Emerging Asia is set to be the world’s fastest-growing region again in 2015, skirting the contagion from Russia’s crisis and riding the fall-out from weak commodity prices, according to Fitch, the credit rating agency. Nevertheless, structural frailties stalk seven out of 10 countries in the region, with surging debt levels a particular concern, the agency said.
The region, excluding China, is expected to expand by 5.9 per cent in 2015 and 6.1 per cent in 2016 – compared to an average for global emerging markets of 4.1 per cent and 4.5 per cent respectively, Fitch said in a report. These forecasts compare with the International Monetary Fund’s (IMF) estimates that developing economies would this year grow at 4.3 per cent, accelerating to 4.7 per cent in 2016. Read more
By Daniel Gallucci
Half a world away from snowy Moscow, Russia’s deepening economic crisis is reverberating upon the palm-fringed beaches and castaway islands of Thailand. The droves of holidaymakers from Russian cities visiting Thai resorts are dwindling, deterred not so much by the southeast Asian nation’s military coup earlier this year as by the rout of the rouble.
As the chart below shows, Russians seeking a warm refuge from the prolonged winter of home were relatively unfazed in early 2014 by the mounting political tensions in Thailand that led to the May military coup. Read more
By Daniel Gallucci in Bangkok
An expectant hush fell over about seven hundred foreign and Thai businessmen as they awaited the keynote speaker at an event in Bangkok this week. Army chief-turned-prime minister Prayuth Chan-ocha, leader of the May coup, was moments away from making his first address to the foreign business community.
Then, as a phalanx of security men signalled the general’s arrival, the venue exploded into song. Blaring from the loud speakers came the ponderous strains of “Returning Happiness to Thailand”, a song he composed just after the coup. Read more
By Daniel Gallucci, Asean Confidential
How badly has Thailand’s economy been affected by a decade of political turmoil? A projection of what GDP growth might have been in the absence of messy politics indicates that at the macroeconomic level, Thailand has not been nearly as able to shrug off external shocks as the oft-quoted moniker “Teflon Thailand” might suggest.
Between the first quarter of 2001, when former premier Thaksin Shinawatra and his Thai Rak Thai party won their first election, and the fourth quarter of 2005, just before significant protests against Thaksin began, the Thai economy expanded by 31.9 per cent in total, equal to an average growth rate of 1.5 per cent quarter on quarter and 6.0 per cent year on year. In the eight and a half years since, the economy has grown by just 21.1 per cent in total, at an average rate of 0.6 quarter on quarter and 2.3 per cent year on year. Read more
Thailand’s ruling junta has pledged to wage war on government waste – but that hasn’t stopped it setting aside a little money to make sure it can rule in suitable style.
As General Prayuth Chan-ocha, coup leader and prime minister, prepares to host his first cabinet meeting on Tuesday in an office in the midst of a near-$8m revamp, officials are playing down reports that the changes are driven by feng shui. Read more
Of all the colonial legacies left by Britain, France and the Netherlands in Asia, one of the least talked-about – yet arguably one of the most lasting and problematic – is the patchwork of legal systems that divides the region.
Doing business in the Association of Southeast Asian Nations (Asean) is gradually getting easier thanks to the elimination of tariff barriers, expansion of supply chains and gradual harmonisation of customs procedures.
Yet one of the big “soft” barriers to greater Asean integration, and one which makes life hard for multinationals and ambitious local companies alike, are the differing jurisdictions across the 10-member bloc. Read more
Gen Prayuth Chan-ocha’s Thursday metamorphosis from Thai coup leader to prime ministerial nominee hammers home the military’s near-total control over the country’s main political and economic levers. But the flip-side is that the generals now have responsibility for Thailand’s troubles – but no one to blame if things go wrong. In a draft budget rubber-stamped without debate by the military’s puppet parliament this week, Gen Prayuth promised big spending rises for transport, education and – to no-one’s shock – defence. Here are five charts that show the coup-makers’ priorities – and some of the difficulties they face. Read more
“When eating an elephant, take one bite at a time”, US Army officer and Vietnam veteran Creighton Abrams once said.
In his new book, The Rise of the New East, Ben Simpfendorfer does just that. His elephant is “The East”, the group of almost 50 emerging markets ranging from Turkey to China that is home to well over half of the world population.
