“Thai economic indicators in October 2010 continued to expand well, despite a deceleration in domestic spending from the previous month from the flood situation. Export continued to grow albeit at a slower pace compared to the previous month, as a result of the slowdown in trading partners’ economy and the appreciation of Thai Baht.”
Mr. Naris Chaiyasoot, Director-General of the Fiscal Policy Office, revealed that “Thai economy in October 2010 continued to expand well, despite a deceleration in domestic spending from the previous month from the flood situation. Export continued to grow albeit at a slower pace compared to the previous month, as a result of the slowdown in trading partners’ economy and the appreciation of Thai Baht. On the domestic front, private consumption expanded at a slower pace, as shown by 4.5 percent per year increase of real value added tax, slower than the previous month’s growth of 7.1 percent per year. Private investment also exhibited a slowdown, as reflected by import volume of capital goods rise of 11.2 percent per year, decreased from the previous month’s expansion of 24.1 percent per year. Meanwhile, the external demand increased at a slower pace, as indicated by export value expansion of 15.7 percent per year, decelerated from the previous month’s growth of 21.2 percent per year, as a result of the slowdown in trading partners’ economy, specifically in the US, Euro zone and Japan, and the appreciation of Thai Baht.
Director-General of the Fiscal Policy Office concluded that “Due to the continued increase in October economic indicators, FPO estimated that the Thai economy will maintain its growth momentum in the last quarter of 2010 after the third quarter expansion of 6.7 percent per year.”
Further details are as follows
Monthly Economic Report (October 2010)
Thai economic indicators in October 2010 continued to expand well, despite a deceleration from the previous month, particularly in domestic spending due to the flood problem. Export continued to grow albeit at a slower pace compared to the previous month, as a result of the slowdown in trading partners’ economy and the appreciation of Thai Baht.
1. Private consumption in October 2010 continued to expand well despite showing a deceleration from previous month as a result of the flood problem. This was reflected by the real?term VAT collection in October which grew 4.5 percent from last year, decelerating from the previous month growth of 7.1 percent per year. This was consistent with the slower growth of durable goods consumption as indicated by sales of passenger cars in October 2010 which grew at 42.7 percent per year, slowed down slightly from previous month growth of 46.6 percent per year. This was also in tandem with motorcycle sales in October 2010 which grew at 14.4 percent per year, decreased from previous month rise of 15.7 percent per year. Moreover, Consumer Confidence Index slightly decreased from previous month to 71.6 points, particularly from the flood problem.
2. Private investment in October 2010 also showed a continued expansion despite a deceleration from the previous month. This was reflected by imports of capital goods in October which increased at 11.2 percent per year, slower from last month increase of 24.1 percent per year. This was consistent with the number of commercial cars sales in October 2010 which expanded at 29.6 percent per year, decreased from previous month growth of 35.4 percent per year. Private investment indicator in term of construction as measured from property tax collection for October expanded at 53.8 percent per year, decreased from the previous month’s rise of 85.1 percent per year. This was partly due to accelerated transactions in September 2010 when the tax incentive on property expired.
3. Fiscal indicators in October 2010 showed that fiscal policies continued to support the Thai economy as indicated by public sector expenditures. In October, budget disbursement amounted to 207.5 billion Baht, increased 129.6 percent per year. High level of disbursement was mainly due to a low base effect in October 2009 from delayed implementation of FY2010 Budget Act which was enacted on 22nd October 2009. Current expenditure disbursement amounted to 190 billion baht, increased at 139.0 percent per year. Capital expenditure disbursement amounted to 4.2 billion baht, expanded at 518.4 percent per year as a result of low base in October 2009. Moreover, under the Strong Thailand 2012 Program, there was a disbursement of 4.8 billion Baht in October which contributed to the accumulated disbursement of 239.3 billion Baht or 68.4 percent of the approved budget framework of 350 billion Baht. Net government revenue collection (net of local authorities’ subsidy allocation) for October amounted to 122.5 billion Baht or expanding at 5.9 percent per year thanks to high level of Corporate Income tax, Personal Income tax and automobile taxes.
4. Exports in October 2010 continued to expand but at a decelerated pace from previous month from a decrease in trading partners’ economy and the Thai Baht appreciation. Export value for October at USD 17.1 billion expanded at 15.7 percent from last year, decreased from September 2010 rise of 21.2 percent per year. Export value growth was attributed to export volume growth of 7.6 percent per year, reduced from previous month increase of 12.8 percent per year, while export price grew at 7.5 percent peryear. A decelerated pace of exports could be attributed to almost all export items and market specifically exports to US, Euro zone and Japan. Import value in USD terms also increased steadily although displayed sign of deceleration from the previous month as import level adjusted to the normal level. In October, import value amounted to USD 14.8 billion or expanding at 13.5 percent per year, which was slower than 16.0 percent per year rise in the previous month. Such deceleration in import value was attributed to import volume growth of 6.6 percent, slowed down from 9.7 percent per year expansion in September and import price growth of 6.5 percent, which was higher than the previous month increase of 5.8 percent per year. From higher export value as compared to import value, trade balance in October 2010 continued to be in surplus at USD 2.3 billion.
5. Supply-side sector indicators for October 2010 showed that Manufacturing sector continued to expand but decelerated from the period earlier. At the same time, tourism sector showed sign of improvement, while agricultural sector contracted. Manufacturing Production Index (MPI) in October increased at 6.2 percent per year, decelerating from the 8.1 percent per year growth in the previous month. Similarly, the Thai Industries Sentiment Index (TISI) for October stood at the level of 98.4, declines from the previous month level of 100.8 following the issue of Baht appreciation and the flood problem. For service sector, the number of in-bound tourists in October 2010 amounted to 1.31 million persons or increased by 8.6 percent per year, reflecting continuous improvement from tourism sector. For agricultural sector indicator. Agricultural Production Index (API) in October contracted at -5.8 percent per year, particularly from rice and tapioca production. Agricultural price in October 2010 still expanded at high level of 29.1percent per year, which has enabled real farm income to grow at 16.5 percent per year.
6. Economic stability remained robust. Unemployment rate in September was at 0.9 percent of total labour force, an equivalent of 343 thousands unemployed persons. Headline inflation in October 2010 grew at 2.8 percent per year, decelerated from 3.0 percent per year rise in the period earlier, mainly from decreased prices in some fresh foods items, while core inflation grew at 1.1 percent per year. Public debt to GDP ratio at the end of September 2010 stood at 42.3 percent well below the 60 percent public debt ceiling under Fiscal Sustainability Framework. Likewise, external economic stability remained robust and resilient to risk from volatilities in the global economy as indicated by high-level international reserves at USD 171.1 billion or approximately 3.8 times of short-term external debt.
Source: Fiscal Policy Office / www.fpo.go.th