“Thai economy in August 2011 continued to grow from both internal and exports sector that exhibited high growth coupled rebound to a positive growth of manufacturing and agricultural sector"
Mr. Naris Chaiyasoot, Director-General of the Fiscal Policy Office, revealed that “In August 2011, the Thai economy continued to show a strong expansion, attributed mainly from steady expansion of domestic demand, as reflected by the real term value-added-tax (VAT) collection which grew at 13.7 percent per year, faster than the previous month increase of 4.6 percent. This was consistent with imports of consumer goods in USD term which increase at 18.7 percent per year following the previous month expansion of 14.0 percent per year. Meanwhile, private investment also continued to expand well as indicated by imports of capital goods which showed an increase of 33.7 percent per year. This was in tandem with sales of commercial cars which expanded at 15.7 percent per year. Furthermore, exports sector in August 2011 showed high expansion with a record high export value of 21.6 billion USD, an expansion of 31.1 percent from last year. This was mainly due to well-expanded growth in almost all sectors and markets, especially ASEAN 5, China and Japan.
Mr. Boonchai Charassangsomboon, Executive Director of Macroeconomic Policy Bureau, further elaborated that “Economic indicators in manufacturing sector rebounded to a positive growth as indicated by Manufacturing Production Index (Preliminary) in August 2011 which showed an expansion of 7.0 percent per year, mainly due to an increase in production of electronics, automobile and jewelries. This was consistent with an expansion of 3.5 percent per year of Agricultural Production Index. Meanwhile, service sector as indicated by number of inbound tourists continued to expand well at 35.4 per year.
Director-General of the Fiscal Policy Office concluded that “Thailand economic indicators in August 2011 indicated that private consumption and private investment as well as exports showed a strong growth. As such, the Ministry of Finance is confident that Thai economy in 2011 and 2012 would grow by 4.0 and 4.5 percent respectively.”
Monthly Economic Report (August 2011)
Thai economy in August 2011 continued to grow from both internal and exports sector that exhibited high growth coupled rebound to a positive growth of manufacturing and agricultural sector
1. Private consumption in August 2011 continued to grow. This was reflected by the real-term VAT collection in August 2011 that grew 13.7 percent from last year, faster than the previous month growth of 4.6 percent per year. Import volume of consumption goods in August 2011 grew by 18.7 percent, accelerating from the previous month increase of 14.0 percent. This was consistent with consumption of durable goods as measured by number of passenger car sales in August 2011 which increased at 26.4 percent from last year, an improvement from 12.2 percent per year expansion in the previous month. Furthermore, motorcycle sales grew at 15.9 percent in August 2011, higher than the previous month expansion of 11.6 percent. This was mainly due to an expansion of 7.1 percent per year of real farm income in August 2011 following the -8.1 percent from last year contraction in the previous month. Nevertheless, Consumer Confidence Index in August 2011 was at 73.8 points, a decrease from the previous month level of 74.4 points, partly due to the flooding problem in different provinces of Thailand, as well as uncertainty in global economic vulnerability that could impact Thai economy.
2. Private investment in July 2011 also continued to expand well, from both investment in machinery and construction. Private investment indicator in terms of machinery as reflected by imports of capital goods in August 2011 expanded at 33.7 percent from last year, accelerating from the previous month growth of 14.2 percent per year. This was consistent with commercial car sales which showed an expansion of 15.7 percent from last year, an increase from the previous month growth of 10.1 percent per year. Private investment indicator in terms of construction in August 2011 steadily grew as measured by property tax collection in August 2011 which showed an expansion of 47.0 percent from last year, following the previous month growth of 47.2 percent per year. This was consistent with cement sales in August 2011 which grew at 15.3 percent, a continuous expansion from the previous month increase of 8.6 percent.
3. Exports in August 2011 continued to expand well. Export value for August 2011 stood at 21.6 billion USD, an expansion of 31.1 percent from last year, following the previous month growth of 33.8 percent, due to the 22.8 percent expansion of export volume and 6.7 percent growth of export price. This growth was particularly attributed to well-expanded growth in all sectors and markets, especially ASEAN-5, China and Japan. Imports value in USD terms showed steady expansion. Import value in August 2011 amounted at a record high level of 22.8 billion USD, an increase of 44.0 percent per year, accelerating from the previous month expansion of 13.5 percent. This was due to 28.9 percent growth in import volume, an acceleration from the previous month growth of 1.2 percent and 11.8 percent growth in import price, slightly decrease from the previous month growth of 12.1 percent. This was mainly due to a well-expanded growth in almost all sector, especially raw material which showed an expansion of 41.2 percent from last year, an improvement from the previous month contraction of -3.7 percent per year. This resulted in trade deficit of -1.2 billion USD in July 2011.