Simpfendorfer gives his topic a thorough treatment. While his insights seem logical and intuitive, taken together they give an impressive oversight of into key trends shaping the region. beyondbrics noted five insights that particularly stood out. Read more
By Dan Gallucci, Asean Confidential
General Prayuth Chan-ocha, leader of the May 22 coup d’état that returned Thailand yet again to a state of military rule, has repeatedly emphasised the country’s need for a “return to happiness” following months of political chaos. He has even released a song about it.
The coup-makers appear to have so far accomplished this task according to some yardsticks: consumer confidence is up nationwide (see chart), and in Bangkok the streets are safer and traffic is no longer disrupted by protests. Many Thais approve both of the coup itself and the job the generals have done managing the country since. Read more
It is a truth almost universally recognised that internet penetration in the 10-member bloc known as Asean – the Association of Southeast Asian Nations – is low, even though the region is humming economically.
Or is it?
UBS has come out with some interesting research that will give the e-commerce crowd something to cheer. The bank finds that Asean has a 32 per cent “internet penetration rate”, or almost 200m users, out of a total population of 620m.
This contrasts with market data apparently widely accepted – and cited by UBS – saying that penetration could be as low as 62m users. Read more
Dan Gallucci, Asean Confidential
Whatever progress toward a stable democracy Thailand has lost with the military’s ouster of the elected Puea Thai government, an economic analysis of the country’s latest coup must confront the following facts. First, the Yingluck Shinawatra administration had severely mismanaged the Thai economy even before the political crisis began. Second, the economy has been far more impacted by this turmoil than headline numbers currently reveal.
It will be difficult for any government the junta installs to do worse. Read more
By Gavin Bowring, Asean Confidential
It might seem odd to think of Cambodia as a haven of political stability. Labour unrest in Cambodia’s garment factories turned violent in January this year, while the country’s opposition party, the Cambodia National Rescue Party (CNRP), has boycotted Parliament for six straight months in protest of last year’s “flawed” general elections.
Nevertheless, in the space of a week, Cambodia has seen thousands of Chinese residents in Vietnam fleeing across the border as a result of escalating tension between China and its southern neighbour, Vietnam. Meanwhile, the recent military coup in Thailand led to implicit suggestions by the lawyer of former prime minister Thaksin Shinawatra that Cambodia might be willing to host his “government-in-exile”, though these suggestions have been denied by Cambodian Prime Minister Hun Sen. Read more
Demonstrators in Bangkok blocked some polling stations in the Thai capital and continued to insist that they would ignore the results of the vote, but in spite of their protests, voting went ahead across the country. Michael Peel reports.
If you are doing business in Asean – the Association of Southeast Asian Nations – be prepared for an electric shock.
Analysts at ANZ have looked at what’s happening with electricity prices across the region and are warning that they are set to rise, making it considerably more expensive to run factories. It will also add half a basis point on average to inflation, which is already inching up. Read more
Demonstrators march towards the government building in Bangkok
Thailand’s prime minister, Yingluck Shinawatra, called a snap election on Monday, but failed to halt fresh mass street protests aimed at ousting her government. Read the full story on FT.com.
Has the Bank of Thailand blinked in the face of the country’s escalating protests? In a surprise move, the bank cut its policy interest rate on Wednesday by 25 basis points to 2.25 per cent a year, highlighting weaker than expected growth in the third quarter and the “ongoing political situation”.
Indeed, growth is expected to be weaker towards the end of 2013 and through 2014. But has the bank made the wrong call? Read more
Thailand’s GDP figures were a bit of a disappointment on Monday, showing growth in Q3 of just 2.7 per cent.
The main culprit was domestic demand, which fell 1.2 per cent year on year. That’s a particular blow as local consumption has up to now been one of the most consistent drivers of growth: since 2007, domestic demand has fallen only in the exceptional circumstances of the global financial crisis of 2008-09 and Thailand’s huge floods of 2001. So what’s the problem now? Read more
Another week, another barrage of criticism for Thailand’s massive rice subsidy scheme.
This time the attack on a programme that is costing the government billions of dollars a year and adding to worries about the country’s economy is delivered diplomatically, but none the less forcefully, by the International Monetary Fund. Read more
Indonesia, the Philippines, Malaysia and Thailand are on the face of it a relatively homogeneous, integrated group of nations with similar trading partners. So why did the first two emerge from the 2008 financial crisis in a much better shape than the latter?
A working paper from the IMF concludes that it was because Indonesia and the Philippines were less open to trade and had greater fiscal stimuli. Read more