 2010
JAN 2011
APR 2011
JUL 2
011
OCT 2011
JAN 2012
APR 2012
JUL 2
012
OCT 2012
JAN 2013
APR 2013
JUL 2
013 100
120
140
160
180
200
220
240
260
280
30.0
35.0
40.0
45.0
50.0
55.0
60.0
Business Sentiment (BSI ) and Private Investment
IP IndexBSI
Priv
ate
Inve
stm
ent I
ndex
Source: Bank of Thailand
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JAN 2007
APR 2007
JUL 2
007
OCT 2007
JAN 2008
APR 2008
JUL 2
008
OCT 2008
JAN 2009
APR 2009
JUL 2
009
OCT 2009
JAN 2010
APR 2010
JUL 2
010
OCT 2010
JAN 2011
APR 2011
JUL 2
011
OCT 2011
JAN 2012
APR 2012
JUL 2
012
OCT 2012
JAN 2013
APR 2013
JUL 2
013 120
125
130
135
140
145
150
155
160
20.0
25.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
Confidence and Private Consumption
PC indexBSI
Inde
x
Source: Bank of Thailand
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Countercyclical Spending
2005 2006 2007 2008 2009 2010 2011
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
Fiscal stance: Deeper Deficit for some ASEAN
IndonesiaMalaysiaPhilippinesThailand%
GDP
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19961997
19981999
20002001
20022003
20042005
20062007
20082009
20102011
201215
17
19
21
23
25
27
29
Fiscal Policy Stance
government revenuegovernment total expenditure
Perc
ent t
o GD
P
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14
Quality of bank assets during recovery
2005 2006 2007 2008 2009 2010 20110
1
2
3
4
5
6
7
8
9
Bank Non-performing loans(% total loan)
Indonesia Malaysia Philippines Singapore Thailand
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Capital inflows (outflow) and currency appreciation (depreciation)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110.600000000000001
0.700000000000001
0.800000000000001
0.900000000000001
1
1.1
1.2
1.3
Southeast Appreciation
BruneiIndonesiaMalaysiaPhilippinesSingaporeThailand
Pric
e of
dol
lar (
2000
= 1.
0)
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16
ASEAN-5 economies looked similarly during the GFC (2008-2011)
2006 2007 2008 2009 2010 2011 20120
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Stock market returns correlation: Singapore
IndonesiaMalaysiaPhilippinesThailand
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US Budget politics
• Debt ceiling deadline: October 17• The US government cannot borrow any more• On October 17, the government would have $30
billion on hand, while the daily expenditures were about $60 billion.
• Default risk on interest payments on bonds • Downgrading of the US’s credit rating • Stock market crash• Highest one-month bond interest in 5 years
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Significant tail risks and bad policy responses
• Be prepared for capital flight after the Fed tapering: No more injection of $85 billion per month
• How far and how long can the BOT defend the baht?
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Thai Budget Politics
• Consumer confidence• Investor sentiment• Business sentiment and effectiveness of fiscal
policy
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20
Fiscal Space and Alternative Growth Driver
19961998
20002002
20042006
20082010
20120
10
20
30
40
50
60
70
Public Debt and Investment
Total investment government gross debt%
GDP