BANGKOK, June 27 (Xinhua) -- Thailand might encounter a repeated economic crisis like the one which occurred two decades ago, said a former governor of the Bank of Thailand over the weekend, Thai media reported on Tuesday.
According to Prasarn Trairatvorakul, Thailand's property sector has been growing so fast and widespread that it is apparently oversupplying the consumer market. Such oversupply might possibly trigger a new economic crisis, following the one unofficially called Tomyum Kung crisis (hot soup with shrimps) in 1997, the ex-governor of the central bank said.
The Tomkun Kung crisis prompted the country's economic bubble to burst, causing property developers and their customers as well as banks, financial firms and their clients to suffer enormous losses.
Given the sustained tight-money situation, the purchasing powers of the consumer have been trimmed down and limited but property sector has continued to grow in imbalanced, oversupply fashion, said Prasarn, now adviser to Central Group, according to Thai media Bangkokbiznews.
Property sector does not only refer to the increased number of new houses and condominiums but those of serviced departments, department stores and shopping malls which have quickly sprawled in Bangkok and its outlying areas, according to the ex-governor of the central bank.
The oversupply in property sector may have been attributed in part to the fact that banks and financial institutions have not provided much lending to other sectors while the interest rates remained low and bank reserve volumes increased, he commented.
"Nobody can assure that the Tomyum Kung crisis will not be repeated but certain measures may be taken to prevent it, " he said.