Thai economy enters recovery phase.

The popular tourist destination of Thailand has suffered more than one knock to its economy in the recent past. The tsunami, followed by the global economic crisis, and now the H1N1 flu, affecting its economic mainstay, namely, tourism.

Now it appears that Thailand is slowly emerging out of the worst phase of the economic crisis, as figures released by the National Economic and Social Development Board would indicate. As is the case with other countries, supposedly out of recession, the major criterion applied to Thailand is also the fact of a slower contraction of its GDP in the last quarter. It is expected to contract only 3% at the end of the fiscal 2009.

Some of the factors that have helped the Thai economy grow are the improved economic conditions in other countries resulting in an upswing in tourist arrivals to a modest level. Other factors include increased consumer spending and confidence.

The Government stimulus program has also helped the economic revival. The new stimulus plan running into Thai Baht 1.40 trillion is expected to lay the ground for rapid economic development during the plan period of 2010 to 2012. This stimulus package is part of the “stronger Thai 2012 project” initiated by the Government to drive the Thai economy into the next century .

However, as the Thai economy is heavily dependent on tourism and exports, the upswing in the economic fortunes of other countries that contribute to Thailand’s economy is a necessity. Any delay in the improvement of recovery in these countries could set back Thailand’s economic plans correspondingly.

Overall, there are fairly strong signals of the Thai economy moving towards recovery. The longer this phase lasts, the stronger the Thai economy is likely to emerge. The question is whether this phase would last long enough for the Thai economy to get going once again.

The Samurai economy is emerging out of recession.

It may not be time yet to celebrate. But the air in Japan is pregnant with subdued optimism and expectation of a turnaround in the economic fortunes of the island nation.

After France and Germany, Japan appears to be breaking out of the recessionary cycle. That was the official announcement of the Japanese Government, that had promoted a USD 260.00 billion stimulus package to revive the economy, and has recorded an upward trend in the major economic indicators.

However, the most important and explosive problem facing Japan, namely, unemployment, is still far from being resolved. Part of the problem is said to be the surplus staff maintained in many of Japan’s manufacturing facilities.

Some of the major reasons attributed to Japan’s economic recovery, though nascent at this point of time, is in the export sector, particularly to China, especially in the electronics and auto sectors. Public spending by Government is also said to have had a positive effect. The stimulus package has also persuaded the Japanese public to loosen their purse strings, and increase consumer spending.

The fact is, there is a fall in the negatives that had battered the Samurai economy for more than a decade and a half. And that is being latched on to by the Government to project a positive image in economic growth.

Be that as it may, the real test of Japan’s recovery would be in sustaining the momentum in economic growth, until such time that not only it recovers the lost ground, but also registers fresh progress. The Samurai have to fight hard in the coming months before they can take it easy.

Turkey on road to recovery.

The global economic crisis has played havoc with the economies of several countries, big and small, and forced them to redraw their priorities.

Some of these countries had expected to emerge as strong economic powers at around this time, but have ended trying to regain their earlier positions of a few years back.

Turkey, the Asian-European country that was growing at a fast clip in recent years, had its wings clipped by the crisis. Now it is once again recovering from the effects of the crisis, and hopes to end fiscal 2010 in the black, or rather green.

The reason why Turkey did not suffer too much in the crisis, in spite of its strong alliance with western markets is the strict regulation applicable to the financial services industry, that ensured no Bank failures took place. And with few or no toxic assets of the type plaguing American Banks, the Turkish Banking industry remained strong and stable through the crisis.

According to figures released by the Turkish Statistical Institute, industrial output has been done especially in capital goods, production in manufacturing has declined, as also in mining and energy. One the plus side, the current account deficit is said to have dropped and foreign trade deficit has also come down.

The stimulus package of the Turkish Government seems to have been of much help to business and industry. With improvement in the global economic situation, things are likely to get better for Turkey.

Canada, the silent economic giant.

While the United States and certain other lesser economic powers are quite brash about their importance to the global economic system, Canada has been a silent economic giant that has assiduously built up an industrial base over the decades, to transform itself from an agrarian to an industrial economy.

Canada has a robust industrial sector, with it’s export manufacturing companies virtually enjoying a captive market in the U.S., which accounts for nearly 80% of its trade and exports, mainly in the energy sector, oil, gas, electric power, etc.

However, on the flip side, this dependence on the U.S. has left the economy vulnerable to the developments in the U.S. economic front, and indeed affected certain sectors of the Canadian economy, especially, the auto sector. Fall in demand from the largest trading partner, the United States, has, to some extent, dealt a severe blow to Canada.

