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Will Thailand spark another collapse?
A Red shirt protester throws a molotov cocktail into flames May 17, 2010 in Bangkok, Thailand.
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TEXT OF STORY
Kai Ryssdal: There are wire service reports this afternoon of a possible cease-fire in Bangkok, Thailand. Months of anti-government protests and five days of violence in the capital have left almost 40 people dead. Stories about it have made headlines all over the world. What we haven't heard much about, though, is the Thai economy. And that got us wondering, because 13 years ago Thailand was where the Asian financial crisis started.
Marketplace's Rob Schmitz reports.
Sound of gun shots, man shouting into a megaphone in Thai
ROB SCHMITZ: The ongoing street violence in Bangkok, captured on Youtube, is proof that Thailand may not be the wisest place to invest these days. The value of Thailand's currency, the Baht, is steadily dropping, and officials from at least one neighboring country, Indonesia, publicly worry this could lead to a repeat of the 1997 Asian financial crisis.
Morris Goldstein is a fellow at the Peterson Institute of International Economics. He says today's situation is nothing like 1997.
Morris Goldstein: At that time, Thailand really acted as a wake-up call for investors to reappraise the situation in all of emerging Asia. When they did that, they saw there were a lot of countries with extensive banking and financial sector problems.
Hmm. So back in '97 we had a crisis that began in one small country, spread quickly across borders, officials weren't on the ball, and pretty soon you had a regional economic crisis on your hands. Sound familiar?
Goldstein: The reason why Thailand hasn't gotten more ink is because of the larger crisis in southern Europe.
The European debt crisis is overshadowing Thailand's current unrest, but Goldstein says Thailand won't affect the rest of Asia this time. Those countries implemented better banking standards after the '97 crisis -- standards, he says, that Southern European countries are now reviewing to try and clean up their economic mess.
I'm Rob Schmitz for Marketplace.
This story was so riddled with inaccuracies I just had to write to correct this poor instance of reporting. Your correspondent said that Thailand's currency has steadily been falling since the protests started, which is completely false. In fact, it has risen and remains strong much to the consternation and dismay of me and my fellow expats. It's risen and stayed strong against all major currencies.
Also, despite the unrest, Thailand's economy is strong, it's on pace to log a 20 percent increase in exports this year. Your report also made it sound like all the other Southeast Asian countries but Thailand had gotten their banking systems in order after the 1997 financial crisis. Thailand's is equally strong. It has oodles of foreign cash reserves and there is no risk of an economic collapse.
In fact, despite the unrest, all of the major brokerage houses expect Thailand's economy to grow by at least 4 percent this year.
This is not an economy in a tailspin.
