According to Bot latest Press Release, the Thai economy continued to be on a decelerating trend in October. The value of merchandise exports continued to contract, mainly due to the economic slowdown of trading partners, consistent with deterioration in manufacturing production and private investment indicators.
Public spending contracted after last month’s expansion, from capital expenditures. However, private consumption indicators expanded at a higher pace compared with the previous month after temporarily benefiting from the government’s economic stimulus measures. The tourism sector also continued to expand well.
On the stability front, headline inflation edged lower on the back of falling energy prices while core inflation held steady. The seasonally adjusted unemployment rate slightly decreased, in line with the rising number of employed persons in agricultural sector. The current account registered a smaller surplus from trade balance. The capital and financial accounts posted a deficit from the asset position.
Details of the economic conditions are as follows:
The value of exports dropped by 5.0 percent
The value of merchandise exports, both including and excluding gold, dropped by 5.0 percent compared with the same period last year.
The contraction of exports in several categories was due to
1) the economic slowdown of trading partners;
2) the continued downturn in electronic cycle without clear sign of recovery; and
3) the contraction of global crude oil prices, coupled with the temporary maintenance shutdown of oil refineries, leading to the contraction of petroleum-related products exports, both in terms of prices and quantity.
Nevertheless, the value of exports in some categories, including agro-manufacturing products, electrical appliances, and automotive and parts, continued to expand, partly as substitution for Chinese products in the US market. In addition, the exports of hard disk drive grew for the first time in 12 months, thanks to the relocation of production base to Thailand.
As a consequence of the merchandise exports contraction, manufacturing production continued to decline.
Private investment indicators continued to deteriorate
Private investment indicators continued to deteriorate from the same period last year, in line with weak domestic and external demand. Investment in machinery and equipment continued to contract from imports of capital goods, domestic machinery sales, and the number of newly registered motor vehicles. Meanwhile, investment in construction declined from permitted construction area in almost every purpose, consistent with subdued construction activities. Nevertheless, the permitted construction area for manufacturing purposes continued to grow.
Merchandise imports contracted by 9.2 percent
The value of merchandise imports contracted by 9.2 percent from the same period last year in almost every category, consistent with softening economic activities.
The contraction was attributable to the decrease in imports of raw materials and intermediate goods, particularly in
1) crude oil, due to the maintenance shutdown of oil refineries; and
2) electronic parts, partly owing to the high base effect in the previous year as well as the contraction in the exports of electronic products. In addition, after last month expansion, imports of consumer goods contracted from seafood imports, mainly from the high base effect in the previous year. However, imports of capital goods accelerated due to imports of aircrafts, ships, floating structures, and locomotive, though mostly in the form of operational leasing. Excluding the category, the imports of capital goods continued to contract.
Public spending contracted
Public spending, excluding transfers, contracted due to
1) central government’s capital expenditures, as the FY2020 budget has yet to be enforced; and
2) state enterprises’ capital expenditures, particularly in the disbursement of the Mass Rapid Transit Authority of Thailand (MRTA). Meanwhile, current expenditures continued to grow owing to the compensation of civil servants and purchases of goods and services.
Private consumption indicators expanded
Private consumption indicators expanded at a higher pace compared with the previous month but continued to be on a decelerating trend. In this month, the improved private consumption indicators temporarily benefited from the government’s economic stimulus measures, boosting spending on non-durable goods and services.
On the other hand, spending on semi-durable and durable goods contracted, especially on vehicles, in line with weakening supporting factors, namely continued contraction in non-farm income, softer farm income growth, and lower consumer confidence, together with financial institutions’ tightening of credit standards for auto-leasing loans after credit quality deteriorated.
Foreign tourist arrivals continued to expand
The number of foreign tourist arrivals continued to expand well at 12.5 percent compared with the same period last year. This was driven by
1) the low base effect from the tour boat incident in Phuket; and
2) the exemption of the visa on arrival fee, encouraging more visitors from China, India, and Taiwan. Additionally, the number of tourists from other Asian countries continued to grow such as those from South Korea, Japan, and Laos. The number of Malaysian visitors also rebounded from a temporary factor as Deepavali Holiday was celebrated at the end of October this year.
On the stability front, headline inflation stood at 0.11 percent, decelerating from last month on the back of higher contraction in energy prices due to the lower domestic retail petroleum prices, while core inflation remained unchanged. The seasonally-adjusted unemployment rate slightly dropped, consistent with higher number of employed persons in agricultural sector. The current account surplus narrowed from trade balance as a result of the increase in merchandise imports value compared with the previous month. The overall capital and financial accounts registered a deficit from the asset position following the increase in Thai Other Depository Corporations’ (ODCs) deposits and Thai portfolio investment abroad.
Thai fruit exports to FTA markets up 107 percent
China, Malaysia, Singapore, Indonesia, the Philippines, Hong Kong, Australia and Chile are top importers of Thai fruits, especially fresh durian, mangosteen, longan and mango. Thai exporters are able to benefit from FTA privileges.
BANGKOK (NNT) – Thailand’s fruit exports continue to increase, despite the sluggish global economy caused by the COVID-19 pandemic, with key trade partners being countries that have free trade agreements (FTAs) with the kingdom.
The Future of Asia: greener but with a public and private debt hangover
The COVID-19 pandemic has been a perfect storm, destroying jobs, worsening poverty and inequality, and creating a public and private debt problem—especially for countries and firms already in fragile financial health beforehand
50:50 campaign may not get immediate extension
BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.
The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.
Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.
The campaign has already been extended once, with the current end date set for 31st March.
The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.
The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.
Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.
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