140831 meb split by Ake Saroj

MONTHLY ECONOMIC September 2014 issue Feature:

THAILAND’S MANUFACTURING 7 Revealing Charts About Its Declining Trend

THAILAND MANUFAC

7 Revealing Charts About Its De

Dâ&#x20AC;&#x2122;S CTURING

eclining Trend

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Manufacturing has and butter for the

Manufacturing share of GDP Percentage 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0%

0.0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 200 Source: NESDB; CTE analysis

been the bread Thai economy

03 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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Manufacturing is Export

Export by product group Percent of total export in Baht term (custom basis)

100% = ᪛ 5.2

᪛ 6.1

᪛ 6.7

᪛ 7.1

᪛ 6.9

᪛ 4.2

Others

6.9

6.2

5.6

5.8

Agriculture

8.0

8.7

10.6

7.9

4.0 8.0

4.0 7.9

Manufacturing

85.1

83.7

86.2

88.0

88.1

9FY

10FY

11FY

12FY

13FY

14/7MO

Source: Bank of Thailand; CTE analysis

s Thailandâ&#x20AC;&#x2122;s

(Trillion)

Top 10 Manufacturing export % of total export Electronics

14.2

Automotive

14.1

Agro products

12.0

Machinery

8.5

PetroÍ˛chemical

5.9

Electrical

5.6

Petroleum Metal Chemicals Apparels

4.7 4.2 3.8 3.4

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After recovering from th Manufacturing has been trend

Manufacturing Production Index Annual average Year 2000 is the base month, seasonally adjusted 250.00

200.00

150.00

100.00

50.00

Source: Bank of Thailand; CTE analysis

Jan-10

Oct-09

Jul-09

Apr-09

Jan-09

Oct-08

Jul-08

Apr-08

Jan-08

Oct-07

Jul-07

Apr-07

Jan-07

Oct-06

Jul-06

Apr-06

Jan-06

0.00

he 2011 flood crisis, on 24-month declining

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

24-month Declining trend

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

2011 Flood crisis

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The declining trend hap ALL industries Change in MPI by sector Seasonally adjusted, May 2012 vs July 2014, percentage Electronic Basic Mat Wood products Rubber&Plastic Tobacco Electrical Precision instruments Textiles Paper Metal products Chemical Mineral Leather Apparel Total MPI Office automate Petroleum Furniture Machineries Food & Bev Vehicles Transport Equip

-13.6 -19.6% -20.1% -21.2% -21.8% -22.1% -26.3% -34.5%

Source: Bank of Thailand; CTE analysis

ppens to most but NOT

11.4% 11.3% 10.2% 9.9% 8.4% 7.3% 5.1% 4.3% 3.3% -1.1% -2.8% -3.3% -6.7% -8.9%

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It’s NOT the Wo

Manufacturing Production Index Latest, percent change on year ago Philippines Ͳ Jun China Ͳ Jul Indonesia Ͳ Jun Malaysia Ͳ Jun Vietnam Ͳ Aug Taiwan Ͳ Jul Australia Ͳ Q1 US Ͳ Jul India Ͳ Jun South Korea Ͳ Jul Singapore Ͳ Jul Hong Kong Ͳ Q1 Russia Ͳ Jul Pakistan Ͳ Jun Euro Area Ͳ Jun Japan Ͳ Jul Thailand Ͳ Jul Brazil Ͳ Jun Source: The Economist

1 0.3 0.0 -0.9 -5.2 -6.9

orld Economy 13.3 9.0 7.3 6.9 6.7 6.1 5.7 5.0 3.4 3.4 3.3 2.1

1.6

Thailandâ&#x20AC;&#x2122;s MPI growth has been consistently lagging other economies

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Itâ&#x20AC;&#x2122;s the countryâ&#x20AC;&#x2122;s competitiveness

Source: World Economic Forum

s deteriorating

â&#x20AC;˘ Declining competitiveness ranking for Thailand since 2007 â&#x20AC;˘ Big improvement in competitiveness ranking for Indonesia and Philippines recently

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Thailand’s at the Innovate or Die

STAGES OF DEVELOPMENT Stage 1: Factor-driven (38 economies)

Characteristics

Main Factors

Transition from Stage 1 to Stage 2 (20 economies)

Sta Efficien (31 ec

• Mainly factor-driven • Compete based on primarily low-skilled labor and natural resources • Low productivity reflected in low wages

• Becomes • Productivi and wage • Compete efficiency process

1. Public and Private institutions 2. Infrastructure 3. Macroeconomic environment 4. Health and primary education

5. Higher e training 6. Goods m 7. Labor m 8. Financia develop 9. Technol 10.Market s

Source: World Economic Forum

e crossroad:

age 2: ncy-driven conomies)

Transition from Stage 2 to Stage 3 (22 economies)

Stage 3: Innovation-driven (37 economies)

more competitive ity will increase s will rise by increasing in production

â&#x20AC;˘ Wages will have risen by so much â&#x20AC;˘ Must compete by producing new and different goods through new technologies or business models

education and

11.Business sophistication 12.Innovation

market efficiency market efficiency al market ment ogical readiness size

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Executive summary Growth Economic contraction ended with a minimal growth of 0.4% in 2Q14. On the expenditure side, apart from the decrease in Import, the increase in Export contributed the most to the overall growth. On the production side, contraction in Manufacturing and Construction has dragged the overall GDP growth. In July, Manufacturing production continued its declining trend, while Agriculture production increased impressively. On the expenditure side, Private consumption recovered but Private Investment continued to decline. BOI net application dropped. Export grew 8% in THB term but decreased in USD term. Import, however, registered a negative growth, driven by lower intermediate goods import. Tourist arrivals dropped 10% in the first 7 months. Looking forward, Monetary policies are proͲ growth, with policy rate unchanged at 2%. Government spending was recovered with the new government.

Confidence in private s Businesses, Industries less pessimistic.

The consensus project 2.6% for 2014 and 4.5Ͳ

Employment and wea Unemployment rate d 1% in July. Thailand’s u the lowest amongst le

Thailand’s per capita in 5,370 in 2013, ranked average Thai is slightly average Chinese but m richer than an average Income distribution is but there has been ove the past two decades, Bangkok. Poverty head have declined over the

sector has improved. and Consumers were all

tion is between 1.5%Ͳ Ͳ5.5% for 2015.

alth distribution ropped back to below unemployment rate is ading economies.

ncome was at USD 103rd in the world. An y poorer than an more than three times e Vietnamese. Thailand’s among the worst in Asia erall improvement over except for only in dcount and poverty rate e last decade.

Stability In August, Headline inflation dropped to 2.1% while Core inflation rose to 1.83%. Meat is leading the way in price increase compared to a year ago. Producer Price inflation decreased to almost zero. Banking system is quite stable. Bank’s capital ratio increased and is still high. Total system’s NPL increased slightly in 2Q14. Liquidity tightened slightly as loan expanded. Budget balance during the first 7 months of 2014 is 50 Billion Baht worse off than the same period in 2013. Public debt as percentage of GDP increased slightly so far this year due mainly to direct government debt, but the current level of 46% is not yet dangerous. Majority of the public debt is domestic based. YearͲtoͲdate Balance of Payment surplus, thanks to trade surplus. External debt has been increasing but still not dangerous. THB appreciated 7Ͳmonth in a row in August.