4. Fiscal indicators in August 2011 showed that fiscal policy continued to support the Thai economy as indicated by government expenditure. In August 2011, budget disbursement amounted to 143.5 billion Baht, an increase of 30.4 percent per year. This was mainly due to an increase in several disbursement items such as debt repayment of 8.3 billion Baht, Ministry of Education expenses of 7.9 billion baht and department of local administration expenses of 4.5 billion Baht. Accumulated disbursement for the first eleven months of FY2011 (October 2010 — August 2011) stood at 1,984.5 billion baht, an expansion of 24.7 percent from the same period of last year, or 79.7 percent of the budget framework (2,170.0 billion Baht). The total disbursement in July 2011 was composed of 1) Current expenditure of 1,634.9 billion Baht, expanded at 27.4 percent per year 2) Capital expenditure of 231.0 billion Baht, or increase at 42.7 percent and 3) Carry over budget of 118.6 billion Baht. Furthermore, in August 2011, 2.6 billion Baht was disbursed under the Strong Thailand 2012 Program, resulting in the accumulated disbursement of 289.2 billion Baht or 82.6 percent of the approved budget framework of 350 billion Baht. Net government revenue collection (net of local authorities’ subsidy allocation) for August 2011 amounted to 301.2 billion Baht, an increase of 18.7 percent from last year or 52.6 billion baht higher than revenue estimation. This was mainly due to higher than estimated corporate income tax collection from profit estimated for the first half of 2011 of 49.3 billion baht. This was consistent with listed companies operating result which expanded at Fiscal Policy 31.3 percent per year. Furthermore, higher than estimated excise tax collection, which was mainly due to 1) recovery in automotive sector and 2) 2.6 billion Baht higher than estimated of petroleum subsidies collection from higher than estimated crude oil price. This resulted in 1,789.4 billion Baht revenue collection for the first eleven months of FY2011 (October 2010 — August 2011) or 229.2 billion Baht higher than revenue estimation.
5. Supply-side sector indicators for August 2011 showed an expansion in manufacturing and agricultural sector after a contraction in the previous month, while service sector continued to expand well. Manufacturing production index in August 2011 grew at 7.0 percent per year, an improvement from the previous month contraction of -0.7 percent per year. This was mainly due to an expansion in electronics, vehicles and jewelries sectors. This was consistent with capacity utilization index, which stood at 64.7 points in August 2011, an increase from the previous month level of 63.1 points. Meanwhile, agricultural sector’s performance as measured by Agricultural Production Index (API) in August 2011 showed a increase of 3.5 percent from last year, accelerating from the previous month contraction of -7.1 percent from last year. This was mainly due to an expansion in tapioca production owing to plant disease subsided. While production in major crops production such as rice and rubber continued to contract, as the climate was not in favor of production and harvest. Meanwhile, real farm income expanded at 9.0 percent per year, acceleration from the previous month growth of 4.8 percent per year. Furthermore, service sector indicators as reflected by tourism indicators in August 2011 continued to expand well. The number of inbound tourists was recorded at 1.7 million persons, an increase of 35.4 percent from last year. This well-expanded growth was mainly due to an increase of tourists from Asian country groups, particularly China, Vietnam, and Japan.
6. Economic stability remained robust. Headline inflation in August 2011 grew by 4.3 percent per year, mainly from an increase in prices of processed food, fresh fruits and transportation and fuel items. Core inflation showed an expansion at a faster pace of 2.9 percent per year. While unemployment rate in July 2011 was at 0.5 percent of total labour force, an equivalent of 205.9 thousands unemployed persons. Public debt to GDP ratio at the end of July 2011 stood at 40.6 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 the end of August 2011 at USD 189.4 billion or approximately 3.5 times of short-term external debt.
Source: Fiscal Policy Office / www.fpo.go.th