Mr. Somchai Sujjapongse, Director-General of the Fiscal Policy Office,revealed that "Indicators in May 2014 indicated that Thai economy on expenditure side showed improving signs, while public spending and private confidence increased due to improving political situation. External demand showed slowing signs from exports of goods and services. Moreover, internal stability remained robust with slight pressure on inflation while external stability remained strong".
Private consumption in May 2014 showed improving sign from last month. This was reflected by real VAT collection which expanded by 2.3 percent per year, the first expansion in past 3 months. Looking into details, the real VAT collection on import goods expanded by 5.0 percent per year, the first increase in past 15 months, while the real VAT collection on domestic consumption increased by 0.1 percent per year. Likewise, Consumer Confidence Index in May 2014 stood at 60.7 points, the first expansion in past 14 months and the highest level in 4 months since February 2014. This was due to consumers' confidence about Thai economy and improvement in political situation.
Private investment in May 2014 also showed improving signs from last month for private investment in construction sector. This was reflected by cement sale in May 2014 which contracted by -1.8 percent per year, but increasing by 1.0 percent from last month after seasonal adjustment (m-o-m SA). Moreover, the real estate tax collection also declined by -1.0 percent per year, but increasing by 2.0 percent from last month after seasonal adjustment (m-o-m SA). Private investment indicators of machinery sector also showed slowing signs as reflected by continued decrease in commercial car sales by -31.7 percent per year.
Public spending accelerated due to improving political situation as reflected by the current year expenditure of 142.5 billion baht, which expanded by 13.3 percent per year, increased from last month's growth of 5.6 percent per year. For the first 8 months of FY2014, the budget disbursement recorded at 1,565.6 billion baht, the disbursement rate stood at 62.0 percent of budget framework FY2014 by 2,525.0 billion baht, increased from last month' rate of 56.4 percent of budget framework.
External demand contracted from last year . Export value in May 2014 stood at 19.4 billion USD, contracted by -2.1 percent from last year, decreasing by -2.6 percent from last month after seasonal adjustment (m-o-m SA). Exports to China, Japan, ASEAN-5 and Australia contracted the most. This was mainly resulted from contraction in agricultural products, vehicles and electrical appliances.
Supply-side indicators in May 2014 suggested slight slowdown especially in manufacturing and tourism . Manufacturing Production Index (MPI) in May 2014 continued to decrease by -4.1 percent from a year earlier. This was due to contraction in vehicles, jewelry and food. However, items that showed expansion were radio and television, electronics, petroleum and textiles. Consistently, Thai Industrial Sentiment Index (TISI) in May 2014 stood at 85.1 points, the first expansion in 7 months, since the political situation improved. Service sector showed slowing signs from last year as reflected by the number of inbound tourists in May 2014 was 1.7 million persons or decreased by -10.7 percent per year. The number of tourists from China, Malaysia and Singapore contracted the most. But the tourists from Laos, England and Vietnam expanded. Meanwhile, Agricultural Production Index (API) in May 2014 increased by 6.9 percent per year. This was due to increasing crop production such as corn and first rice. However, agricultural price contracted by -8.6 percent per year. This resulted in a contraction of -5.8 percent in real farmer income.
Internal stability remained robust with slight pressure on inflation while external stability remained strong . Headline inflation in May 2014 was at 2.6 percent. Unemployment rate in May 2014 stood at 0.9 percent of total labor force or equivalent to 362,000 unemployed persons. 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 May 2014 at 167.5 billion USD, or approximately 2.76 times of short-term external debt.
Moreover, Director-General of the Fiscal Policy Office concluded that May 2014 was the month of transition of Thai economic recovery since NCPO came to restore normal administration. FPO expects that the engines of growth particularly private consumption and investment and public spending would support Thai economy starting June 2014.
Source: Fiscal Policy Office / www.fpo.go.th