From the blog world:
How will the situation in Japan affect the upcoming Thai election? | Asian Correspondent
As we know, an earthquake and then a tsunami hit Japan last Friday causing the death of thousands and the displacement of hundreds of thousands, but this a blog about Thai politics so ultimately the question is, what is the impact on Thailand and particularly the upcoming Thai election? (the election will most likely to be held on June 19, June 26 or July 3 after Prime Minister Abhisit Vejjajiva announced that parliament will be dissolved in the first week of May).
On exports:
The Bangkok Post:University of the Thai Chamber of Commerce (UTCC) economic and business forecasting centre director Att Pisarnvanich said on Tuesday that Japan’s economic growth for 2011 would likely drop by 0.5 to 1.0 per cent.
Mr Att said he expected the catastrophe would cause Thai exports to Japan to fall by about 7.2 per cent, or about US$735 million, to $1.47 billion, accounting for 0.3 to 0.7 per cent of total Thai exports to the world market.
The impact on Thailand’s industrial exports would be higher, estimated at 8.3 per cent, with agricultural exports looking at a 2.9 per cent, he added.
BP: Japan is Thailand’s second-largest export market last year, taking 10.5 percent of its shipments.
On tourism:
Bloomberg:“Thailand may feel the short-term impact from delays in exports and imports,” Pornthep Jubandhu, a senior economist at Bangkok-based Siam Commercial Bank Pcl, said in a research note today. “More worrisome is the long-term problem for foreign direct investment. This event may prompt many companies in Japan to focus on the reconstruction of local operations.”
The earthquake will also “significantly affect” the tourism sector by potentially hindering Japanese travelers, he said. Last year, one million Japanese visited Thailand, accounting for about 6 percent of the 15 million in total tourist arrivals, according to the research note.
On assets and baht:
Bloomberg:Thailand’s baht fell by the most in six weeks as the deteriorating situation at a nuclear power plant in Japan boosted concern the global economic recovery will slow, cutting demand for emerging-market assets.
“The nuclear power plant explosion and concern the situation will worsen are leading to selling of Asian assets and currencies,” said Daisuke Uno, chief strategist in Tokyo at Sumitomo Mitsui Banking Corp. “Sentiment, not only for Japan but for the whole of Asia, is weak at this stage.”
The baht weakened 0.6 percent to 30.49 per dollar as of 3:44 p.m. in Bangkok and earlier touched 30.51 earlier, the weakest level since March 4, according to data compiled by Bloomberg. The MSCI Asia Pacific Index of shares slumped 5.2 percent today.
BP: Of course, a lower currency is helpful for exporters, but it is always a double-edged sword. A weaker baht also means increased oil prices. It is more about short-term economic confidence…
FT on general economic concerns:· Thai commodities will also be hit. Thailand is the world’s largest producer of rubber and rubber prices have collapsed – Japan is the world’s fourth biggest consumer. Rubber futures on the Tokyo exchange fell 12 per cent on Tuesday, to hit a four-month low.
· Thai factories of Japanese car makers could run out of parts. “Most imported parts are made and delivered on a just-in-time basis, so there is no hefty pile of inventory stock. If production in Japan remains suspended for a long period of time, the Thai plants will likely run out of imported parts in approximately two weeks,” Vallop Tiasiri, president of the Thai Automotive Institute, told Dow Jones Newswires on Monday.
· Japanese investors are delaying their plans. Viboon Kromadit, CEO of Amata Corporation, Thailand’s largest industrial estate developer, told Reuters that medium-to-small Japanese customers have delayed land purchase for one to two months.
BP: Some are very optimistic that the rebuilding could spur on the world economy, but this is in the long-term. Most of above problems are largely short-term problems which will likely not be as bad in 4-6 months, but in the short-term the Thai economy will be affected. The short-term is the problem for the government as a late June/early July election is in the short-term and so this just another factor aside from the rising oil prices, rising food prices, and general inflationary concerns. The timing could not be worse for the government….