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  1. #1
    Thailand Expat
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    Fears of lay-offs grow by the day

    ECONOMIC SLOWDOWN
    Fears of lay-offs grow by the day



    Growth needs to start accelerating soon or industrial sector will be hit: Finance Ministry


    The economic slowdown has started to affect employment, with lay-offs expected if growth does not pick up soon, according to the Finance Ministry.

    Signs of unemployment are evident in the manufacturing sector, which saw February's employment numbers expand only 1.7 per cent, compared with 5.5 per cent in January. Employment in the service sector grew only 1.8 per cent in February, compared with 3.5 per cent in January.

    Thailand experienced high employment while deposed prime minister Thaksin Shinawatra's was in power as the economy grew throughout those years. It now has to grow by 5 per cent to absorb the new workforce at around 300,000 to 400,000 a year.

    The threat of unemployment is expected to be visible in March, when new graduates are set to enter the job market.

    However, it is probable that economic growth may not reach 4 per cent as earlier expected.

    Consumption and investment slowed in March, as economic growth decelerated further, Pannee Sathavarodom, the director general of the Fiscal Policy Office said yesterday.

    However, government spending and resilience of the export sector provided some cushion for lower growth.

    Meanwhile, Kanit Sangsubhan, director of the Fiscal Policy Research Institute, the research arm of the Fiscal Policy Office, said the capacity of the economy to accommodate a larger labour force was weakening.

    Employment in manufacturing in February expanded only 1.7 per cent, compared with 5.5 per cent in January, while employment in the service sector grew only 1.8 per cent compared with 3.5 per cent in January.

    Kanit said a planned economic-stimulus package could cushion further negative impact on the employment market and prevent lay-offs.

    Household consumption measured by value-added tax revenue indicated a sharp deceleration.

    Pannee said collection of VAT had risen 1.9 per cent year on year in March, compared with 4.6-per-cent growth the month before.

    Lower consumption revenue reflected a dampening in consumer confidence in the economy, which was adversely affected by political uncertainty and renewed rising of retail energy prices, she said.

    Private investment also suffered. Cement sales dropped by 4.6 per cent, revenue of specific business tax contracted by 0.1 per cent, and statistics indicated that investment in the property sector had dropped.

    However, Pannee pointed to investment recovery in some sectors as projects receiving tax incentives from the Board of Investment (BOI) rose by 35.2 per cent.

    Government spending has returned to normal after months of delay. Budget disbursement rose 9.8 per cent to Bt139.9 billion, while government revenue dropped 3 per cent to Bt103.3 billion, indicating an economic slowdown.

    Exports in March expanded by 18.4 per cent to US$13.1 billion, (Bt458.5 million), while imports expanded 0.6 per cent to US$10.8 billion, down from the growth rate of 3.1 per cent in February.

    Lower import growth also indicated low investment, but the country enjoyed a trade surplus of US$2.27 billion, which was a record.

    Pannee said production in the farm sector had risen 0.6 per cent compared with 5.4 per cent in February.

    The manufacturing index expanded 2.7 per cent, down from a growth rate of 6.6 per cent in the previous month.

    Tourist numbers expanded 6.4 per cent to 1.27 million, partly because of Chinese New Year falling in February, instead of January in the year before.

    Inflation was moderate, as headline inflation grew at 2 per cent year on year, compared with 2.3 per cent in February.

    Public debt stood at 37.6 per cent of gross domestic product.

    Pannee said the economic fundamentals in March and the first quarter of this year had remained good, due to a strong export sector and the acceleration of public spending.

    The Finance Ministry will revise the economic forecast next month. Its current projection is growth of 4-4.5 per cent.

    A report by Macquarie Research on Thursday said that with the ongoing political turmoil it was pessimistic about the growth outlook of Thailand, dashing hopes of a fourth-quarter recovery.

    It has downgraded the Thai economic growth forecast from 4.5 per cent to 3.5 per cent.

    "We also now expect the Bank of Thailand to cut its repurchase rate by another 100 basis pints to 3 per cent," the report said.
    Other research houses have recently revised their projects downwards and warned that growth will be below 4 per cent, a critical level because it could affect employment.


    Wichit Chaitrong
    The Nation

  2. #2
    I am in Jail
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    Incredibly as it sounds, Thailand is indeed fully employed, that is "marketable" employees are fully employed, which makes it difficult to find new staff and competent employees. Hopefully this will change and create liquidity in the labor market.

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