29 June 2015
Monthly Economic Report (May 2015)
"Economic indicators in May 2015 showed that for the demand side, the government expenditures supported economy, while private consumption and private investment showed slowing signs. Meanwhile, exports continued to contract. The supply-side economy was significantly supported by the strong growth of tourism sector even though agricultural sector continued to contract and drought situation should be monitored closely. Thailand's internal and external economic stabilities remained robust."Mr. Krisada Chinavicharana, Director-General of the Fiscal Policy Office, Spokesperson of the Ministry of Finance, revealed that "Economic indicators in May 2015 showed that for the demand side, the government expenditures supported economy, while private consumption and private investment showed slowing signs. Meanwhile, exports continued to contract. The supply-side economy was significantly supported by the strong growth of tourism sector even though agricultural sector continued to contract and drought situation should be monitored closely. Thailand's internal and external economic stabilities remained robust."
Private consumption in May 2015 slowed down as reflected by the real VAT collection from domestic consumption base in May 2015 , which continued to increase by 11.6 percent per year. Meanwhile, the real VAT collection from imports continued to decrease by -19.4 percent per year. As a consequence, overall real VAT collection decreased by -2.5 percent per year and contracted by -2.8 percent per month after seasonal adjustment. The consumption of durable goods showed a contraction as reflected by the motorcycle sales, which decreased by -5.4 percent per year. However, after seasonal adjustment, the motorcycle sales expanded by 16.3 percent per month due to the expansion of motorcycle sales in Bangkok (6.0 percent per month) and other regions (14.2 percent per month). Meanwhile, the real income's farmers contracted with slower pace from -17.8 percent per year last month to -10.8 percent per year in May 2015 and this was corresponding with the slower decline in Agricultural Production Index (API) and agricultural prices. Meanwhile, the passenger car sales still contracted by -21.1 percent per year or contracted by -9.1 percent per month. In addition, Consumer Confidence Index was down to 65.0 points lowest in 11 months. This decline was caused by the anxiety of an unclear recovery of domestic economy. In addition, the agricultural prices particularly in paddy and rubber remained at low level and this caused the slowdown in domestic purchasing power.
Private investment in May 2015 showed the slowing signs. For the investment in construction sector,the real estate tax collection in May 2015 showed the first contraction in 5 months by decreasing -11.3 percent per year. However, cement sales contracted by -0.5 percent per year but expanded by 2.8 percent per month. Meanwhile, for investment in equipment and machinery sector,the commercial car sales continued to contract by -19.7 percent per year. However, after seasonal adjustment, the commercial car sales showed the first expansion in 5 months by increasing 2.1 percent per month. The imports of capital goods in May 2015 contracted by -5.3 percent and after excluding airplane, ship, and train the imports of capital goods decreased -7.7 percent per year.
Fiscal indicators in May 2015 showed that the government expenditures was the main support of economy expansion. The total budget disbursement in May 2015 was 176.8 billion baht or expanded by 14.6 percent per year. Looking into details, capital expenditure expanded by 47.2 percent per year and the current expenditure expanded by 10.9 percent per year.The net government revenue collection (net of local authorities' allocation) in May 2015 amounted at 224.8 billion baht or decreased by -19.3 percent per year. The budget balance in May 2015 showed the deficit of -10.6 billion baht.
External demand as reflected by exports in May 2015 showed the fifth consecutive months of contraction. The exports in May 2015 was amounted at 18.4 billion USD or contracted by -5.0 percent per year.This contraction was caused by the slowdown of global economy and Thailand's main trade partners. The slowdown of purchasing power in world market caused the contraction in export goods such as electrical appliances, vehicles, and agro-industry. The export markets showing a contraction were Japan, Eurozone, Africa, and ASEAN-9.
The supply-side economy was supported by the expansion from tourism sector. In May 2015, the number of inbound tourists was recorded at 2.31 million persons or expanded by 38.2 percent per year or increased by 6.5 percent per month. This expansion was mainly due to the short-distance tourists from China and Malaysia. However, the tourists from Europe still contracted. In addition, the preliminary data during 1-21 June 2015 showed that the number of inbound tourists totaled 1.56 million persons or highly expanded by 53.6 percent per year. This reflected the strong growth in tourism sector. However, Agricultural Production Index (API)in May 2015 contracted by -7.3 percent per year but expanded by 0.7 percent per month due to the contraction in rice, rubber, oil palm, and corn for animal feed. In addition, Thai Industries Sentiment Index (TISI) in May 2015 stood at 85.4 points, which was the fifth consecutive month. This was due to the concern of global economy and drought, which affected the purchasing power of domestic consumers particularly in agricultural sector.
Internal economic stability remained favorable. The unemployment rate in May 2015 (preliminary) was low at 0.9 percent of total labor force or equivalent to 354,000 unemployed persons . Meanwhile, headline inflation in May 2015 contracted by -1.3 percent per year and this was the fifth consecutive month of contraction. This was due to the low level of energy prices. The core inflation was down to 0.9 percent per year. External economic stability remained robust , as indicated by high-level of international reserves at 158.5 billion USD, or approximately 2.9 times of short-term external debt. These reflected the resilient ability to risk from the volatilities in global economy.
The latest status of the policies of the Ministry of Finance during the past months comprised of (1)the Government Bank Expo. The Fiscal Policy Office, Ministry of Finance, co-hosted with 9 government financial institutions, 4 nanofinance entrepreneurs, and 7 government authorities working together to provide financial literacy in 5 provinces on 27-28 June 2015. The success of this event as measured by the number of participants in 5 provinces amounted at 100,000 participants and the deposits were totalled at 5 billion baht. In addition loans to small entrepreneurs were totalled more than 10,000 million baht. Moreover, the new customers of state financial institutions increased by more than 10,000 customers and this will alleviate the suffering of people and small entrepreneurs that cannot access to financial resources. Also, this will promote savings of people. Due to this event, people interested inquiries from agencies which provided financial literacy and credit verification. The Legal Execution Department has joined the successful execution mediation 293 cases worth over 160 million baht. Further, more than 500 participants were interested in Nano-finance loans from 4 attending entrepreneurs and some of them were interested in applying for Nano-finace loans and other loans worth more than 40 million baht. This event was the first step of public relations for people and small entrepreneurs to aware of the alleviating measurements of the state financial institutions to customers who are unable to access to fundamental financial services. (2) Nano-Finance loans aim to help low-income people to access financial resources for occupation purposes. The loan will be provided not more than 100,000 baht per case with the interest rate not exceeding 36 percent per year. At the end of May 2015, the Ministry of Finance has issued licenses to 9 companies. 2 companies have already started operation. In addition, there are 70 perspective companies interested to start Nano-Finance businesses.
Source: Fiscal Policy Office / www.fpo.go.th