28 January 2016
"The Thai economy in December and Q4/2015 reflected recovery signs from domestic expenditures particularly in private consumption and investment which were the result of economic stimulus package of the government launched since September 2015. In addition, government spending particularly capital expenditures showed high expansion and this was a supportive factor for the economy. However, export sector continued to contract reflecting economic slowdown of Thailand's trade partners that should be monitored closely in 2016 onwards."Mr. Krisada Chinavicharana, Director-General of the Fiscal Policy Office, Spokesperson of the Ministry of Finance, revealed that "The Thai economy in December and Q4/2015 reflected recovery signs from domestic expenditures particularly in private consumption and investment which were the result of economic stimulus package of the government launched since September 2015. In addition, government spending particularly capital expenditures showed high expansion and this was a supportive factor for the economy. However, export sector continued to contract reflecting economic slowdown of Thailand's trade partners that should be monitored closely in 2016 onwards." The details were summarized as follows:
1. Private consumption in December and Q4/2015 showed improving signs as reflected by real VAT collection in December 2015 which expanded by 6.8 percent per year due to an increase in real VAT collection from domestic consumption which increased by 15.2 percent per year and this reflected the expansion of domestic consumption caused by the government's measures to stimulate domestic expenditures. As a result, real VAT collection of Q4/2015 expanded by 2.0 percent per year or expanded by 2.8 percent per quarter after seasonal adjustment. Likewise, the motorcycle sales expanded for 2 months consecutively by expanding 7.8 percent per year due to the expansion of the sales in Bangkok and vicinities, and regions. Consequently, in Q4/2015 the motorcycle sales expanded by 2.3 percent per year and expanded by 8.8 percent per quarter after seasonal adjustment. In addition, Consumer Confidence Index showed the highest improvement in 7 months by standing at 65.1 points reflecting consumers' confidence in economic situation caused by economic stimulus package particularly tax measures launched at the end of December 2015 by allowing tax deduction on selected purchases of goods and services in personal income tax calculation for tax year 2015 and the decline in domestic retail oil prices.
2. Private investment in December and Q4/2015 improved from previous month and previous quarter particularly in construction sector as reflected by real estate tax collection which expanded by 32.7 percent per year and consequently in Q4/2015 real estate tax collection expanded by 18.8 percent per year or expanded by 19.6 percent per quarter after seasonal adjustment due to temporary reduction of real estate transfer and mortgage registration fees effective 29 October 2015. Meanwhile, the cement sale expanded for 2 months consecutively by increasing 4.1 percent per year. As a result, the cement sale in Q4/2015 increased by 2.1 percent per year or expanded by 1.1 percent per quarter after seasonal adjustment. For investment in equipment and machinery sector,the imports of capital goods excluding special items (airplane, ship, and train) contracted by -0.6 percent per year but expanded by 2.0 percent per month after seasonal adjustment. Consequently, the imports of capital goods excluding special items in Q4/2015 expanded by 0.1 percent per year or expanded by 2.1 percent per quarter after seasonal adjustment.
3.Fiscal indicators in December and Q4/2015 (1 st Quarter of Fiscal Year 2016) showed that fiscal policies continued to support the Thai economy as reflected by the expansion of government investment and the deficit budget. Total budget disbursement was 283.8 billion baht or expanded by 4.8 percent per year. The budget expenditure of current fiscal year was recorded at 239.1 billion baht or decreased by -0.8 percent per year. This amounts comprised (1) current expenditure of 206.0 billion baht decreasing by -7.7 percent per year and (2) capital expenditure of 33.0 billion baht expanding by 87.0 percent per year. As a result, in Q4/2015 (or Q1/FY2016) annual budgetary expenditure was disbursed at 807.7 billion baht or 29.7 percent of FY2016 expenditure framework (2,720.0 billion baht). Meanwhile,the net government revenue collection (net of local authorities' allocation) amounted at 235.5 billion baht or increased by 36.8 percent per year. Consequently, in Q4/2015 (Q1/FY2016) the net government revenue collection (net of local authorities' allocation) amounted at 581.3 billion baht or expanded by 14.6 percent per year. As a result, the budget balance showed the deficit of -39.7 billion baht and in Q4/2015 (Q1/FY2016) the budget balance showed the deficit of -311.4 billion baht. This reflect the role of fiscal policies in supporting the Thai economy.
4. External demand as reflected by exports in December and Q4/2015 continued to contract and the growth in December was lowest in 4 years. The export values in terms of U.S. dollars (USD) in December 2015 contracted by -8.7 percent per year. The contraction was from almost all exporting goods particularly electrical appliances, agriculture, oil and fuel. Meanwhile, the exports contracted in almost all destinations particularly main trade partners such as China, Japan, U.S.A. and ASEAN-5. However, the exporting markets such as EU and CLMV showed positive expansion. As a result, in Q4/2015 export values in USD contracted by -8.1 percent per year.
5. For the supply-side economy, the Agricultural Production Index (API) showed an expansion in 9 months since February 2015 and the expansion increased by 42.9 percent per year due to the postponement of rice cultivation from the mid-2015 to the end of July 2015. The postponement was due to the anxiety of rainfall caused by rain delay. As a result, rice harvest was delayed than usual and led to an expansion of API in paddy sector in December 2015 which was 274.3 percent per year. This drove the overall API to expand. In Q4/2015 the API contracted by -3.2 percent per year but expanded by 5.5 percent per quarter after seasonal adjustment. Meanwhile, Thai Industries Sentiment Index (TISI) improved for 4 months consecutively by up to 87.5 points due to the promotion to stimulate sales during end of year, Thailand International Motor Expo 2015, and tax deduction measure to stimulate people's consumption during New Year festival. In addition, the decrease in fuel positively affected transportation costs of entrepreneurs. Meanwhile,the tourism sector continued to increase as reflected by the number of inbound foreign tourists which was recorded at 2.99 million persons or expanded by 4.7 percent per year and after seasonal adjustment it expanded by 3.2 percent per month. Most inbound foreign tourists were from China, South Korea, and U.S.A. As a result, in Q4/2015 inbound foreign tourists expanded by 3.7 percent per year but contracted by -6.3 percent per quarter after seasonal adjustment partly due to the blast happened at the Ratchaprasong intersection in August 2015.
6. Internal economic stability remained favorable. The unemployment rate in December 2015 was low at 0.7 percent of total labor force or equivalent to 250,000 unemployed persons. As a result, in Q4/2015 the unemployment rate was 0.8 percent of total labor force. Meanwhile, the headline inflation in December 2015 contracted by -0.9 percent per year due to decreasing prices in energy, electric, and meat. The core inflation expanded with the slower rate than that of last month by standing at 0.7 percent per year. Consequently, in Q4/2015 headline inflation was -0.9 percent per year and core inflation increased by 0.8 percent per year. Public debt to GDP at the end of November 2015 stood at 44.5 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 December 2015 were high at 156.5 billion USD, or approximately 2.9 times of shortterm external debt.
Source: Fiscal Policy Office / www.fpo.go.th