Mr. Somchai Sujjapongse, Director-General of the Fiscal Policy Office , revealed that "Indicators in February 2014 indicated that Thai economy showed continued slowing signs which was affected by political unrest both on expenditure and production sides, especially tourism. Meanwhile, exports showed improving signs toward major trading partners".
Private consumption in February 2014 showed slowing sign from last month due to continual political unrest. Consumer Confidence Index in February 2014 stood at 59.7 points, the lowest level in past 12 years. Further, real VAT collection contracted by -2.4 percent per year after 2 consecutive months of growth. The motorcycle sales contracted by -14.0 percent from a year earlier. Moreover, passenger car sales in February 2014 also showed continued contraction of -54.2 percent per year.
Private investment indicators show slowing signs both in construction and machinery sectors. In machinery sector, import of capital goods declined by -6.6 percent, together with decrease in commercial car sales of -35.9 percent. In construction sector, real estate tax collection declined by -3.8 percent. This reflected that real estate market in Thailand started to show slowing signs. Moreover, cement sales also contracted by -2.1 percent per year.
Export in February 2014 expanded by 2.4 percent due to expansion in electronics, electrical appliances and vehicles along with global economic growth and our major trading partners. Exports to major trading partners such as Europe, Japan, Hong Kong and CLMV increased by 7.0, 2.7, 8.7 and 14.1 percent respectively. However, export value excluding gold expanded by 0.3 percent per year.
Supply-side indicators also showed slowing sign, as reflected by Manufacturing Production Index (MPI, preliminary data) in February 2014 which contracted by -4.4 percent. This was due to contraction in vehicles, furniture and decorations, petroleum by -21.3, -13.9, and -8.6 percent per year respectively. However, items that showed expansion were textiles, and radio and television by 12.5 and 5.7 percent respectively. Consistently, Thai Industrial Sentiment Index (TISI) in February 2014 stood at 85.7 points, lowest point since July 2009, due to producers' concerns about political situation. Moreover, service sector especially tourism sector showed slowing sign as reflected by the number of inbound tourists in February 2014 was 2.2 million persons or decreased by -8.1 percent per year. This showed the first contraction in past 27 months since flood crisis in November 2011. Moreover, tourists which contracted the most were China, Malaysia and Japan. However, Agricultural Production Index (API) in February 2014 increased by 1.9 percent per year but decelerated from last month. This was due to decrease in paddy rice production from drought while rubber harvest area increased in Eastern and Northeastern region of Thailand, in tandem with increasing livestock especially pork and poultry from strong demand.
Economic stability remained robust on both internal and external sides. Headline inflation in February 2014 was at 2.0 percent. Unemployment rate in February 2014 stood at 0.9 percent of total labor force on preliminary data. Likewise, external economic stability remained robust and resilient to risks from volatilities in global economy, as indicated by high-level of international reserves at the end of February 2014 at 168.1 billion USD, or approximately 2.8 times of short-term external debt.
Indicators in February 2014 indicated that Thai economy in the first quarter of 2014 showed slowing signs which was affected by continual political unrest. Therefore, FPO may revise down our forecast in 2014 from December 2013. We expected that exports would play important role in boosting Thai economy.
Source: Fiscal Policy Office / www.fpo.go.th