Mr. Krisada Chinavicharana, Director-General of the Fiscal Policy Office, Spokesperson of the Ministry of Finance revealed that "The Thai economy in July 2016 gradually improved as private consumption showed improving signs from an expansion in passenger car sales and registration of new motorcycles partly due to an increase in farmers' real income, while exports of goods declined. Meanwhile, the supply side economy improved from positive expansion in agricultural sector and tourism sector due to a continuous surge of inbound foreign tourists." The details were summarized as follows:
Private consumption in July 2016 showed improving signs as registration of new motorcycles expanded by 7.4 percent per year in Bangkok Metropolitan Region and other regions, reflected the consecutive recovery of consumers' purchasing power resulting from the start rising trend of agricultural prices. Passenger Car Sales in July 2016 expanded by 9.6 percent per year, in line with farmer's real income which increased by 17.7 percent per year. Meanwhile, real VAT collection expanded at slower pace by 0.9 percent per year, lower than that of last month which expanded by 6.5 percent per year as real VAT collection from domestic consumption base showed less expansion and real VAT collection from import base turned to contract.
Private investment in July 2016 showed slowing signs. Investment in construction sector as reflected by real estate tax collection contracted by -20.8 percent per year, whereas cement sales contracted by -4.0 percent per year. Investment in equipment and machinery sector as reflected by the imports of capital goods contracted by -0.7 percent per year and after excluding special items (airplanes, ships, and trains) the imports of capital goods contracted by -5.0 percent per year.
For fiscal indicators in July 2016, net government revenue collection (net of local authorities' allocation) was amounted at 174.0 billion baht or expanded highly by 22.2 percent per year as the revenue collection from other government services expanded highly particularly the transitional royalty petroleum, the license auction to use spectrum in 900 MHz (4G), and license auction to operate digital TV Phase III. In addition, total government expenditure was disbursed 184.2 billion baht or contracted by -17.0 percent per year. The annual budgetary expenditure was disbursed 176.1 billion baht or contracted by -15.6 percent per year due to a contraction in current and capital expenditures. However, carry-over expenditure was disbursed 8.1 billion baht. As a result, the budget balance showed the deficit of -32.1 billion baht.
External demand as shown by export of goods in July 2016 continued to contract by -6.4 percent per year due to fragile global economy. Export goods that showed contraction comprised agricultural sector and agroindustry sector such as paddy, rubber, cassava, and manufacturing sector such as vehicles and parts, finished oil, plastic beads, radios and television, and chemicals.
Supply side indicators in July 2016 improved from agricultural sector which turned to increase and also tourism sector continued to increase. Agricultural Production Index (API) increased by 2.3 percent per year and increased by 3.7 percent per month after seasonal adjustment due to an expansion in agricultural sector, livestock, and fishery. In addition, Agricultural Price Index expanded by 16.2 percent per year and this was an expansion for 4 months consecutively. The number of inbound foreign tourists expanded by 10.8 percent per year and expanded by 6.2 percent per month after seasonal adjustment due to a surge of tourists from China, CLMV, India, South Korea, and U.S.A. Manufacturing Production Index (MPI) in July 2016 recorded a decrease by -5.1 percent per year from the production in vehicles, rubber products and plastic, garment, and chemicals, similarly to categories of exports that showed a contraction. In addition, Thai Industries Sentiment Index (TISI) stood at 84.7 points, lower than last month which was 85.3 points due to an anxiety in increasing costs of materials and the volatility in exchange rates including external risks from global economy that affected exports sector.
Internal stabilities remained favourable and external stabilities remained robust. Headline inflation and core inflation were low at 0.1 and 0.8 percent per year, respectively. Meanwhile, unemployment rate was low at 1.0 percent of total labor force. Public debt to GDP at the end of June 2016 stood at 42.8 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 July were high at 180.2 billion USD, or approximately 3.3 times of short-term external debt.
Source: Fiscal Policy Office / www.fpo.go.th