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CONTENT

Executive summary

Growth

Income distribution

Stability

• Economic contraction ended with a Ͳ On the expenditure side, a contributed the most to th Ͳ On the production side, Co the overall GDP growth • In July, Manufacturing production c • Private consumption recovered but • Export grew in THB term, Import de • Monetary easing with policy rate o • Businesses Industries and consume • The consensus projection is betwee

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

• In August, Headline inflation dropp leading the way in price increase co • Banking system is quite stable. Ban increased slightly in 2Q14. Liquidity • Budget balance during the first 7 m period in 2013. Public debt is increa • YearͲtoͲdate Balance of Payment s increasing but still not dangerous. T

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

continued its declining trend t Private Investment continued to decline ecreased. Tourist arrival dropped. n downward trend while Fiscal spending recovered ers were all less pessimistic in July en 1.5%Ͳ2.6% for 2014 and 4.5Ͳ5.5% for 2015 to below 1% in July. Thailand’s unemployment rate is the

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

ped to 2.1% while Core inflation rose to 1.83%. Meat is ompared to a year ago. nk’s capital ratio increased and is still high. Total system’s NPL y tightened slightly as loan expanded. months of 2014 is 50 Billion Baht worse off than the same asing but not too worrying just yet. urplus, thanks to trade surplus. External debt has been THB appreciated 7Ͳmonth in a row in August.

Economic contraction ended with

Chart 1.05 – Historical Real GDP growth rate Annual growth, percent 7.1% 6.3% 5.3%

CAGR* 2002Ͳ2013 = 4.1%

4.6%

5.1% 5.0%

2.5%

-2.3

2002 2003 2004 2005 2006 2007 2008 200

Note: (*) Cumulative Annual Growth Rate Source: NESDB; CTE analysis

h a minimal growth in 2Q14

7.8% 6.5%

2.9%

0.4%

0.1% -0.5%

09 2010 2011 2012 2013

1Q14 2Q14 3Q14 4Q14

4 www.ChartingThailandEconomy.com

GDP grew 0.4% in 2Q14 despite c

Chart 1.06a – Real growth by sector, 2Q14 YearͲonͲYear percentage change 0.4

GDP

6.1

Financial

5.3

Transport 4.0

PublicAdmin

3.4

Utilities Agriculture

2.7

Education

2.6 1.5

Private HH

0.9

Health&Social

0.3

Trading -0.7

RealEstate

-1.2

Fishing Manufacture

-1.6

Mining

-1.7 -2.6

Other social Construction

-3.2

Hotel&Res-4.2 Source: NESDB; CTE analysis

ontraction in Manufacturing

Chart 1.06b â&#x20AC;&#x201C; Sectoral contributions, 2Q14 Contributions to total Real GDP growth 0.4

GDP

0.5

Transport 0.3

Financial

0.2

Agriculture Utilities

0.1

PublicAdmin

0.1

Education

0.1

Trading

0.0

Health&Social

0.0

Private HH

0.0

Fishing

0.0

RealEstate

0.0

Mining

0.0

Other social

-0.1

Construction

-0.1 -0.2

Hotel&Res Manufacture

-0.6

5 www.ChartingThailandEconomy.com

Apart from the decrease in Impor contributed the most to the overa

Chart 1.08a – Real growth by expenditure, 2Q YearͲonͲYear percentage change G

1.9

X (goods)

1.5

GDP

0.4

M (services)

0.2

I (capital)

-6.9

X (services)

-8.4

M (goods) I

-10.8 -20.4

Note: (*) C = Private consumption, I = Investment which includes I (capital) = Capital fo G = Government consumption, X = Export of goods and services, M = Import

Source: NESDB; CTE analysis

rt, the increase in Export all 2Q14 GDP growth

Q14 Chart 1.08b â&#x20AC;&#x201C; Expenditure Contributions, 2Q14 Contributions to total Real GDP growth M (goods)

5.7

X (goods)

0.8

GDP

0.4

0.2

0.1

Discrpncy

0.1

M (services)

0.0

X (services)

-1.3

I (capital) I (Inventory)

-1.7 -3.6

ormation and I (inventory) = Change in inventory t of goods and services

6 www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Manufacturing production declin

Chart 1.11 â&#x20AC;&#x201C; Manufacturing Production Index (2000=100) CAGR

2.7%

194.2 174.6 152.1

182.9

161.1

170.0

177.6

138.6

2004 2005 2006 2007 2008 2009 2010 2011 Source: The Office of Industrial Economics

ed again in July

Monthly Average 250.0

200.0

2013

181.6

175.7

150.0

2014

M-o-M

100.0

-2.2%

Y-o-Y

50.0

-5.2%

0.0

2012 2013

J F M A M J J A S O N D

8 www.ChartingThailandEconomy.com

Most sectors had their production last month

Chart 1.12a – YͲonͲY change in MPI by sector July 2014, percent Electronic

17.6

Precision instru

17.3 13.6

Wood products Leather

9.2

Basic Mat

9.1

Rubber&Plastic

8.9 5.8

Metal products

3.1

Office automate

1.0

Paper Chemical

-2.3

Machineries

-3.4

Textiles

-3.4

Apparel

-4.6

Food & Bev

-4.9

Mineral

-5.2 -6.7

Furniture

-9.8

Electrical

-13.3

Tobacco Petroleum

-19.7

Transport Equip

-23.8

Vehicles

-24.2

Source: The Office of Industrial Economics; CTE analysis

n decreased substantially from

Chart 1.12b – MͲonͲM change in MPI by sector July 2014, percent 5.6 2.3 0.9 -0.9 -6.0 2.8 -1.8 -3.0 -0.5 0.8 -2.6 1.6 -1.4 -5.4 2.6 0.2 7.6 -21.2 -3.7 -12.9 -5.4

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Capacity utilization rate continue

Chart 1.13a â&#x20AC;&#x201C; Overall Capacity Utilization Rate Percent 100% 90% 80% 70% 60% 50%

Seasonally adjusted Normal

40% 30% 20% 10% 0% Feb-14 Mar-14 Apr-14 May-14 Jun-14

Source: The Office of Industrial Economics

Jul-14

s its declining trend

Chart 1.13b â&#x20AC;&#x201C; Capacity utilization rate by sector July 2014, percent Rubber&Plastic Wood products Electrical Textiles Chemical Basic Mat Metal products Furniture Office automate Leather Electronic Food & Bev Precision instru Mineral Paper Vehicles Transport Equip Petroleum Machineries Tobacco Apparel

86% 84% 81% 75% 74% 73% 71% 71% 65% 64% 63% 60% 59% 58% 51% 45% 44% 42% 41% 34% 29%

10 www.ChartingThailandEconomy.com

Thailand’s MPI dropped the secon Philippines enjoyed highest grow

Chart 1.14 – Manufacturing Production Index Latest, percent change on year ago Philippines Ͳ Jun China Ͳ Jul Indonesia Ͳ Jun Malaysia Ͳ Jun Vietnam Ͳ Aug Taiwan Ͳ Jul Australia Ͳ Q1 US Ͳ Jul India Ͳ Jun South Korea Ͳ Jul Singapore Ͳ Jul Hong Kong Ͳ Q1 Russia Ͳ Jul Pakistan Ͳ Jun

Euro Area Ͳ Jun -0.9

Japan Ͳ Jul -5.2

Thailand Ͳ Jul Brazil Ͳ Jun Source: The Economist

-6.9

nd most from a year ago, while wth

x 13.3 9.0 7.3 6.9 6.7 6.1 5.7 5.0 3.4 3.4 3.3 2.1 1.6 0.3

0.0

11 www.ChartingThailandEconomy.com

Agriculture production still grew

Chart 1.10 â&#x20AC;&#x201C; Agriculture production index (2005=100)

CAGR

3.0% 122.5

100.0

105.9

113.0 112.1 109.4 111.2

2004 2005 2006 2007 2008 2009 2010 2011

Source: Office of Agricultural Economics, Ministry of Agriculture a

healthily from a year ago

Monthly Average 250.0 Y-o-Y

128.4 126.6

+4.3% 200.0 M-o-M

-11.5% 150.0

2014 2013 100.0

50.0

0.0

2012 2013

J F M A M J J A S O N D

12 nd Cooperatives

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CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Private consumption recovered w

