150228 eng emag by Ake Saroj

Charting Thailandâ&#x20AC;&#x2122;s Economy

MONTHLY

March 2015

Charting Thailand’s Economy Monthly Brief, March 2015 Publication Date: March 3rd, 2015 Number of pages: 65

DISCLAIMER All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, ChartingASEAN™. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that ChartingASEAN™ delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such ChartingASEAN™ can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect. ASK THE EDITOR ChartingASEAN™ team consists of editors, analysts, and researchers. For any questions and comments about this report, you can contact the chief editor directly at editor@chartingasean.com.

About This Report This report is designed to chart out the economic outlook of Thailand on a monthly basis. It is ideal for strategic management and corporate planning functions in companies operating or looking to get into the second largest economy in ASEAN.

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CONTENT SUMMARY

Growth

• Growth seemed to pick up but at a very low pace, making a full year growth of only 0.7% in 2014. Domestic drove the growth with Private Consumption the main driver with the help of decreasing Import. Transport, Financials and Utilities were the key drivers for the growth on production side. • Manufacturing production still trailed last year’s level in January • Private consumption and Private Investment retreated • Import declined faster than Export. Tourist arrivals dropped. • Unemployment rose • Policy interest rate unchanged, government spending rose • Businesses, Industries and Consumers were more pessimistic • The consensus growth projection is between 4.0‐4.2% for 2015

Stability

• Headline Consumer Price Index dropped to ‐0.52% and stayed in the deflation zone in February • Banking system is quite stable. Bank’s capital ratio decreased but was still high. NPL as percentage of total loan remain unchanged in 2014. Liquidity unchanged. • Bigger budget deficit so far in 2015, Public debt also increased but not too worrying yet • Positive Balance of Payment so far in 2015, thanks to trade and net service surplus. External debt has been increasing but still not dangerous. THB appreciated 10‐month in a row in February.

Reading This Report This report is designed to be read like a corporate presentation. Readers can easily follow the content point by point with detailed charts for each point. Explanation for chart(s) is provided on the right side bar of each page.

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Growth seemed to pick up but at a very low pace, making a full year growth of less than 1% in 2014 Real GDP growth This chart gives the long-term perspective of the historical GDP growth of Thailand. It also gives the latest annual growth during the last four quarters. It shows the real growth, which already excludes the effect from inflation. GDP calculations are prepared by Office of The National Economic and Social Development Board and released quarterly.

Chart 1.05 – Historical Real GDP growth rate Annual growth, percent 7.8% 7.1% 6.5%

6.3% 4.6%

Historical growth for the Thai economy

5.1% 5.0%

CAGR* 2003‐2014 = 3.5%

2.9%

2.5%

2.3% 0.7%

0.4% 0.6%

0.1% -0.5%

-2.3% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

1Q14 2Q14 3Q14 4Q14

The cumulative annual growth rate between 2001-2012 was 4.3%. During the last 12 years, only one year (2009) that registered a negative growth. Growth in 2010 was exceptionally high, representing the V-shape recovery. Thailand has recovered strongly from the flood crisis, growing 6.5% in 2012. Growth in 2013 has been slower especially in the 4th quarter, ending at 2.9%. The prolonged political crisis took its toll on the economy, forcing it to contract 0.5% in the first quarter of 2014. The Economic contraction ended with a minimal growth of 0.4% in 2Q14, 0.6% in 3Q14 and 2.3% in 4Q14. Full year 2014 GDP growth was 0.7%.

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GDP grew 2.3% in 4Q14 thanks to Transport, Trading and Manufacture Chart 1.06a – Real growth by sector, 4Q14

Chart 1.06b – Sectoral contributions, 4Q14

Year‐on‐Year percentage change

Contributions to total Real GDP growth

GDP

2.3

Fishing

9.5

Private HH

8.7

Other social

8.1

2.3

Transport

0.7

Trading

0.3

Manufacture

0.3

Transport

6.5

Utilities

0.2

Utilities

6.3

Financial

0.2

Other social

0.2

Financial

4.5

PublicAdmin

3.9

Hotel&Res

0.2

RealEstate

3.8

RealEstate

0.1

Construction

3.7

Fishing

0.1

Hotel&Res

3.6

PublicAdmin

0.1

Construction

0.1

Health&Social

0.0

Education

0.0

Health&Social

3.2

Trading Education

2.3 1.5

Mining

0.8

Mining

0.0

Manufacture

0.7

Private HH

0.0

Agriculture -3.5

Agriculture

Source of Growth – Production side Chart A shows the real growth rate of value added from each production sector. Chart B shows each sector’s contribution to the overall GDP growth. The contribution from each sector must add up to the overall growth. GDP calculations are prepared by Office of The National Economic and Social Development Board and released quarterly.

