28 April 2016
"The Thai economy in March 2016 and Q1/2016 reflected a gradual recovery from last year as a result of the government's ongoing economic measures and the expansion of tourism sector. Investment showed improving signs, however, export sector remained faced with risk factors due to an uncertainty in global economy, which reduced economic confidence and slowed down private consumption."Mr. Warotai Kosolpisitkul, Deputy Director-General of the Fiscal Policy Office, and Ms. Kulaya Tantitemit, Executive Director of Macroeconomic Policy Bureau revealed that "The Thai economy in March 2016 and Q1/2016 reflected a gradual recovery from last year as a result of the government's ongoing economic measures and the expansion of tourism sector. Investment showed improving signs, however, export sector remained faced with risk factors due to an uncertainty in global economy, which reduced economic confidence and slowed down private consumption." The details were summarized as follows:
Private consumption in March 2016 and Q1/2016 showed slowing signs, as real VAT collection in March 2016 contracted by -1.6 percent per year but increased slightly by 0.8 percent per month after seasonal adjustment. Consequently, real VAT collection in Q1/2016 slightly expanded by 0.1 percent per year but contracted by -1.0 percent per quarter after seasonal adjustment. Motorcycle sales contracted by -9.4 percent per year but expanded by 17.2 percent per month after seasonal adjustment. As a consequence, motorcycle sales in Q1/2016 contracted by -3.3 percent per year but expanded by 3.6 percent per quarter after seasonal adjustment. Meanwhile, imports of consumers' goods turned to expand by 18.5 percent per year, resulting in Q1/2016 imports of consumers' goods expanded by 3.6 percent per year and expanded by 7.8 percent per quarter after seasonal adjustment. However, farmers' real income contracted by -5.2 percent per year and in Q1/2016 farmers' real income contracted by -7.1 percent per year. In addition, Consumer Confidence Index declined for 3 months consecutively by standing at 62.4 points and this reflected that consumers were anxious about Thai economy which recovered slowly and was affected from the uncertainty of global economy particularly the slowdown in China economy which adversely affected Thai exports of goods. In addition, prices of agricultural products stayed at the low level.
Private investment in March 2016 and Q1/2016 showed improving signs particularly in construction sector as reflected by real estate tax collection which continued to expand by 11.9 percent per year and increased by 5.2 percent per month after seasonal adjustment. Consequently, in Q1/2016 real estate tax collection expanded by 4.5 percent per year. In addition, cement sales expanded by 3.4 percent per year but slightly decreased by -0.3 percent per month after seasonal adjustment. Consequently, cement sales in Q1/2016 expanded by 3.1 percent per year and increased by 1.8 percent per quarter after seasonal adjustment. For investment in equipment and machinery sector,the imports of capital goods in March 2016 turned to expand by 6.5 percent per year but slightly contracted in Q1/2016 by -1.0 percent per year. However, after seasonal adjustment, the imports of capital goods expanded by 0.5 percent per quarter.
Fiscal indicators in March 2016 and Q1/2016 (Q2/Fiscal Year 2016) showed that fiscal policies continued to support the Thai economy particularly government expenditures in accelerating investments which showed high expansion. Total government expenditure was disbursed 259.4 billion baht or expanded by 3.2 percent per year. The annual budgetary expenditure contracted by -1.7 percent per year from (1) current expenditure which contracted by -5.7 percent per year, while (2) capital expenditure highly expanded by 18.5 percent per year. As a consequence, in Q1/2016 (or Q2/FY2016) total government expenditure was disbursed 680.0 billion baht or expanded by 10.1 percent per year. Net government revenue collection (net of local authorities' allocation)expanded by 15.1 percent per year and in Q1/2016 (or Q2/FY2016)the net government revenue collection (net of local authorities' allocation) expanded 4.5 percent per year. As a result, the budget balance showed the deficit of -77.8 billion baht in March 2016 and of -204.8 billion baht in Q1/2016 (or Q2/FY2016).
External demand as reflected by exports in March 2016 showed improving signs for 2 months consecutively. In March 2016, export values in terms of U.S. dollars (USD) expanded by 1.3 percent per year but contracted by -0.9 percent per month after seasonal adjustment. Values of exports expanded due to exports of gem and jewellery, and gold, including the exports of vehicles and parts, and machinery that turned to expand. The export markets which showed an expansion comprised ASEAN-5 and Australia. As a result, in Q1/2016, export values in terms of U.S. dollars (USD) expanded by 0.9 percent per year and expanded by 2.9 percent per quarter after seasonal adjustment.
Supply side indicators were affected a positive factor from tourism sector as reflected by the number of inbound foreign tourists in March 2016 which continually expanded by 15.4 percent per year and increased by 1.2 percent per month after seasonal adjustment due to expansion of tourists from almost regions particularly East Asia and Europe. As a result, in Q1/2016 the number of inbound foreign tourists expanded by 15.5 percent per year or expanded by 14.8 percent per month after seasonal adjustment. Meanwhile,the Agricultural Production Index (API) showed a contraction of -3.5 percent per year due to a contraction in paddy, corn and oil palm. In Q1/2016, the Agricultural Production Index (API)showed a contraction of -1.9 percent per year but increased by 3.3 percent per quarter after seasonal adjustment. Thai Industries Sentiment Index (TISI) was at 86.7 points, the first expansion in 3 months due to economic stimulus package in real estate sector and public investment in infrastructure which increased purchasing order and sales in construction materials.
Internal stabilities remained favourable and external stabilities remained robust. Headline inflation in March 2016 was -0.5 percent per year as oil prices gradually increased and tobacco prices were adjusted to increase as a result of an increase in tobacco stamps since February 2016. Core inflation in March 2016 was 0.8 percent per year. Consequently, in Q1/2016 Headline inflation contracted by -0.5 percent per year and Core inflation expanded by 0.7 percent per year. Meanwhile, unemployment rate in March 2016 was 1.0 percent of total labor force or equivalent to 397,000 unemployed persons. Public debt to GDP at the end of February 2016 stood at 44.1 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 March 2016 were high at 175.1 billion USD, or approximately 3.3 times of short-term external debt.
Source: Fiscal Policy Office / www.fpo.go.th