Mr. Somchai Sujjapongse, Director-General of the Fiscal Policy Office, announced that, "Economic indicators in December and the 4th quarter of 2013 showed slowing signs in both domestic spending and supply-side, partly due to political unrest which affected consumer and producer confidence and tourism. However, export expanded slightly in tandem with improving signs from trading partners. For the private consumption indicators, passenger car sales in December 2013 also showed a contraction of -28.3 percent per year, decreasing for the 8th consecutive months. This resulted in a decrease of -39.7 percent from a year earlier in the 4th quarter of 2013. Meanwhile, motorcycle sales in December 2013 and Q4/2013 contracted by -17.2 percent and -14.9 percent from a year earlier, respectively. Moreover, the real VAT collection in December 2013 expanded by 3.1 percent due to low inflation rate in this month. This resulted in a -1.0 percent year-on-year decrease in the fourth quarter of 2013.
Private investment in December and Q4/2013 also showed slowing signs, especially in machinery investment, as commercial car sales in December 2013 decreased at -14.5 percent per year. This resulted in a decrease of -24.1 percent in the fourth quarter. Meanwhile, the real estate tax collection in December and Q4/2013 which expanded by 9.1 percent and 9.1 percent respectively. This reflected that the real estate market showed stable sign. However, exports in December 2013 showed improving signs with 1.8 percent growth y-o-y due to improving signs of Thailand's trading partner economies, especially United States and Europe.
Supply-side indicators also showed slowing sign, as reflected by Manufacturing Production Index (MPI) in December 2013 which contracted by -6.1 percent. The manufacturing sector which contracted in the December 2013 included food industry (-14.3 percent), vehicles (-21.3 percent) and furniture (-15.3 percent). However, manufacturing that showed expansion were leather (7.6 percent), radio and television (2.8 percent) and textile (2.4 percent). This resulted in a -7.1 percent per year decrease in the fourth quarter of 2013, decelerating from last quarter's contraction at -3.5 percent. Consistently, Thai Industrial Sentiment Index (TISI) in December 2013 stood at 88.3 points, the lowest points in the past 25 months. This was due to producers' concerns about political unrest which affected Thai economy. The number of inbound tourists in December 2013 increased only 6.7 percent from last year, with a decrease of -3.9 percent per year after seasonal adjustment (m-o-m SA). In total, the number of inbound tourists in the fourth quarter 2013 expanded by 10.7 percent from a year earlier, decelerating from last quarter which stood at 26.1 percent.
Nonetheless, Economic stability remained robust on both internal and external sides. Headline inflation in December 2013 was at 1.7 percent. Unemployment rate in December 2013 stood at 0.6 percent of total labor force. Likewise, external economic stability remained robust and resilient to the risk from volatilities in the global economy, as indicated by the high-level of international reserves at the end of December 2013 at 167.2 billion USD, or approximately 2.8 times of short-term external debt.
Given that economic indicators in December and the 4th quarter of 2013 showed slowing signs, Thai economy in 2013 is expected to grow slower than its potential. In this connection, FPO expects that Thai economy would expand by 2.8 percent per year in 2013 in accordance with our forecast as of end of December 2013."
Source: Fiscal Policy Office / www.fpo.go.th