Chart 1.15 â&#x20AC;&#x201C; Composite Private Consumption I (2000=100) CAGR

2.5%

117.8

126.1 121.9 124.2

130.6

134.2

139.2

127.2

04-Avg 05-Avg 06-Avg 07-Avg 08-Avg 09-Avg 10-Avg 11-Avg 1

Note: (*) seasonally adjusted Source: Bank of Thailand

well in July

Index*

147.0 147.5

12-Avg 13-Avg

Monthly Average 150.0

149.0

148.0

2013 147.0

2014 146.0

145.0

144.0

Y-o-Y

M-o-M

+0.2%

+0.9%

143.0

J F M A M J J A S O N D

14 www.ChartingThailandEconomy.com

Vehicle consumption expenditure far this year Chart 1.16a – YͲonͲY change First 7 months of 2014 vs 2013, percent NGV (kg.)* LPG (litre)*

Benzene & Gasohol (litre)

HH electricity (kilowatt/hour)

Real VAT (2000 prices, baht)

Diesel (litre)

Real import of consumer goods (2000 prices, US$)

-6.4 -18.9

Motocycle (Unit) -32.4

Commercial Car (Unit) Passenger Car (Unit)

-46.5

Note: (*) figures are 1Ͳmonth delayed Source: Bank of Thailand; CTE analysis

es were the biggest decliners so

Chart 1.16b – MͲonͲM change July vs June 2014, percent 3.9

-0.7 0.5

1.1

5.7

0.9 -1.1

0.8

2.8

0.5 -0.1

0.1

3.7 6.7 0.7 -4.3

15 www.ChartingThailandEconomy.com

Private Investment continues its d

Chart 1.17 â&#x20AC;&#x201C; Private Investment Index (2000=100)

CAGR

4.9% 209.1 172.4 175.2 175.7 156.0

193.5

183.9 161.2

04-Avg 05-Avg 06-Avg 07-Avg 08-Avg 09-Avg 10-Avg 11-Avg 1

Source: Bank of Thailand

declining trend in July

Monthly Average 260.0 M-o-M

255.0

-0.4%

250.0 Y-o-Y

240.8 240.1

12-Avg 13-Avg

-3.4% 245.0

2013

240.0 235.0 230.0

2014 225.0 220.0 215.0

J F M A M J J A S O N D

16 www.ChartingThailandEconomy.com

Commercial car sales took the big

Chart 1.18a – YͲonͲY change First 7 months of 2014 vs 2013, percent

Domestic Cement sales (ton)

1.8

Domestic Machinery sales* (2000 prices, Baht)

1.7

Construction Area permitted (sqm)

Import of Capital Goods (2000 prices, Baht)

Domestic commercial car -31.9 sales (unit)

Note: (*) figures are 1Ͳmonth delayed Source: Bank of Thailand; CTE analysis

-1.1

-5.9

ggest hit so far this year

Chart 1.18b – MͲonͲM change July vs June 2014, percent

-0.4

-0.2

-0.8

-0.5

-0.7

17 www.ChartingThailandEconomy.com

FDI value increased almost by 50%

Chart 5.14 â&#x20AC;&#x201C; Foreign Direct Investment Million USD

1 11,331 10,699 9,112 8,547

4,853 3,861

07FY

08FY

(*) Preliminary figures

Source: BOT

09FY

10FY

11FY

12FY

% during the first 6 months

Monthly cumulative FDI* 14,000

12,807

13FY

12,000

2013 10,000

8,000

6,000

4,000

2014 2,000

F M A M J

A S O N D

18 www.ChartingThailandEconomy.com

BOI’s net application decreased 1 2014

Chart 5.15 – BOI net application of foreign di Billion Baht 648

396 351 236

09FY

10FY

11FY

Note: (*) Foreign investment (foreign equity>=10%)

Source: Board of Investment

12FY

12% during the first 7 months of

irect investment*

525

298 261

13FY

2013/7M

2014/7M

19 www.ChartingThailandEconomy.com

All key Property indicators have d

Chart 1.19a – YͲonͲY change First 6 months of 2014 vs 2013, percent

-1.2

Condo unit registered

-8.3

Constr. Area in municipal

New housing unit

-12.6

Value of land transaction -16.8

Source: Bank of Thailand; CTE analysis

decreased so far in 2014

Chart 1.19b – MͲonͲM change June vs May 2014, percent

-9.7

-14.0

-34.1

17.6

20 www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Improvement in trade balance is and lower import Chart 5.03a â&#x20AC;&#x201C; Trade balance* in THB First 7 months of 2014 vs 2013, Billion Baht 5,000

4,000

3,000

2 2,000

-4.9%

+8.4%

1,000

-1,000

Export

â&#x20AC;&#x201C;

Import

Trade balance

Note: (*) Not equal to the one in Balance of Payment decomposition due to few adjus (**) Excluding Electricity and aircraft export, adjustment for Balance of payment (***) Excluding Electricity and military import, adjustment for Balance of payment

Source: Bank of Thailand; CTE analysis

a combination of weaker THB

2013

Chart 5.03b – Trade balance* in USD First 7 months of 2014 vs 2013, Billion USD 160 140 120 100 80

2014 60

-0.4%

-12.5%

40 20 0 -20 -40

Export

stments t and exchange rate conversion t and exchange rate conversion

–

Import

Trade balance

22 www.ChartingThailandEconomy.com

Export grew 8.4% in the first 7 mo machinery, automotive and elect

Chart 5.05a – YTD annual change in Export in First 7 months of 2014 vs those of 2013, percent Total export ReͲexports Other export Machinery PetroͲchemical Other manufacturing Jewellery Electrical Automotive Footware Furniture Optical instru Apparels Agriculture Electronics Fishery Toiletries Forestry Agro products Chemicals Petroleum -0.1 Photo instru -11.1 Metal -11.9 Aircrafts -13.6 Mining-33.8

8.4 >100.0 59.1 19.2 18.1 16.8 13.6 13.2 11.1 10.6 9.7 8.9 8.8 8.7 8.6 7.2 5.4 4.6 3.3 0.7

Source: Bank of Thailand; CTE analysis

onths of 2014, thanks mainly to ronics Baht Chart 5.05b – Sectoral contributions Contributions to total export growth Total export Automotive Machinery Electronics PetroͲchemical Other export Electrical Agriculture Other manufacturing Agro products Jewellery Apparels ReͲexports Optical instru Fishery Toiletries Furniture Footware Chemicals Forestry Petroleum Photo instru Aircrafts Mining Metal

8.4 1.5 1.5 1.2 1.0 0.8 0.7 0.7 0.6 0.4 0.4 0.3 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 -0.1 -0.2 -0.3 -0.6

23 www.ChartingThailandEconomy.com

Positive growth in all export mark

Chart 5.07a – Export by country Percent of total export in THB term

᪛ 6.9 (Trilli

᪛ 5.2

᪛ 6.1

᪛ 6.7

᪛ 7.1

Middle East

5.7

5.0

4.7

5.1

11.9

11.3

10.9

9.5

9.8

Japan

10.3

10.5

10.7

10.2

9.7

12.2

11.7

11.1

11.4

11.5

17.4

18.1

16.7

18.4

18.1

East Asia exͲJapan

21.0

21.2

20.1

20.4

ASEAN

21.3

23.0

24.3

24.6

25.9

09FY

10FY

11FY

12FY

13FY

100% =

NAFTA Rest of the world

Source: Bank of Thailand; CTE analysis

kets so far this year

Chart 5.07b â&#x20AC;&#x201C; Change in Export In THB term, First 7 months of 2014 vs those of 2013

ion) 16.9%

EU Middle East

13.8%

11.7%

NAFTA

Japan

8.0%

Rest of the world

6.5%

East Asia ex Japan

6.5%

ASEAN

5.7%

24 www.ChartingThailandEconomy.com

Import has decreased 5% so far in decrease in Others

Chart 5.09a – YTD annual change in Import in First 7 months of 2014 vs those of 2013, percent

