(Bloomberg) — Thailand is replacing the top two officials steering the economy through its worst crisis ever, injecting more uncertainty into the policy outlook.
Finance Minister Uttama Savanayana resigned July 16 ahead of a Cabinet reshuffle, with Prime Minister Prayuth Chan-Ocha saying he’ll announce a likely replacement by next month. At the Bank of Thailand, the search for a successor to Governor Veerathai Santiprabhob is entering the final stages, although the Cabinet changes may delay that process. Veerathai, 50, has declined to seek a new term when his current one ends in September.
The upheaval comes at a time of heightened uncertainty in the global economy and a slump in export- and tourism-reliant Thailand that’s among the worst in Asia. The finance minister and central bank governor helped shape a 1.9 trillion-baht ($60 billion) stimulus package that’s meant to curb the economic fallout from the pandemic, and investors want to see those funds put to work.
“We are in a crucial time of transition from lockdown to resumption of business, so the continuation of key policies are very important to help the economy hit by the outbreak,” said Vasin Vanichvoranun, chairman of Kasikorn Asset Management Co. in Bangkok. The sooner the replacements are found “the better,” he said.
Somkid Jatusripitak, who was deputy prime minister in charge of the economy, also resigned alongside Uttama last week, another blow to the government’s management team.
Military Leader
Prayuth is set to make his first Cabinet changes since his victory in last year’s disputed election. A former army chief, he led a military coup in 2014 and ruled as the head of a junta for five years before returning at the head of a multi-party coalition after the vote. Uttama was recently replaced as leader of the largest political party in the coalition.
The political shake-up couldn’t have come at a worse time for the economy. The central bank expects gross domestic product to shrink 8.1% this year, the biggest decline on record and more dire than official forecasts for any other Asian nation. The central bank also is dealing with currency turmoil that’s undermining exports, and is examining new ways of supporting the economy as it runs out of conventional policy space.
After sharp gains since April, the baht has slid steadily this month amid weaker global sentiment. It’s down 2.6% against the dollar since the beginning of July, the worst performer in Asia after Indonesia’s rupiah.
Baht weakness illustrates market worries about the pandemic and the political upheaval, with the uncertainty weighing on financial market, consumer and business sentiment, said Tim Leelahaphan, an economist at Standard Chartered Plc in Bangkok.
The finance minister post is a key one market participants are watching. Prayuth said last week he’s waiting to hear from potential successors he has approached — some of whom are “outsiders” without political backgrounds.
One of the candidates he approached is a well-known banker, who has emerged as the possible front-runner for the post:
Radhika Rao, an economist at DBS Group Holdings Ltd. in Singapore, said the market is looking for “seasoned players” to take over.
“With the broad fiscal stimulus framework to fight the pandemic in place, the incoming finance minister will likely prioritize stabilizing growth through higher government support and demand, as external sectors require global recovery to also get underway as well as international borders to reopen,” she said.
The new finance minister will pick the next central bank governor from a shortlist of candidates. A selection committee received six applications for the position, including from two current deputy governors.
The likely front-runner, according to media reports, is a current member of the bank’s Monetary Policy Committee:
Investors are heartened by the fact that the likely replacements are well-known and qualified, but expect the road ahead to be a difficult one.
“What the newcomers need to deal with are real tough jobs,” said Win Phromphaet, chief investment officer of Principal Asset Management Co. in Bangkok. “The central bank has limited policy space and they will need to handle rising bad debts going forward, while the task of the finance minister, who will need to boost the economy after Covid-19, is also very difficult.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
