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World Bank: Slow down govt spending

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With world export economy near crisis & a Greek govt spending disaster, caution in Thai govt spending a safe choice. 



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Economics

Populism overload

World Bank counsels spending cutbacks
24/05/2012 
Parista Yuthamanop

The World Bank urged the government to scale down spending programmes, which will in turn improve its fiscal capacity to invest in basic foundations to cope with the protracted sluggish world trade.

Kirida Bhaopichitr, the World Bank's country economist, said the euro-zone crisis will make a significant impact on the economy. Direct exports and exports to China for manufacturing goods to be shipped to the region will be affected.

The prospect of a long slump in the European economies presents a critical question for the economy to effectively stimulate domestic demand, which should be oriented toward fiscal investment to improve competitiveness and efficiency, she said.

But fiscal losses deriving from the government's existing spending and tax cut programmes could add up to 450 billion or 4.5% of gross domestic product (GDP) to the fiscal budget, with doubtful impacts on improved productivity.

"Spending programmes such as the debt moratorium, rice-pledging scheme and free tablets for children could generate fiscal losses equal to 3% of GDP this year. The forgone revenue stemming from various tax cuts could mount to 1.5% of GDP," said Dr Kirida.

In order to have enough fiscal space for investment to cushion the severe global slowdown, the country might need to cut some expensive spending programmes which have little contribution to productivity improvement.

The share of public investment in GDP has fallen to 5% currently and should be increased to 8%. Public investment in the total budget stood at 18% in fiscal 2012, lower than a suitable level of 25%, she said.

Under the existing budget plan, public debt was expected to soar to 48% of GDP by the end of next year from 42% this year and 54% of gross domestic output over the next four years.

Dr Kirida said the country's top 10 export goods to Europe have all shrank during the first three months of this year except prepared seafood.

"The Thai exports to European countries, totalling one-tenth of all value, have started to contract since the final quarter of last year, because of the slow demand rather than the floods. The exports to other regions still increased in the first quarter, while they declined in other destinations," said Dr Kirida.

East Asia's exports to China for manufacturing into finished goods to be shipped to Europe accounted for one-fifth of the total.

The World Bank will likely revise down the economic forecast of the euro zone from -0.3% this year, she said.

The financial sector has limited exposure to European banks, she said.

Dr Kirida said the economy was expected to grow 4.5% this year, with exports and imports growing 12% and 20% year-on-year, respectively.

Post-flood recovery of the industrial sector is projected for the end of the second quarter, later than previously expected.

The government's slow disbursement of spending on water management projects and threats of more floods would dampen economic confidence, she said.

Closer economic integration among Asean in 2015 and better linkage to China and India could help strengthen growth the region.

Bert Hofman, the World Bank's chief economist for East Asia and the Pacific, said that most East Asian economies are well positioned to cope with renewed volatility stemming directly from the euro-zone crisis.

Commodity prices will soften in line with the world economy this year, he said.

(Source: Economics, Populism overload, World Bank counsels spending cutbacks, 24/05/2012, Parista Yuthamanop, link

Government Spending Vocabulary

populism - a political philosophy that urges social and political change claiming it represents ordinary people's needs and wishes, a common theme compares "the people" against "the elite" with a folksy appeal to the average guy, used by political or social movements (a form of mobilization that is essentially devoid of theory) (See Wikipedia)

overload
- too much of something
populism overload

populist government spending programs

crowd - when there are many people gathered in a small space เคราดฺ, ฝูงชน, กลุ่มชน, คนมาก ๆ (See Wikipedia on crowd psychology and crowd manipulation)

counsels - advise; give advice; suggest
cutbacks - reductions in spending, activities, etc
spending cutbacks
- decreasing the amount of money spent (cutting government programs)