-4.9

Total import

Intermediate Ͳ Fuel

Consumer goods

Capital goods

0.9

Intermediate Ͳ Non fuel

0.7

Others

-47.2

Source: Bank of Thailand; CTE analysis

n 2014, due mainly to the

n Baht Chart 5.09b – Sectoral contributions Contributions to total import growth

Total import

-4.9

4.5

Intermediate Ͳ Fuel

Intermediate Ͳ Non fuel

0.2

Consumer goods

0.2

Capital goods

0.2

0.9

Others-6.4

25 www.ChartingThailandEconomy.com

Tourist arrivals dropped 10% in th compared to the same period last Chart 5.18 â&#x20AC;&#x201C; International Tourist Arrivals Million visits

CAGR

10.6%

19.2 15.9 14.5 10.8

11.7

14.1

11.5

10.0

04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY Source: Department of Tourism

he first 7 months of this year t year

Monthly cumulative 30.0

26.7 25.0

22.4

Y 12FY 13FY

2013 20.0

15.0

10.0

2014 5.0

0.0

J F M A M J J A S O N D

26 www.ChartingThailandEconomy.com

Laos and Russia have been the tw tourists so far this year Chart 5.19a International Tourist Arrivals by country of nationality Percent of total Rest of world Americas

Europe

East Asia

15.3 6.0

28.7

15.6 5.3

27.9

14.7

13.8

5.0

4.8

26.5

25.3

50.0

51.2

53.8

56.0

09FY

10FY

11FY

12FY

Source: Department of Tourism; CTE analysis

11.8 4.4

23.6

60.2

13FY

wo highest growing market for

Chart 5.19b 10 Highest Change in International Tourist Arrivals by country of nationality First 7 month of 2014 vs 2013, Thousands 121.6

Laos 69.9

Russia 28.0

France

22.5

United Kingdom Cambodia

13.8

Italy

9.0

Myanmar

7.8

Finland

7.5

Brazil

5.6

Switzerland

5.5

27 www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Policy interest rate unchanged in

Chart 3.01a – BOT’s policy rate

Sep-13

2.60% 2.50% 2.40% 2.30% 2.20% 2.10% 2.00% 1.90% 1.80% Aug-14

Chart 3.01c – Saving deposit rate* 10.00% 7.50% 5.00% Max

2.50%

Min Sep-13

0.00% Aug-14

Note: (*) All Commercial Banks registered in Thailand, excluding foreign bra

Source: Bank of Thailand

August

Chart 3.01b – BIBOR overnight rate 2.60% 2.50% 2.40% 2.30% 2.20% 2.10% 2.00% 1.90% 1.80% Aug-14

Sep-13

Chart 3.01d – Commercial bank MLR* Max

10.00% 7.50%

Min 5.00% 2.50%

Sep-13

anches

0.00% Aug-14

29 www.ChartingThailandEconomy.com

Government spending recovered

Chart â&#x20AC;&#x201C; Monthly cumulative Fiscal expenditure Billion Baht 3000

2500

2000

1500

1000

2014

500

Source: Bank of Thailand; CTE analysis

2013

www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Improving business confidence

Chart 1.21a â&#x20AC;&#x201C; Business Sentiment Index* 100

Better

46.5

49.4 44.3

48.6

48.0

49.6

Worse

0 Feb-14 Mar-14 Apr-14 May-14 Jun-14

Jul-14

Note: (*) Below is the interpretation of the index: Index = 50 indicates that business sentiment remains stable Index > 50 indicates that business sentiment has improved Index < 50 indicates that business sentiment has worsened Source: Bank of Thailand, The Federation of Thai Industries

Chart 1.21b â&#x20AC;&#x201C; Thai Industries Sentiment Index** 200

Better

100

85.7

84.7

84.0

85.1

88.4

89.7

Worse

0 Feb-14 Mar-14 Apr-14 May-14 Jun-14

Jul-14

Note: (*) Below is the interpretation of the index: Index = 100 indicates that industries sentiment remains stable Index > 100 indicates that industries sentiment has improved Index < 100 indicates that industries sentiment has worsened

32 www.ChartingThailandEconomy.com

Improving consumer confidence i

Chart 1.20a â&#x20AC;&#x201C; Consumer Confidence Index Overall

100

Better

50 Worse

Worse

0 Jan-14

Mar-14

May-14

Jul-14

Jan-14

Mar-1

Note: (*) The index ranges from 0 to 100 50 means consumer confidence is equal to those of the prior mo Over 50 means consumer confidence is better than those of the Under 50 means consumer confidence is worse than those of th Source: Ministry of Commerce

in July

On job

On future income

100

Better 50 Worse

0 4

May-14

onth e prior month he prior month

Jul-14

Jan-14

Mar-14

May-14

Jul-14

33 www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

NESDB lowered its growth projec

Chart 1.03a â&#x20AC;&#x201C; Real GDP growth projections For 2014, Annual percentage change 6.00 5.50 5.00 4.50 4.00 3.50

FPO The Economist poll

3.00 2.50

NESDB

2.00

BOT

1.50 1.00

Mar-14 Apr-14 May-14 Jun-14

Jul-14

Aug-14

Forecast as of, month ending

Source: NESDB, Fiscal Policy Office, Bank of Thailand, The Econo

tion for this year

omist

Chart 1.03b â&#x20AC;&#x201C; Real GDP growth projections For 2015, Annual percentage change 6.00 5.50

BOT 5.00 4.50 The Economist poll

4.00 3.50 3.00 2.50 2.00 1.50 1.00

Mar-14 Apr-14 May-14 Jun-14

Jul-14

Aug-14

Forecast as of, month ending 35 www.ChartingThailandEconomy.com

Low growth prospect for Thailand

Chart 1.04a â&#x20AC;&#x201C; Real GDP growth projections 2014, Annual % change, as of Aug 29th 2014 7.5

China Philippines India Vietnam Malaysia Pakistan Indonesia Singapore South Korea Taiwan

6.3 6.0 5.8 5.7 5.4 5.3 4.1 3.8 3.5 3.0 2.4

Australia Hong Kong US Thailand Japan Euro Area Brazil Russia

Source: The Economist

2.0 1.9 1.4 1.1 1.0 0.2

d in 2014

Chart 1.04b â&#x20AC;&#x201C; Real GDP growth projections 2015, Annual % change, as of Aug 29th 2014 7.0 6.4 6.4 6.5 5.6 4.1 6.0 4.4 3.6 3.3 2.9 2.6 3.0 4.5 1.2 1.6 1.8 0.7 36 www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Unemployment rate dropped bac

Chart 2.08 â&#x20AC;&#x201C; Unemployment rate Percent

2.07 1.83 1.51

1.49 1.38

1.38

1.04

0.68

04-Avg 05-Avg 06-Avg 07-Avg 08-Avg 09-Avg 10-Avg 11-Avg 1

Source: National Statistical Office, Bank of Thailand

ck to below 1% in July

Monthly Average 1.40

1.20

2014 1.00

0.80

2013

0.60

0.66

0.72

12-Avg 13-Avg

0.40

0.20

0.00

J F M A M J J A S O N D

38 www.ChartingThailandEconomy.com

Thailand’s unemployment rate is leading economies Chart 2.09 – Unemployment rate Latest, percent Thailand Ͳ Jul Singapore Ͳ Q2 Malaysia Ͳ Jun

