Thailand Economy

The economic crisis that has brought turmoil to Southeast Asia for four months claimed its first political leader Thursday as Thailand's Prime Minister Chavalit Yongchaiyudh resigned to make way for a new government that could restore international confidence. Members of the opposition Democrat Party said they had cobbled together a coalition that will open the way for party leader Chuan Leekpai to take power.

Embattled Prime Minister Chavalit Yongchaiyudh, facing mounting criticism over his nation's economic tailspin, said Monday that he will step down later this week. The Thai stock market and currency rallied on the news in early trading today. An end to Thailand's political infighting would be good news in the West, where the economic crises in Southeast Asia are blamed for triggering last week's dramatic gyrations in world stock markets. Last week, the U.S.

A group of young Thai professionals, enjoying a dinner at Christmastime in one of Bangkok's fanciest restaurants last year when times were still flush, casually ordered a $160 bottle of Mouton Rothschild. The bouquet didn't much appeal to them, however. They soon ordered Coca-Cola, orange juice and Seven-Up, then mixed the wine in with the soft drinks, recalled Dutch businessman Edny van den Broek, who was at a nearby table. When they left, there was still wine in the bottle.

Vorachan Vinyarath's wallpaper-importing business got off to a roaring start when she launched it early last year, while Thailand was still enjoying its decade-long economic boom. The firm jumped from 30 employees up to 50 in five months, and switched from moderately priced Taiwanese wallpaper to a focus on a luxury Italian brand, supplemented by high-quality imports from the United States and New Zealand.

Federal Reserve Board Chairman Alan Greenspan on Friday said Thailand's economic crisis showed that governments must provide investors with complete and timely economic and financial information and called for international financial institutions to force the issue. In one of his first public comments on the Southeast Asian currency crisis, Greenspan told central bankers and economists at the Kansas City Federal Reserve Bank's annual symposium in Jackson Hole, Wyo.

A $16-billion rescue package for Thailand's once high-flying economy won backing here Monday from the International Monetary Fund and Asian nations led by Japan, in one of the largest global bailouts of any country. The plan, which Japan officials said "affirms the solidarity of the region," could be boosted by as much as $4 billion today, when Thai Finance Minister Thanong Bidaya is due to meet with officials of 21 Japanese banks to seek additional support.

Bowing to enormous pressure to seek an international financial bailout, Thai officials Monday agreed to seek assistance from the International Monetary Fund to cope with a worsening economic crisis. Since the July 2 devaluation of the baht, Thailand has become like "a water tank with a leak," Thai Finance Minister Thanong Bidaya told reporters in Bangkok, adding that the IMF can "help plug the hole."

A top official of the International Monetary Fund said Thailand must quickly shore up its troubled financial system and cut government spending to defuse an economic crisis that has shaken currency and stock markets across three continents. At a briefing for reporters Monday, Stanley Fischer, the IMF's deputy director, suggested that Thailand is behaving foolishly by refusing to seek an IMF emergency loan, which would come with politically distasteful conditions.

Japan, confronted with tottering financial markets across Southeast Asia triggered by devaluation of the Thai baht, is scrambling to organize an international bailout that could stabilize economies in Thailand and the region. Japanese and U.S. sources said Monday that a $20-billion loan package is taking shape for Thailand that would be led by Japan and supported by the International Monetary Fund. The U.S. Congress was briefed by Treasury officials on the volatile Southeast Asian situation.

So far, investors appear to believe that the currency devaluations in Thailand and the Philippines were the right medicine. In Thailand, the main stock market index has surged to 628.55 from an eight-year low of 464.77 on June 19, for a gain of 35%. In the Philippines, the composite stock index rocketed 190 points on Friday, or 7.6%, to 2,701.14, immediately after the nation's central bank stopped defending the peso. The index still is down 15% year-to-date, however.