Notwithstanding the above, prudent fiscal policies, a strong domestic banking sector that is a stickler for conservative lending practices, and a long and uninterrupted course of prosperity have provided sufficient cushion for the Canadian economy to absorb the impact of the global crisis.

Canada’s exports, mainly to the U.S. have ensured a steady supply of foreign exchange, making it easier for Canada to invest in capital goods and heavy industry, thereby adding to the GDP and increased employment.

The current scenario in Canada is a fall in the oil and gas extraction output, fall in industrial output, mining, and an overall contraction in economic activity.

The Canadian Government deserves 3 cheers for having laid a strong foundation for a real strong economy in the formative years of the nation, that has withstood the worst recession in several decades and continues to grow, though a bit slowly.

France moving tentatively towards recovery.

Forecasting, particularly economic forecasting can be quite a tricky business. Few experts and specialists had an idea of the economic crisis we are going through now. And so, when forecasts are made about supposed recovery in the economic situation, one tends to take the news with a pinch of salt.

The news about the French economy being out of the worst phase of recession and headed towards more sunny climes, though music to French ears, has drawn lukewarm cheer from French business and industry. Having burnt their fingers badly not long ago, commentators do not wish to been misleading the public again with their grand predictions and pronouncements.
The July 2009 data for industry, commerce, and the economy in general seems to be encouraging, with consumer spending reportedly having improved, and manufacturing activity picking up, or rather, not falling further, and so on.

And in the current depressing scenario, even a slight drop in the negatives, is reason for cheer. The actual situation may be that certain factors may have combined to present a transient positive picture. The question is how long this transient phase would last, and at what point may it be considered to have upgraded from the transient to the stable and permanent.

All kinds of statistical tools are employed in supporting theories of an economic rebound, but in the end, unless the ground level situation does not improve, it cannot really have a positive impact on the overall economic situation.

It is still early days for a French economic recovery, though there are strong pointers to it. In the meantime, the French may want to follow the advice popularly attributed to Marie Antoinette to eat cake if they could not afford bread!

Qatar, the nimble footed player.

Qatar, the oil and natural gas rich state in the Arabian Gulf, is a nimble footed operator that seizes opportunities as they come along, and capitalizes on its strength in the process.

One of the fastest growing economies in the Gulf region, it is also not lagging behind on cornering international glory through its proactive role in international affairs. The Doha Round of the WTO talks was a highlight and a feather in the cap of the ruling establishment in Qatar.

The country has been quite aggressive in diversifying its income sources away from its traditional oil and natural gas base, to industry, commerce, tourism, etc. However, much needs to be done in these areas. As a matter of fact, the Government has taken an active part in all matters of economics, commerce and industry, while encouraging the private sector to play their part in the process.

However, like other countries not directly responsible or connected with the global economic crisis, Qatar has also had to face its share of problems on the economic front. Even though the Banking sector has been doing quite well, with 2008 being a golden year, the Government has had to intervene in the sector, imposing certain restrictions, in order to restore public confidence, and avoid the spread of a negative sentiment, affecting the markets.

A special mention needs to be made of the Islamic Banking sector that has done really well, crisis or no crisis, and has remained practically immune from the virus of toxic assets affecting their conventional cousins in the western world. This is mainly because of their ethical business practices, and avoidance of highly risky and unethical business practices and wheeling and dealing. As a result, the conventional Banks, in large numbers, have been going in for the establishing Islamic Banking subsidiaries to face the troubled times better.

The coming years pose a challenge to Qatar, but given its past record of nimble footed negotiation of troubled times, this middle eastern state may trot ahead of many of its counterparts in the Gulf.

Oman, the long term player.

The long coastline of this neat country may have something to do with its long term planning. Oman has built itself up over the last couple of decades, into a well run and steady economy, with little or no effect of the global economic turmoil.

Like its other Middle Eastern brothers, Oman is also heavily dependent on oil for revenues. And expatriates still play an uncomfortably large role in running the various industries and businesses being promoted, through the country. Educating and Training the locals to take over the day to day running of the firms and institutions is a long term goal in which considerable resources and efforts have been invested.

The country’s GDP has been growing steadily, with 2007 being a golden period, when it registered a growth of nearly 13%. The current economic crisis, of course, has not left Oman totally immune. However, it has escaped the worst of the crisis, mainly because of shunning an overtly risky way of doing business, and giving unfettered freedom to the private sector.

That apart, Oman had, in place, a special general reserve fund, that could be relied upon to counter the effects of a fall in the prices of oil, the mainstay of its economy, and revenues. This fund has served Oman well in the period of crisis, and speaks of the vision of its rulers to foresee the problem and to actually be prepared for it.