1.0 2.0 2.8

Hong Kong Ͳ Jul

3.3

South Korea Ͳ Jul

3.4

Vietnam Ͳ 2013 Japan Ͳ Jul

3.6 3.8

Taiwan Ͳ Jul

4.0

China Ͳ Q2

4.1

Brazil Ͳ Apr Russia Ͳ Jul Indonesia Ͳ Q1 US Ͳ Jul Pakistan Ͳ 2013 Australia Ͳ Jul Philippines Ͳ Q2 India Ͳ 2013 Euro Area Ͳ Jul Source: The Economist

lowest comparing to other

4.9 4.9 5.7 6.2 6.2 6.4 7.0 8.8 11.5

39 www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Overall improvement in income d for only in Bangkok Chart 2.01 â&#x20AC;&#x201C; Thailandâ&#x20AC;&#x2122;s GINI coefficient 0.55

Overall 0.50

South

0.45

0.40

0.35

0.30

'88

'90

'92

'94

'96

'98

Note: (*) The Gini coefficient is a measure of inequality of a distribution o It is defined as a ratio with values between 0 and 1 Here, 0 corresponds to perfect income equality (i.e. everyone has and 1 corresponds to perfect income inequality (i.e. one person Therefore, the lower the ratio the better the income distribution

Source: National Statistics Office, NESDB

distribution in Thailand, except

North East North Central Bangkok

'00

'02

'04

'06

'07

'09

'11

of income.

the same income) n has all the income, while everyone else has zero income). n.

www.ChartingThailandEconomy.com

Slight improvement of income dis top and the bottom 20% Chart 2.02 â&#x20AC;&#x201C; Quintile by income Percent of total income

Top 20% Bottom 20%

11.9

13.3

14.9

14.1

13.5

Top 20%

54.4

57.0

59.0

57.2

56.5

Second 20%

20.6

19.5

18.9

19.7

19.9

Third 20%

12.4

11.7

11.1

11.7

11.8

Forth 20%

8.1

7.5

7.4

7.6

Bottom 20%

4.6

4.3

7.1 4.0

4.1

4.2

1988

1990

1992

1994

1996

Source: National Statistics Office, NESDB

stribution when compared the

13.1

14.6

13.4

12.2

14.4

12.8

11.8

11.1

56.1

57.5

56.0

54.7

56.0

54.6

54.1

54.2

19.8

20.1

20.3

20.2

20.5

20.4

19.5

12.0

11.5

12.1

12.5

12.2

12.6

12.7

12.8

7.8

7.7

8.0

7.7

8.0

8.3

8.6

4.3

7.3 4.0

4.2

4.5

3.9

4.3

4.6

4.9

1998

2000

2002

2004

2006

2007

2009

2011 42

www.ChartingThailandEconomy.com

Data from World Bank suggests th Thailand is not as bad as in Malay Chart 2.03 â&#x20AC;&#x201C; Income equality in the world

Ratio of the share of national income going to the richest 20% Latest, selected countries Honduras Bolivia Comoros South Africa Namibia Brazil Colombia Guatemala Seychelles Central African Republic Paraguay Panama Zambia Costa Rica El Salvador Swaziland Chile Peru Qatar Ecuador Nigeria Venezuela, RB Mexico Malaysia Dominican Republic

2 26. 25.3 21.8 20.6 20.1 19.6 18.8 18.0 17.3 17.1 16.6 14.5 14.3 14.0 13.5 13.5 13.3 12.5 12.2 11.5 11.3 11.3 11.3

Source: The World Bank; CTE analysis

hat income equality problem in ysia or China

% to the share of the poorest 20%

29.7 27.8 .7

Argentina Kenya China Philippines Turkey Russian Federation Thailand Iran, Islamic Rep. Sri Lanka Bhutan Maldives Lithuania Malawi Mongolia Cambodia Lao PDR Vietnam Indonesia Nepal India Bangladesh Egypt, Arab Rep. Pakistan Afghanistan Slovak Republic

11.3 11.0 9.6 8.3 7.9 7.3 7.1 7.0 6.9 6.8 6.8 6.7 6.6 6.2 6.1 5.9 5.9 5.1 5.0 4.9 4.7 4.4 4.2 4.0 3.6

www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Except for only Bangkok, poverty have declined over the last decad Chart 2.04a

Chart 2.04b

Thailand Poverty Line

Number of poor pe

Baht/ month/ person

Million

3,500

3,000 20 2,500 15

2,000

1,500

1,000 5 500

0 '01

'03

'05

'07

'09

Legend color:

'11

Overall

'01

'03

Bangkok

'05

Centr

Note: Before 2006, poverty survey was normally conducted every 2 years. For the mi

Source: NESDB

headcount and poverty rate de Chart 2.04c

eople

Percent of Poor people Percentage of total population 60%

50%

40%

30%

20%

10%

0% '07

ral

'09

North

'11

'01

'03

North East

South

'05

'07

ssing year, we use the average value between the prior and later years

'09

'11

www.ChartingThailandEconomy.com

Many countries in Asia and espec of their populations earning less t

Chart 2.05 â&#x20AC;&#x201C; Poverty in the world, selected co

Poverty headcount ratio at $2 a day (PPP) (% of population), L Congo, Dem. Rep. Madagascar Nigeria Ethiopia Bangladesh TimorÍ˛Leste India

Lao PDR 60.2

Pakistan

57.3

Nepal

53.3

Cambodia 46.1

Indonesia

43.4

Vietnam

41.5

Philippines 31.3

South Africa China

29.8

Bhutan

29.8

Sri Lanka

29.1

Iraq Colombia Source: The World Bank

21.4 15.8

cially ASEAN, still have majority than $2.00 a day

ountries

Latest 95.2 92.6 84.5 77.6 76.5 72.8 68.7

66.0

15.4

Egypt, Arab Rep. Venezuela, RB

12.9

Peru

12.7 10.8

Brazil

8.0

Iran, Islamic Rep. Mexico

5.2

Thailand

4.6

Turkey

4.2

Chile

2.7

Malaysia

2.3

Argentina

1.9

Romania

1.7

Bulgaria

0.4

Hungary

0.4

Montenegro

0.3

Poland

0.2

Slovak Republic

0.1

Slovenia

0.1

Croatia

0.1

Russian Federation

0.1

www.ChartingThailandEconomy.com

An average Thai is slightly poorer more than three times richer than

Chart 2.06 â&#x20AC;&#x201C; GNI per capita, selected countrie 2013 or latest, Atlas method (current US$) Monaco (1) Liechtenstein (2) Bermuda (3) Norway (4) Qatar (5) Switzerland (6) Luxembourg (7) Australia (8) Macao SAR, China (9) Denmark (10) Sweden (11) Singapore (12) United States (13) North America (14) Canada (15) San Marino (16) Austria (17) Netherlands (18) Finland (19) Japan (20) Germany (21) Belgium (22) Kuwait (23) Iceland (24) Andorra (25)

Source: The World Bank

13 104,610 102,610 85,550 80,950 71,810 65,520 64,050 61,110 59,130 54,040 53,670 53,533 52,200 51,470 48,590 47,440 47,110 46,140 46,100 45,210 44,940 43,930 43,110

r than an average Chinese but n an average Vietnamese

36,770

( ) = World rank 186,950

France (26) United Kingdom (27) Hong Kong SAR,â&#x20AC;Ś Brunei Darussalamâ&#x20AC;Ś Korea, Rep. (39) Chile (52) Venezuela, RB (64) Brazil (67) Malaysia (73) Mexico (74) China (94) Thailand (103) Mongolia (120) Indonesia (125) Philippines (130) Bhutan (140) Vietnam (147) Lao PDR (153) Cambodia (165) Bangladesh (167) Mali (176) Gambia, The (182) Ethiopia (185) Liberia (189) Malawi (192)

