26 November 2015
Monthly Economic Report (October 2015)
"The Thai economy in October 2015 showed positive signs from improving economic confidence which is a result from supportive government policies in domestic consumption and investment including fiscal policy through expansionary capital expenditures. As a result, the Thai economy in Q4/2015 is expected to continue expansion."Mr. Krisada Chinavicharana, Director-General of the Fiscal Policy Office, Spokesperson of the Ministry of Finance, revealed that "The Thai economy in October 2015 showed positive signs from improving economic confidence which is a result from supportive government policies in domestic consumption and investment including fiscal policy through expansionary capital expenditures. As a result, the Thai economy in Q4/2015 is expected to continue expansion."
Private consumption in October 2015 was positively supported by Consumer Confidence Ind ex which was up to 62.2 points and this was the first expansion in 10 months. The improvement in Consumer Confidence Index was caused by short-term economic stimulus package and a declining retail price of domestic oil. Meanwhile, real VAT collection from domestic consumption expanded by 4.8 percent per year. However, overall real VAT collection contracted by -4.1 percent per year due to real VAT collection from the import of consumer goods which contracted by -15.3 percent per year. Also, consumption of durable goods as reflected by the motorcycle sales in October 2015 contracted by -6.5 percent per year due to the contraction in regional sales which was caused by decreasing prices of agricultural products and slowing global demand, therefore people's purchasing power was slow down.
Private investment in October 2015 still remained. The investment in construction sector as reflected by real estate tax collection in October 2015 contracted with slower rate by -4.6 percent per year but expanded by 0.2 per month after seasonal adjustment. Meanwhile, the cement sale contracted by -0.3 percent per year and the Construction Materials Price Index (CMI) continued to decrease by -6.5 percent per year. For investment in equipment and machinery sector,the import of capital goods expanded by 5.4 percent per year, however, when excluded special items (airplane, ship, and train), the import of capital goods contracted by -2.7 percent per year.
Fiscal indicators in October 2015 showed that fiscal policies supported the Thai economy particularly the high expansion of government investment and the deficit budget. Total budget disbursement in October 2015 was 374.2 billion baht or expanded by 1.8 percent per year. The budget expenditure of current fiscal year was recorded at 359.6 billion baht or increased by 4.3 percent per year. This amounts comprised of (1) current year expenditure of 336.1 billion baht increasing by 1.8 percent per year and (2) capital expenditure of 23.5 billion baht expanding by 58.7 percent per year. Meanwhile,the net government revenue collection (net of local authorities' allocation) in October 2015 amounted at 165.3 billion baht or decreased by -4.8 percent per year. As a result, the budget balance in October 2015 showed the deficit of -218.1 billion baht and this reflected the role of fiscal policies in supporting the Thai economy.
External demand as reflected by exports in October 2015 showed the continued contraction by -8.1 percent per year due to adverse external factors such as the economic slowdown of Thailand's major trade partners, declining prices of crude oil in world market, and the volatility of exchange rate. The contraction occurred in all exporting destinations except Hong Kong, Vietnam, Philippines, and South Korea which still showed expansion.
For the supply-side economy, Thai Industries Sentiment Index (TISI) in October 2015 improved for 2 months consecutively by stood at 84.7 points. This improvement was due to the increase in purchasing orders during the end of year which is the period of sale promotion from entrepreneurs for stimulating domestic purchasing power. In addition, this improvement was the result from the positive effect of trade with neighboring countries. The tourism sector as reflected by the number of inbound foreign tourists slightly expanded by 1.0 percent per year and increased by 1.9 percent per month after seasonal adjustment. This was the first expansion in 2 months when compared to last month. This reflected that the negative effect of Ratchprasong Bomb in August 2015 decreased. For the agricultural sector , the Agricultural Production Index (API) in October 2015 still contracted by -4.8 percent per year but expanded by 5.4 percent per month after seasonal adjustment due to the expansion of cassava and corn including the continued expansion of livestock sector. Meanwhile, the main products like paddy continued to decrease as it was adversely affected by drought and, in addition, rubber and oil palm still declined.
Internal economic stability remained favorable. The unemployment rate in October 2015 was low at 0.9 percent of total labor force or equivalent to 380,000 unemployed persons . Meanwhile, the headline inflation contracted by -0.8 percent per year due to decreasing energy, electrical, and meat prices. The core inflation stood at 1.0 percent per year. Public debt to GDP at the end of September 2015 stood at 43.3 percent of GDP below the Fiscal Sustainability Framework of 60 percent of GDP. External economic stability remained robust reflecting the resilient ability to risk from the volatilities in global economy as the international reserves at the end of October 2015 were high at 158.3 billion USD, or approximately 2.8 times of short-term external debt.
Source: Fiscal Policy Office / www.fpo.go.th