26 February 2016
"The Thai economy in January 2016 was supported by well expansion from government spending and tourism sector. However, private expenditures would still need to be monitored due to their softening signs and exports showed continued contraction."Ms.Kulaya Tantitemit, Director of the Macroeconomic Policy Bureau, Deputy Spokesperson of the Ministry of Finance, revealed that "The Thai economy in January 2016 was supported by well expansion from government spending and tourism sector. However, private expenditures would still need to be monitored due to their softening signs and exports showed continued contraction." The details were summarized as follows:
Private consumption in January 2016 showed slowing sign as reflected by real VAT collection in January 2016 which contracted by -1.2 percent per year due to a decrease in real VAT collection from imports which continued to contract. Meanwhile, real VAT collection from domestic consumption slightly expanded. Consumer Confidence Index declined in 4 months by standing at 64.4 points and this reflected that consumers were anxious about Thai economy which recovered slowly and was affected from the uncertainty of global economy. In addition, prices of agricultural products stood at the low level. However, the motorcycle sales continued to expand for 3 months consecutively by expanding 12.9 percent per year due to the expansion of the sales in Bangkok and regions as a cause of sale promotion of entrepreneurs during New Year. In addition, paddy harvest season brought to farmers' real incomes highly increase in the previous month, while in January 2016 farmers' real income slightly contracted by -3.5 percent per year
Private investment in January 2016 showed slowing sign from last month particularly in construction sector as reflected by real estate tax collection which contracted by -5.6 percent per year. This contraction was partly due to the accelerated transfer in former period before the new land appraisal prices would be applied on January 1, 2016. Meanwhile, the cement sale turned to contract in 2 months by declining -0.3 percent per year and Construction Materials Price Index (CMI) contracted by -6.2 percent per year due to a decline in prices of steel and steel products caused by the declining prices in world steel merket. For investment in equipment and machinery sector,the imports of capital goods turned to expand by 2.9 percent per year and the imports of capital goods excluding special items (airplanes, ships, and trains) expanded by 4.9 percent per year.
Fiscal indicators in January 2016 reflected fiscal policies continued to support the Thai economy particularly the government investment which still showed high expansion. Total government expenditure was disbursed at 259.9 billion baht or expanded by 20.5 percent per year. The annual budgetary expenditure was disbursed at 241.0 billion baht or increased by 21.8 percent per year. This amounts comprised (1) current expenditure which decreased by 22.0 percent per year and (2) capital expenditure which expanded by 19.6 percent per year. Meanwhile,the net government revenue collection (net of local authorities' allocation) amounted at 156.4 billion baht or contracted by -2.6 percent per year. As a result, the budget balance showed the deficit of -109.7 billion baht and this reflected the role of fiscal policies on expenditure side in supporting the growth of Thai economy.
External demand as reflected by exports in January 2016 continued to contract. The export values in terms of U.S. dollars (USD) contracted by -8.9 percent per year in almost all exporting goods particularly in oil and fuel, and electrical appliances. Meanwhile, the exports contracted in almost all destinations particularly main trade partners such as ASEAN-5, Japan, and U.S.A. However, the exports to Australia, Philippines and CLMV showed positive expansion.
Supply-side economy was supported by an expansion of tourism sector as reflected by the number of inbound foreign tourists in January 2016 which was recorded at 3.0 million persons or expanded by 15.0 percent per year. This expansion was supported by tourists from China, South Korea, and Malaysia while tourists from Russia still contracted. Moreover, Agricultural Production Index (API) in January 2016 expanded by 2.8 percent per year due to the expansion of rice resulted from the postponement of rice cultivation from the mid-2015 to the end of July 2015. In addition, fruits increased in most categories, and the livestock and fishery still expanded well. Meanwhile, Thai Industries Sentiment Index (TISI) in January 2016 decreased in 5 months and it was down to 86.3 points due to the concerns of the slowdown in domestic purchasing power which was had been already accelerated from the previous month, the anxiety of drought, and risk factor from global economy particularly China economy.
Economic stabilities remained favourable. Unnemployment rate in January 2016 was low at 0.9 percent of total labor force or equivalent to 346,000 unemployed persons. Meanwhile, headline inflation still contracted by -0.5 percent per year and core inflation expanded by 0.6 percent per year. Public debt to GDP at the end of December 2015 stood at 44.4 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 international reserves at the end of January 2016 were high at 160.1 billion USD, or approximately 3.0 times of short-term external debt.
Source: Fiscal Policy Office / www.fpo.go.th