Virabongsa: Govt wrong on economy

Business » Economics

Virabongsa: Govt wrong on economy

Published: 31/07/2009 at 01:51 PM
Online news: Economics

The government should not expect the economy to recover soon as there is a strong possibility that the domestic recession will worsen in the second half of this year and the first half of next year, former finance minister Virabongsa Ramangkura said on Friday.

He was speaking at a seminar, The Economy in the Second Half: Can Thailand be Strong, organised by the Creating Thai Future Institute, chaired by Khunying Sudarat Keyuraphan, a former key member of the Thai Rak Thai party.

Mr Virabongsa reasoned that the country is being hit hard by the global economic meltdown, political uncertainty and the outbreak of swine flu.

“I was frightened to see that the government dared to declare the economy would recover in the second half of the year because there is no sign of any improvement,” he said.

Exports shrank by two-digit figures and the tourism sector was in a critical situation and prices for agricultural products were declining.

Mr Virabongsa said the government gives more importance to political matters than to economic problems. If the government was confident the economy was recovering there would be no additional stimulus measures, and this would worsen the situation.

The fiscal and monetary measures being implemented were not enough to continuously shore up the economy.

It was not clear what the government would do over the next three years with the B800 billion baht it plans to raise in loans. There were no new investment projects in the government's fiscal 2009 budget and therefore the prediction for economic improvement was not sound.

What was clear was that the unemployment and inflation rate figures showed Thailand was entering a period of deflation.

The country was also entering a liquidity trap - as there was excessive liquidity but no one was investing the cash, the former finance minister said.

Mr Virabongsa is CEO of Advanced Agro and served as an economic adviser to then-prime minister Gen Prem Tinsulanonda in the 1980s. In the mid-1990s, he was finance minister during Gen Chatichai Choonhaven's administration and was deputy premier in charge of economic affairs under prime minister Chavalit Yongchaiyudh.

About the author

Writer: BangkokPost.com

Keep this article in your social bookmark:

Latest stories in this category:

Share your thoughts

For more candid, lengthy, conversational and open discussion between one another, use our Forum

Report objectionable comments click here. Include: discussion #, commenter name, comment date / time as it looks on the page. Example: discussion 15: 09/01/2009 at 10:00 AM.

Who is Virabongsa trying to fool?

Discussion 8 : 02/08/2009 at 02:09 AM8
The recession started in the US around late 2007. People Power Party was in government for the whole of 2008, and Virabongsa was the finance minister!!!

Wasn't he in a better position to act then, than now conveniently NOT taking responsibility and pointing his finger at the current government?

Wasn't Thaksin the "shadow" chief economic adviser & strategist to the People Power Party led government in 2008?

So what has Virabongsa got to say now???
wantmymoney

Discussion 7 : 01/08/2009 at 01:18 AM7
Lets put it this way, any economy that depends on export for growth are now in recession or going into recession. The US financial crisis started in late 2007 and it have yet to run its full course so the thai government say they will have positive growth next quarter, its like counting your chicken before they are hatch!Thailands does not have domestic consumption market large enough to absorb its 60% export output, and those products are not what a average thai can afford much less need. Even an advance economy like japan and singapore are not predicting growth any time soon, so how is possible that thailand can escape recession. Their main exports rice and srimps are not selling, tourism is dying so where the growth is coming from? Maybe from the chao phayao river.
TSC

Discussion 6 : 31/07/2009 at 10:42 PM6
I support his take on the situation fully... They should disolve the parliament, put PADs in jails, impeach and high rank misconducts, put justise in place of balance, bring back some of the blocked out politicians and then return to the 2540 constitution... afterward, lets think of it as a nightmare and starts it over w/ the new election ASAP... or one more thing, dead sentense for any army chiefs whoever even said or do anything w/ coup! seriousely
artitk

Discussion 5 : 31/07/2009 at 06:22 PM5
Political stability problem islso cause by Tkaksin, UDD and the red shirts. This govt mistake is that they underestimate the UDD, and refuse to take hard stand against them. If Seripisuth is the police chief, the UDD will be dispersed and political stability will be much better than what you see now.
artitk

Discussion 4 : 31/07/2009 at 06:19 PM4
I think khun Vorapong is a bit unfair. 1st stimulation package actually work quite well, no corruption to speak off, money reach pocket of people quickly and reach to those in lower level of society to help their needs. The economy didn't tank as much as it could. With little additional unemployment, to my surprise because I expect this to be much worst.
Peter

Discussion 3 : 31/07/2009 at 04:28 PM3
Isn't this the same exact thing he said last week?
So its really not news anymore, is it?

"...no signs of any improvement."?
Ok, things are surging, but there are improvements.

To make it more newsworthy, why not add what Dr.Supavud said at the same seminar?
Red Capitalist

Discussion 2 : 31/07/2009 at 02:43 PM2
I think Mr Virabongsa Ramangkura hits the hammer on the nail.

Thailand seems to be at the beginning of a period of negative growth and deflation, despite excessive liquidity.

We quite recently have seen a similar situation in Japan, which experienced a many years' long period of deflation, negative growth and liquidity, despite numerous substantial government stimulus packages.

The only possible light at the end of the tunnel, which my eyes cannot see, is a pick up of world food prices and strong growth in China (and possibly India).

All domestic signs are red including a looming credit crisis over an overstretched credit market, where a large percentage of the population is struggling, month after month, to pay numerous smaller and bigger debts house, car, credit card, financing companies, loan sharks, etc).
Stense

Discussion 1 : 31/07/2009 at 02:12 PM1
Each time this GOV talks about economy, it is firstly the US being behind all Thai problems! How much sub prime exposure did Thai banks have in America, better how many billion down the drain?

Virabongsa: Govt wrong on economy