42,250 39,110 38,420 31,590 25,920 15,230 12,550 11,690 10,400 9,940 6,560 5,370 3,770 3,580 3,270 2,460 1,730 1,460 950 900 670 510 470 410 270 47

www.ChartingThailandEconomy.com

Using Purchasing Power Parity, Th with higher GNI per capita than C

Chart 2.07 â&#x20AC;&#x201C; GNI per capita, selected countrie 2013 or latest, PPP (current international $) Qatar (1) Macao SAR, China (2) Kuwait (3) Singapore (4) Brunei Darussalam (5) Norway (6) Bermuda (7) Luxembourg (8) United Arab Emirates (9) Hong Kong SAR, China (10) United States (11) Switzerland (12) Saudi Arabia (13) Oman (14) Sweden (15) Germany (16) Denmark (17) Austria (18) Netherlands (19) Canada (20) Australia (21) Belgium (22) Iceland (23) Finland (24) Japan (25)

Source: The World Bank

66,

66, 59,750 58,090 54,260 53,960 53,920 53,780 52,170 44,660 44,540 44,440 43,810 43,210 42,590 42,540 40,280 38,870 38,480 37,630

hailand’s rank improved to 82nd, China

( ) = World rank

88,170 76,850

8,090

,520

,390

France (26) 37,580 United Kingdom (28) 35,760 Korea, Rep. (31) 33,440 Israel (32) 32,140 Russian Federation… 23,200 Malaysia (50) 22,460 Lebanon (66) 17,390 Mexico (71) 16,110 Brazil (78) 14,750 Thailand (82) 13,510 China (88) 11,850 Sri Lanka (104) 9,470 Indonesia (105) 9,260 Mongolia (108) 8,810 Philippines (112) 7,820 Bhutan (116) 7,210 TimorͲLeste (122) 6,410 India (129) 5,350 Vietnam (132) 5,030 Lao PDR (137) 4,570 Cambodia (148) 2,890 Bangladesh (151) 2,810 Nepal (157) 2,260 Uganda (174) 1,370 Malawi (185) 760 48

www.ChartingThailandEconomy.com

Increasing trend in household inc debt service year has reduced fro Chart 2.10a â&#x20AC;&#x201C; Monthly income per household Average, Baht 23,236 14,963

2004

17,787

18,660

2006

2007

2011

25,403

2013

Chart 2.10b â&#x20AC;&#x201C; Monthly expenditure per househ Average, Baht

12,297

2004

14,311

14,500

2006

2007

17,403

2011

Source: National Statistic Office survey; CTE analysis

19,259

2013

come, expenditure and debt, but om the recent peak in 2004

hold

Chart 2.10c – Debt per household Average, Baht 159,492 104,571

2004

116,585

116,681

2006

2007

134,900

2011

2013

Chart 2.10d – Debt service year* 3.3 2.8 2.3 1.9

2004

2006

2007

2011

2.2

2013

Note: (*) Avg. debt / (annual income – annual expenditure)

www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Headline inflation dropped while in August Chart 3.07a – YͲoͲY change in CPI Percent 3.00%

2.50%

Head line 2.00%

Core* 1.50%

1.00%

0.50%

0.00% Mar-14

Apr-14

May-14 Jun-14

Jul-14

Aug-14

Note: (*) exclude raw food and energy

Source: Bureau of Trade and Economic Indices; CTE analysis

core inflation increased slightly

Chart 3.07b – YͲoͲY change in CPI by product August 2014, percent Meat

6.4

Tobacco & alcohol

6.2

Food away from home

5.6

Seasoning

5.6

Prepared food at home

5.5

Energy

2.9

Eggs & milk

2.7

Housing & furnishing

1.8

Rice

1.4

Non alcoholic beverage

1.2

Medical care

1.1

Recreation & Education

0.7

Apparel and footware

0.7

Transport & Commu Veg & fruit

0.3 -2.5

51 www.ChartingThailandEconomy.com

Thailand’s inflation is rather on th economies Chart 3.08 – Consumer Price Index Annual percentage change

Latest

India Ͳ Jul Pakistan Ͳ Jul

Russia Ͳ Jul 6.5

Brazil Ͳ Jul 4.9

Philippines Ͳ Jul

4.5

Indonesia Ͳ Jul

4.3

Vietnam Ͳ Aug

4.1

Hong Kong Ͳ Jul 3.4

Japan Ͳ Jul

3.2

Malaysia Ͳ Jul

3.0

Australia Ͳ Q2 2.3

China Ͳ Jul Thailand Ͳ Aug

2.1

US Ͳ Jul

2.0 1.8

Taiwan Ͳ Jul

1.6

South Korea Ͳ Jul

1.2

Singapore Ͳ Jul Euro Area Ͳ Aug

0.3

Note: (*) The Economist Poll

Source: The Economist

he low side compared to other

2014* 8.0

9.6

7.9

8.3

7.4

6.5 6.3 2.5 8.0 7.5 6.9 0.7 2.0 2.4 2.7 2.0 2.0 0.1 1.7 1.9 1.3

52 www.ChartingThailandEconomy.com

There is almost no inflation at the

Chart 3.09a – YͲoͲY change in PPI Percent 3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0% Mar-14

Apr-14

May-14 Jun-14

Jul-14

Aug-14

Source: Bureau of Trade and Economic Indices; CTE analysis

e producer level

Chart 3.09b – YͲoͲY change in PPI by product August 2014, percent Livestocks Metal Petroluem products Chemical Mechinery Basic metals Fishing Energy Transport equip Leather & footware Pulp & paper Wood Forestry Forestry Textile Food Electrical equip Other manu goods Crop Rubber & plastic -8.3

4.3 3.6 3.3 2.4 2.1 2.1 0.9 0.5 0.2 0.1 0.1 0.1 0.0 0.0 -0.1 -0.4 -0.8 -0.9 -1.0

53 www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Credit market is still growing but Chart 3.02a – Commercial Banks’ Loan THB billion 11,000 10,800 10,600 10,400 10,200 10,000 9,800 Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Chart 3.02b – Commercial Banks’ Loan/Depos Percent 100%

95%

94.9%

95.7%

9 95.5%

95.0%

90% Jul-13

Source: Bank of Thailand

Aug-13 Sep-13

Oct-13 Nov-13 D

the pace has slowed down

M-o-M +0.4%

Y-o-Y +7.3%

ec-13

Jan-14

Feb-14

Mar-14

Apr-14

May-14

Jun-14

it* ratio

96.6%

Dec-13

97.8% 96.3%

Jan-14

95.3%

96.2%

Feb-14 Mar-14

98.3%

96.7%

Apr-14 May-14 Jun-14

55 www.ChartingThailandEconomy.com

Gross NPL continued to increase i and percent of total loan

Chart 3.03a – Total Financial Institutions’ Gros Billion Baht

445

06YE

458

07YE

401

08YE

380

09YE

317

10YE

270

11Y

Chart 3.03b – Total Financial Institutions’ Gros Percentage of Total Loans

7.47%

7.31% 5.29%

4.85% 3.60%

06YE

07YE

Source: Bank of Thailand

08YE

09YE

10YE

2.75

11Y

in 14/Q2 in both absolute value

ss NPLs Outstanding

256

267

12YE

13YE

281

285

2014/Q1 2014/Q2 2014/Q3

ss NPLs Outstanding

2.26%

2.16%

12YE

13YE

2.26%

2.29%

2014/Q1 2014/Q2 2014/Q3 56 www.ChartingThailandEconomy.com

Banksâ&#x20AC;&#x2122; capital ratio increased slig

Chart 3.04 â&#x20AC;&#x201C; Capital ratio of all commercial ba % of risk assets, at year end