Whether it is the banking or the insurance sectors, the defence or the civic areas, or the capital markets or the investment areas, Oman has always been long term in thinking and action, and has worked out patiently to improve its standing in the comity of nations.

The economic scene in Kuwait.

Kuwait, a small nation awash with oil. Synonymous with wealth and mega projects. A society part traditional, part modern, and a little part, ultra modern.

The economic meltdown does not seem to have affected Kuwait much, with the economy growing steadily. And concerted efforts at diversification have also helped the country absorb the shocks of an oil glut affecting the major source of its revenues.

None of the other sectors of this tiny oil giant have been affected, like the Banking, Insurance, etc. This testifies to the fundamental strengths of the system. However, the Kuwait capital market did suffer on account of the fall out of the global economic recession, which was to be expected.

On the other hand, traditional Islamic Banking and financial institutions gained considerably in the downturn. In fact, the excesses of the conventional Banks and financial institutions have given a boost to the popularity of the Islamic Banking institutions, who on account of their ethical investment and credit policies have escaped the downturn and indeed set a good example for the conventional Banks.

What does the future hold for the Kuwaiti economy? The major issue affecting the country, of course, is the price of oil. With oil prices coming down for a variety of reasons, like falling demand, non adherence to quotas, development of alternative sources of energy, etc, Kuwait faces the challenge of diversifying its revenues while modernizing and optimizing its traditional oil sector.

The state has invested enormous amounts of money in establishing other and varied sources of economic activity that are slowly showing results. It may be said that Kuwait is well placed to face the challenges on account of its small size and huge revenues. Astute handling of the situation and prudent financial and economic management should see Kuwait emerge through the next decade with flying colors.

China and America SAED.

Thi is the second and concluding part of the article.

Bilateral Relations: China-U.S. bilateral relations seem to be going north with several important issues, both at the bilateral level, as well as global, willy nilly driving them in consort. On the bilateral front, some of the activities lined up are an official visit to China of the United States President, the exchange of military delegations, American participation in the Shanghai World Expo in 2010, facilitation of visa procedures on either side, and restarting the dialog on the issue of human rights.

On the economic and financial side, the two sides resolved to take necessary steps to revive their domestic economies by increasing savings in the U.S. and increasing spending and consumption in China. The second important issue is to build a powerful financial system with a proper regulatory framework in place. Thirdly, to work against protectionism and towards open markets, creating more jobs, etc. And fourthly, to reform the global financial system and to take care of future crises.
Global and regional issues also took up considerable time and effort of both the countries, with both of them resolving to hold joint discussions and exchanges as required, on the issues of low carbon economy, climate changes, energy, environment, etc. Specific projects that would be pursued for fruitiion were clean, and efficient power, clean and efficient transport, clean air and forest, and wet land protection.

It is clear that the United States and China have a lot to gain from mutual co-operation and with America’s hands full in Afghanistan, and Iraq, it may not have much of a choice than to be ‘friends’ with China, much against its natural tendencies to show off its ‘muscle’ and ‘brains’.
Concluded.

China and America SAED.

You cannot thrash them all. You cannot beat them all. The strength of your opponent defines your options in dealing with him.

In his over 25 centuries old treatise, “The Art of War”, the Chinese master, Sun Tzu, had wrote:”He who wishes to fight, must first count the cost”. And quite appropriately, perhaps, the Americans seem to be following the advice of the Chinese master diligently in avoiding a confrontation with China. China is too big, and too powerful to be trifled with. And so, the American strategy toward China is predictably different from that applied to Iraq, Iran, Libya, Saudi Arabia, and so on.

Las week, the 28th of July, to be precise, a new chapter, as it were, opened in China-U.S. relations, with the successful conclusion of the first round of China-U.S. Strategic And Economic Dialog(SAED). The dialog revolved around the theme of strategic and long term issues concerning both the countries in particluar, and the rest of the world, in general. The objective of holding the dialogwas apparently to achieve a deeper understanding of each others’ views, to bring about consensus in thought and action, to increase mutual trust that follows greater understanding, to take matters forward through mutual co-operation, and give a filip to their bilateral partnership.

A pretty long list of wishes. But one which both the sides seem to be keen on achieving, at least apparently. Of course, for their own reasons. It is difficult to imagine America giving space voluntarily to Chinese ambitions for World dominance. At the same time, the U.S. may not have many options at its disposal, in dealing with China. And the current economic crisis has only made it worse. America may be slowly, but reluctantly, coming to the realization that it cannot always call the shots. And progress in these talks may result in some benefits too, especially for its beleagured industry, and banking and financial system by attracting more Chinese imports of American goods and services.
To be concluded.

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