World Bank counsels spending cutbacks

fiscal - related to government spending; connected with the government budget, i.e., public money เกี่ยวกับงบประมาณ
fiscal year - the calendar year that government spending is budgeted for

capacity - the ability to do something, the greatest amount that can be handled ความสามารถในการทำงาน
fiscal capacity - government spending that a government is able to pay for without running into problems (like Greece recently)

improve - to make better ทำให้ดีขึ้น
improve fiscal capacity

investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
fiscal investment - government investment for one year

budget - the amounts of money that an organisation has available to spend on different things during a period  งบประมาณ (See Wikipedia)
fiscal budget - the government spending budget for one year

fiscal losses
- losing money on projects during a "fiscal year"
 
generate - to produce ก่อให้เกิด create สร้าง กระตุ้นให้เิกิด
generate fiscal losses

have enough space to do - have enough area (enough room, enough space) to be able to move and do something
have enough fiscal space for investment - when the government has enough money left after handouts to make important investments for the long-term growth of the economy

urged - requested them to do, advised someone very strongly about what action should be taken วิงวอน

scale - size (relative size)
scale down - reduce size, decrease size of project

foundations - the important things that other things are built on top of (example: investment is a necessary foundation for the development of any economy)
cope - to deal successfully with a difficult situation, continue to operate and function despite problems รับมือกับ (See glossary)

protracted
- lasting for a long time, continuing for too long ที่ยืดเยื้อเป็นเวลานาน ที่กินเวลานาน
sluggish - moving slowly อย่างช้า moving much slower than usual ซบเซา not performing or reacting as well as usual (เศรษฐกิจ) ที่ซบเซา

trade - the buying and selling of goods การค้าขาย
world trade - the buying and selling of goods between the different countries of the world

protracted sluggish world trade

The World Bank urged the government to scale down spending programmes, which will in turn improve its fiscal capacity to invest in basic foundations to cope with the protracted sluggish world trade.

crisis - an urgent, difficult or dangerous situation วิกฤตการณ์ วิกฤต
euro-zone crisis

significant
- important สำคัญ
impact - an effect or influence ผลกระทบ
significant impact - an important effect

Kirida Bhaopichitr, the World Bank's country economist, said the euro-zone crisis will make a significant impact on the economy. Direct exports and exports to China for manufacturing goods to be shipped to the region will be affected.

prospect - the possibility that something we happen ความคาดหวัง ความหวังข้างหน้า อนาคต

slump - a period when an economy is much less successful than before and many people lose their jobs ช่วงเศรษฐกิจตกต่ำ
long slump

critical - extremely important because a future situation will be affected by it สำคัญยิ่ง
critical question

effectively - working well and producing the results that they wanted
domestic - within the country ภายในประเทศ

stimulate - encourage activity, growth, and development;  act so as to increase activity กระตุ้น (See glossary)
effectively stimulate domestic demand

oriented toward - directed towards or mainly concerned with  

competitiveness
- how well a business can do compared to other firms (does it have lower price or higher quality?) การแข่งขัน

efficiency - doing a task well without wasting time, money, resources (See glossary) การทำงานอย่างมีประสิทธิภาพ คุ้มค่าเวลาและใช้พลังงานหรือต้นทุนในการผลิตน้อย เพื่อให้ได้ผลผลิตมาก

The prospect of a long slump in the European economies presents a critical question for the economy to effectively stimulate domestic demand, which should be oriented toward fiscal investment to improve competitiveness and efficiency, she said.

gross domestic product (GDP)

impacts - effects on different people and things
doubtful impact

productivity - producing more with the same amount of inputs (labour, energy, etc) การผลิตสินค้า
improved productivity

But fiscal losses deriving from the government's existing spending and tax cut programmes could add up to 450 billion or 4.5% of gross domestic product (GDP) to the fiscal budget, with doubtful impacts on improved productivity.

debt - an amount of money that you owe หนี้
debt moratorium

scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
rice-pledging scheme

revenue - income from taxes or business activities รายได้
foregone revenue

stemming from

mount - to increase เพิ่มขึ้น
mount to
foregone revenue could mount to 1.5% of GDP

"Spending programmes such as the debt moratorium, rice-pledging scheme and free tablets for children could generate fiscal losses equal to 3% of GDP this year. The forgone revenue stemming from various tax cuts could mount to 1.5% of GDP," said Dr Kirida.

cushion - soften

global - throughout the world ทั่วโลก
global slowdown

severe - very serious and unpleasant and worrying รุนแรง ที่รุนแรง ที่น่าเป็นห่วง
severe global slowdown

investment to cushion the severe global slowdown

contribution - help produce something or help make something successful ผลงาน,การช่วยเหลือ
improvement - when something gets better or when you make it better การปรับปรุง, การทำให้ดีขึ้น

contribution to productivity improvement.