15.8% 14.9% 13.3%

16.1% 14.8%

14.0%

13.9%

12.4%

2004

2005

2006

2007

2008

2009

2010

2011

Note: (*) All Commercial Banks registered in Thailand, excluding foreign bra

Source: Bank of Thailand

htly in June

nks* Month End 16.8%

16.2%

15.7%

16.6% 16.4% 16.2% 16.0%

2013 15.8% 15.6% 15.4%

2014

15.2% 15.0%

2012

anches

2013

14.8%

J F M A M J J A S O N D

57 www.ChartingThailandEconomy.com

Thailand’s real interest rate is slig Chart 3.05 – Real interest rates Percent, as of Aug 1st 2014

3M riskͲfree interest rates Brazil

10.0

Pakistan

10.0 9.7

Russia

8.6

India

8.1

Indonesia 6.0

Vietnam 4.7

China

3.8

Malaysia

2.8

Australia

2.4

South Korea

1.9

Thailand

1.4

Philippines Taiwan

0.9

Hong Kong

0.4

Singapore

0.3

0.2

Euro Area

0.2

Japan

0.1

Note: (*) The Economist Poll

Source: The Economist

൞

ghtly negative

Expected 2014 inflation*

Real interest rates

6.3

3.7 8.3

1.7

6.5

3.2 9.6

-1.0

8.0 7.5

0.1 -1.5

2.7

2.0

1.8

2.4

0.4

1.7

0.7

2.0

-0.1

2.5

-1.1

0.1

0.8 6.9 1.9

-1.6

2.0

-1.8

1.3 0.7

-1.1 -0.6

www.ChartingThailandEconomy.com

SET went up almost 4% in August Chart 3.06a â&#x20AC;&#x201C; Monthly performance of SET index Percent change from prior month, at month end 4.9% 3.9%

3.8% 2.8% 1.1% 0.1%

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Chart 3.06b â&#x20AC;&#x201C; Cumulative net foreign fund flow SET & MAI, Billion Baht, Month end 0.0 -10.0 -20.0 -30.0 -40.0 -50.0

D-13 J-14 F-14 M-14 A-14 M-14 J-14 J-14 A-14 S-14 O-14 N-14 D-14

Source: SET, The Economist; CTE analysis

t thanks to foreign fund inflow Chart 3.06c â&#x20AC;&#x201C; Change since Dec 31st 2013 Percent, as of Aug 27th 2014 25.5%

India (BSE) Indonesia (JSX)

20.8%

Thailand (SET)

20.5% 11.8%

Pakistan (KSE)

10.2%

Taiwan (TWI)

9.4%

US (NAScomp)

8.2%

US (S&P 500)

6.9%

HK (Hang Seng) Singapore (STI)

5.5%

Australia (All Ord.)

5.5% 4.4%

China (SSEA) US (DJIA)

3.3%

S Korea (KOSPI)

3.2%

Euro Area (FTSE Euro 100)

2.3%

France (CAC 40)

2.3% 1.2%

UK (FTSE 100) Malaysia (KLSE)

0.3%

Germany (DAX)

0.2%

China (SSEB, $ terms)

-0.4%

Japan (Nikkei 225) -4.6%

59 www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

Lower budget and cash deficit as

Chart 4.1 â&#x20AC;&#x201C; Government budget and cash bala Percent

Budget cash balance Overall Cash balance (including non-budgetary deficit/ surp

1.4%

1.1%

0.0% 0.1%

-0.5%-0.6% -1.1%-1.1 -1.7% -2.0%

04FY

05FY

06FY

Source: Bank of Thailand; CTE analysis

07FY

08FY

percentage of GDP in 2013

ance as percentage of nominal GDP

plus)

-0.3% -0.7%

-0.9% -2.0% -2.3%

-2.6% -3.6% -4.0% -4.4%

09FY

-4.1%

10FY

11FY

12FY

13FY 61

www.ChartingThailandEconomy.com

Budget balance during the first 7 worse off than the same period in Chart 4.2 â&#x20AC;&#x201C; Government budget balance Billion Baht

1,751

Revenue 1,109

1,241

-36

Budget balance -1,109

-1,277

1,390

1,455

1,498

-174

-100

-1,629

-1,598

1,484

110

-75 -364

-1,280

Expenditure

-1,849

-1,825

-1

04FY 05FY 06FY 07FY 08FY 09FY 10FY 1 Source: Bank of Thailand; CTE analysis

months of 2014 is 50 Billion Baht n 2013

Monthly cumulative Budget balance (Billion Baht)

,902

2,078

2,153

100.0

50.0

0.0

-50.0

-28 -412

-271 -100.0

2014

2013

-150.0

-200.0

1,930 -2,489

-2,424

-250.0

-300.0

1FY 12FY 13FY

J F M A M J J A S O N D

62 www.ChartingThailandEconomy.com

NonÍ˛budgetary deficit so far in 20

Chart 4.3 â&#x20AC;&#x201C; Government cash balance Billion Baht

Budget cash balance Overall Cash balance (including non-budgetary deficit/ surp 110

-36 -45 -100 -96 -144 -174

-3

04FY

05FY

06FY

Source: Bank of Thailand; CTE analysis

07FY

08FY

014

plus)

-28 -75

-41 -74

-96

-236 -266

-271

364 -401

-412 -466

09FY

10FY

11FY

12FY

13FY

'14/7mo

63 www.ChartingThailandEconomy.com

Thailand budget deficit is expecte same as Indonesia

Chart 4.4 â&#x20AC;&#x201C; Government Budget balance as pe 2014*, percent Hong Kong Singapore South Korea Russia Australia Philippines Taiwan Indonesia Thailand Euro Area US China Malaysia Brazil Vietnam India -7.0

Pakistan Japan Note: (*) The Economist Poll

Source: The Economist

-7.8

ed to be around 2.2% of GDP,

ercentage of GDP 0.8 0.7 0.6 0.3 -1.2 -1.4 -1.4 -1.6 -2.2 -2.5 -2.9 -2.9 -3.7 -3.8 -4.7 -4.9

64 www.ChartingThailandEconomy.com

A slight increase in Public debt so

Chart 4.5a â&#x20AC;&#x201C; Composition of Public debt THB Trillion 6.0

5.0 Public debt from State Enterprises 4.0

Bond to Compensate FIDF's Loss & Prefunding debt

3.0

2.0

Direct Government debt

1.0

0.0 2010 10%

2011

2012

2013

Jun-14

Source: Public Debt Management Office

Ext as

o far in 2014

Chart 4.5b â&#x20AC;&#x201C; Composition of Public debt As percentage of nominal GDP 50% 45% 40%

Public debt from State Enterprises

35% 30%

Bond to Compensate FIDF's Loss & Prefunding debt

25% 20% 15% 10%

Direct Government debt

5% 0%

2010

ternal debt percent of total

2011

2012

2013

Jun-14

65 www.ChartingThailandEconomy.com

Thailand’s public debt is not high standard Chart 4.6 – Public debt in the world Percentage of GDP, 2013 est. 1 Japan 3 Greece 4 Italy 5 Iceland 6 Portugal 7 Ireland 10 Singapore 11 Cyprus 12 Sudan 17 France 18 Spain 19 Egypt 20 United Kingdom 23 Canada 26 Germany 27 Hungary 29 Sri Lanka 31 Morocco 32 Austria 35 Netherlands 36 United States 39 Israel 44 El Salvador 45 Bahrain 46 Albania

22 175 133 131 128 124 114 113 111 94 94 92 91 86 80 80 78 77 76 73 72 67 62 61 61

Source: CIA fact book; Public Debt Management Office for Thailand’s dat

compared to international

48 Brazil 53 Croatia 54 Finland 58 Pakistan 59 Malaysia 63 India 68 Philippines 70 Vietnam 71 Poland 77 Laos 78 Thailand 79 Argentina 88 Ukraine 93 Bhutan 94 Taiwan 99 Mexico 102 Turkey 105 Korea, South 106 Hong Kong 107 Switzerland 114 China 118 Bangladesh 123 Norway 128 Indonesia 148 Russia

59 57 57 55 55 52 50 48 48 46 46 46 41 39 39 38 37 36 36 34 32 31 30 24 8

Intâ&#x20AC;&#x2122;l rule of thumb <60% of GDP

www.ChartingThailandEconomy.com

CONTENT

Executive summary

Growth

Income distribution

Stability

• Unemployment rate dropped back lowest amongst leading economies • Thailand’s Income distribution is am improvement over the past two de • Except for only Bangkok, poverty h decade

a minimal growth of 0.4% in 2Q14 part from the decrease in Import, the increase in Export e overall growth ontraction in Manufacturing and Construction has dragged

s mong the worst in Asia but there has been overall ecades, except for only in Bangkok eadcount and poverty rate have declined over the last

YearͲtoͲdate Balance of Payment

Chart 5.01 – Balance of Payment decompositio Billion USD

31.3 24.1

5.3 1.9

1.2

-5.0 09FY

10FY

11FY

12FY

Source: Bank of Thailand; CTE analysis

13FY

14/7mo

surplus, thanks to trade surplus Trade Balance (F.O.B) 32.6

29.8 17.0

09FY

10FY

11FY

14.0 6.0

6.4

12FY

13FY

14/7mo

Net service income & transfer

-10.7

-7.5

-9.1

12FY

13FY

-12.9

-6.1

-19.7

09FY

10FY

11FY

14/7mo

Net Capital Movement + errors and omissions 21.3 6.7

2.2

-2.3

-2.9 09FY

10FY

11FY

12FY

13FY

-6.0 14/7mo

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Strong Asian export engines refle surplus Chart 5.02 – Current Account balance As % of 2014 GDP* Singapore Ͳ Q2

Taiwan Ͳ Q2 Malaysia Ͳ Q2

6.3%

South Korea Ͳ Jul

6.0% 5.3%

Vietnam Ͳ 2013 Russia Ͳ Q2

2.9%

Philippines Ͳ Mar

2.7%

Euro Area Ͳ Jun

2.6%

Thailand Ͳ Q2

2.5%

Hong Kong Ͳ Q1

2.4% 1.7%

China Ͳ Q2

0.2%

Japan Ͳ Jun Australia Ͳ Q1

-2.0%

Pakistan Ͳ Q2

-2.2%

US Ͳ Q1

-2.5%

India Ͳ Q1

-2.8%

Indonesia Ͳ Q2

-3.5%

Brazil Ͳ Jul

-3.7%

Note: (*) The Economist Poll

Source: The Economist

ecting in huge current account

Last 12 months, USD Billion 19.9%

56.5

11.8%

64.0 18.7 87.7 9.5 51.5 9.7 297.9 12.5 4.5 163.6 -5.2 -40.9 -3.0 -405.9 -32.4 -26.3 -78.4

69 www.ChartingThailandEconomy.com

External debt almost unchanged

Chart 5.10a – External Debt Level Billion USD 160 120 80 40 0

05YE

06YE

07YE

08YE

09YE

Chart 5.10b – External Debt as % of GDP

37.0%

05YE

38.5%

06YE

Source: Bank of Thailand

35.4%

07YE

31.4%

28.8%

08YE

09YE

in the first quarter of 2014

10YE

35.2%

33.7%

10YE

11YE

12YE

13YE

14/1Q

38.0%

38.2%

12YE

13YE

14/1Q

70 www.ChartingThailandEconomy.com

Structure of external debt does n

Chart 5.11a â&#x20AC;&#x201C; External debt breakdown Private vs Public Private Public = General Government and Monetary Authorities

13%

16%

87%

84%

10YE

11YE

Source: Bank of Thailand

20%

18%

80%

82%

12YE

13YE

14/1Q

ot change from end of last year

Chart 5.11b – External debt breakdown LongͲTerm vs ShortͲTerm Long term Short term

50%

10YE

45%

44%

43%

55%

56%

57%

11YE

12YE

13YE

14/1Q

71 www.ChartingThailandEconomy.com

Capability to repay external debt concern as debt service ratio is lo Chart 5.12a â&#x20AC;&#x201C; International reserves As % of ST external debt

418% 370% 340% 312%

09YE

10YE

11YE

12YE

279%

13YE

14/1Q

Note: (*) Debt service payment / Export of goods and services

Source: Bank of Thailand; CTE analysis

deteriorated but not yet a ow and reserves at healthy level Chart 5.12b â&#x20AC;&#x201C; Debt service ratio* Percent

7.6%

4.7% 4.2%

4.0%

3.9%

13FY

14/1Q

3.4%

09FY

10FY

11FY

12FY

72 www.ChartingThailandEconomy.com

Net International reserves increas still considered excessive Chart 5.13a â&#x20AC;&#x201C; International reserves level* At the end of period, Billion USD

154.1 55.9

2005

106.5

118.0

2007

2008

73.9

2006

2009

Chart 5.13b â&#x20AC;&#x201C; International reserves as numbe

13.8 9.1 5.7

2005

6.9

2006

2007

7.9

2008

2009

Note: (*) Including Net Forward position (**) For the last period using average monthly import value during

Source: Bank of Thailand; CTE analysis

making it 7 months in a row

Chart 5.17b – YͲoͲY change in FX rate* Percentage change in avg. selling rate as of Aug 29th 2014 IDR Ͳ 2.9481

8.4

JPY Ͳ 31.0961

6.1

CNY Ͳ 5.2628

1.1

EUR Ͳ 42.4113

0.9

USD Ͳ 32.0961

0.4

TWD Ͳ 1.0734

0.2

VND Ͳ 0.0015

0.0

SGD Ͳ 25.8264

-1.7

MXN Ͳ 2.4527

-1.7

PHP Ͳ 0.7452

-1.8

MYR Ͳ 10.2909

-4.0

AUD Ͳ 30.1602

-4.0

GBP Ͳ 53.3311

-6.1

INR Ͳ 0.5647 -8.1 KRW Ͳ 0.0316 -8.2 Baht depreciates

Baht appreciates 74

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THB appreciated again in August,

Chart 5.17a – Nominal Effective Exchange Rate 2007=100

105.0

Baht appreciates

104.0

103.0

102.0

MͲoͲM

+0.8%

101.0

100.0

YͲoͲY

+1.2%

Baht depreciates Aug-13

Nov-13

Feb-14

May-14

99.0

98.0 Aug-14

Note: (*) Positive numbers mean the Baht has been depreciated against those currencies, the opposite applies to negative numbers USD = US$, GBP = Pound Sterling, EUR = Euro, JPY = Yen (per 100), CNY = Yuan Renminbi, SGD = Singapore $, MYR = Malaysia Ringgit, PHP = Philippines Peso, IDR = Indonesia Rupiah (per 1,000), INR = India Rupee, KRW = Korea Won, TWD = Taiwan $, VND = Vietnam Dong, MXN = Mexico Peso, AUD = Australia $

Source: Bank of Thailand; CTE analysis

sed slightly so far this year and

191.7

206.4

205.8

2011

2012

190.2

192.0

2013

Jul-14

2010

er of months of import**

12.6 10.8

2010

the last 12 months

2011

9.9

2012

9.1

2013

10.0

Jul-14

73 www.ChartingThailandEconomy.com