In order to have enough fiscal space for investment to cushion the severe global slowdown, the country might need to cut some expensive spending programmes which have little contribution to productivity improvement.

share - to have or use something at the same time as someone else ใช้ร่วมกัน
share of public investment in GDP

suitable - right for a situation; acceptable or right for someone or something เหมาะสม
a suitable level 
a suitable level of 25%

The share of public investment in GDP has fallen to 5% currently and should be increased to 8%. Public investment in the total budget stood at 18% in fiscal 2012, lower than a suitable level of 25%, she said.

expected - believe will happen คาดว่า (จะเกิดขึ้น)
soar - to rise very quickly to a high level มีความหวังสูง,พุ่งพรวดขึ้น
expected to soar

Under the existing budget plan, public debt was expected to soar to 48% of GDP by the end of next year from 42% this year and 54% of gross domestic output over the next four years. Dr Kirida said the country's top 10 export goods to Europe have all shrank during the first three months of this year except prepared seafood.

contract - reduce in size, grow smaller, shrink หดตัว
exports started to contract

final quarter - the last three months of the year
exports started to contract since the final quarter of last year

"The Thai exports to European countries, totalling one-tenth of all value, have started to contract since the final quarter of last year, because of the slow demand rather than the floods. The exports to other regions still increased in the first quarter, while they declined in other destinations," said Dr Kirida. East Asia's exports to China for manufacturing into finished goods to be shipped to Europe accounted for one-fifth of the total.

forecast
- a statement about what will happen in the future based on information available now พยากรณ์
economic forecast

revise - improve, rewrite, create again or recreate with improvements
revise down the economic forecast

The World Bank will likely revise down the economic forecast of the euro zone from -0.3% this year, she said.

sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
financial sector

exposure - not covered or protected from harm, runs a risk of being harmed, in a position where you might be harmed or suffer damage
limited exposure
financial sector has limited exposure to European banks

The financial sector has limited exposure to European banks, she said.  Dr Kirida said the economy was expected to grow 4.5% this year, with exports and imports growing 12% and 20% year-on-year, respectively.

recovery - when the economy improves and gets better (more jobs, higher incomes) and starts growing again after a downturn or recession การฟื้นฟูสภาพ
post-flood recovery

projected - the amount that experts believe (forecast) for the future
projected - expected, forecast
projected - what people believe it will in the future

disbursement - paying out money or funds for a project; paying money to people or departments from a large fund
confidence
dampen - decrease and make less, reduce intensity and energy   ทำให้หดหู่
confidence - feel sure and certain about something;  trusting and believing in something ความเชื่อมั่น ความมั่นใจ
economic confidence
dampen economic confidence

Post-
flood recovery of the industrial sector is projected for the end of the second quarter, later than previously expected. The government's slow disbursement of spending on water management projects and threats of more floods would dampen economic confidence, she said.

integration - combine, join, unite, becoming closely linked and parts of one whole; the process of combining with others to create a single unit or system; become closely linked with other parts in the system การรวมเข้าด้วยกัน, การผสมผสาน

economic integration - bringing countries closer together economically through trade or shared labour pools
closer economic integration

linkage - a connection between two things
better linkage to China and India

volatility - when prices move suddenly in unexpected ways; the degree to which asset prices swing up and down, a measure of risk in financial markets  อัตราความเสี่ยงต่อการลงทุนทางการเงิน changing suddenly and unexpectedly (bad because it makes it difficult to make decisions) ความไม่แน่นอน

renew - start again
renewed volatility - when volatility starts again

cope with renewed volatility -
deal the volatility after it starts again (take action to stop or reduce the ups and downs)

positioned to cope with
- have the resources needed to deal with and solve a problem
positioned to cope with renewed volatility

stem from - caused by
volatility stemming directly from the euro-zone crisis.

soften - fall to lower level, not be as high as they have been
commodity prices will soften - commodity prices will fall a bit

in line
with - following, agreeing with, matching

Closer economic integration among Asean in 2015 and better linkage to China and India could help strengthen growth the region. Bert Hofman, the World Bank's chief economist for East Asia and the Pacific, said that most East Asian economies are well positioned to cope with renewed volatility stemming directly from the euro-zone crisis. Commodity prices will soften in line with the world economy this year, he said.

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