Most contributing sectors for the Thai economy in 4Q14 Chart A says that Utilities have grown most from 4Q13 to 4Q14, with Fishing increased the most. Chart B looks at the contributions to total growth from all sectors. The growth in Transport sector contributed the most while all other sectors, except Agriculture, contributed positively to the total growth.

-0.3 © ChartingASEAN™

Source: NESDB; ChartingAsean analysis

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Growth in Transport and Financial sectors contributed the most to the overall growth in 2014 Chart 1.07a – Real growth by sector, 2014

Chart 1.07b – Sectoral contributions, 2014

Year‐on‐Year percentage change

Contributions to total Real GDP growth

GDP

0.7

Financial

5.7

0.7

Transport

0.5

Transport

4.5

Financial

PublicAdmin

4.5

PublicAdmin

0.1

Utilities

0.1

Education

0.1

Education

3.6

Utilities

2.9

0.3

Health&Social

2.2

Trading

0.1

Private HH

2.1

Agriculture

0.1

Fishing

1.8

Other social

1.5

Agriculture

1.0

Other social

0.0

Health&Social

0.0

Fishing

0.0

Trading

0.6

RealEstate

0.0

RealEstate

0.4

Private HH

0.0

Mining Manufacture Hotel&Res

-0.5 -1.1 -2.1

Construction -3.8

Mining

Most contributing sectors for the Thai economy in 2014 Chart A says that Financial sector has grown the most in 2014, while Construction decreased the most. Chart B says that Transport was the most influential sector to the overall GDP growth of the period, contributing 0.5% to the total 0.7% growth.

0.0

Construction

-0.1

Hotel&Res

-0.1

Manufacture-0.4 © ChartingASEAN™

Source: NESDB; ChartingAsean analysis

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Tourism and Export contributed the most to the overall growth in 4Q14 Chart 1.08a – Real growth by expenditure, 4Q14 Chart 1.08b – Expenditure Contributions, 4Q14 Year‐on‐Year percentage change

Contributions to total Real GDP growth

GDP

2.3

X (services)

11.4

5.5

X (services)

3.2

X (goods)

2.8

I (capital)

1.9

M (services)

0.3

M (goods)

-0.4

Discrpncy I

-8.1 -11.9

2.0

X (goods)

I (capital)

2.3

1.5 0.9

0.5

M (goods)

0.2

M (services)

0.0

Discrpncy

Growth drivers for the Thai economy in 4Q14 Chart A shows that Tourism (X of services) grew the most in 4Q14. Chart B shows that Tourism and Export contributed the most to the overall growth in 4Q14. Lower level of Inventory was the main drag on the overall growth.

-0.2 -3.3

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

Source: NESDB; ChartingAsean analysis

Chart A shows the real growth rate of each expenditure. Chart B shows each expenditure’s contribution to the overall GDP growth. The contribution from each sector must add up to the overall GDP growth. GDP calculations are prepared by Office of The National Economic and Social Development Board and released quarterly.

0.6

I (Inventory)

Source of Growth – Expenditure side

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Decrease in Import was the main contributor to the small growth in 2014 Chart 1.09a – Real growth by expenditure, 2014 Chart 1.09b – Expenditure Contributions, 2014 Year‐on‐Year percentage change GDP

Contributions to total Real GDP growth GDP

0.7

Discrpncy

15.2

0.7

M (goods)

M (services)

3.3

X (goods)

2.8

3.1 0.5 0.3

X (goods)

0.9

0.2

0.3

Discrpncy

0.1

I (capital)

-2.8

M (services)

X (services)

-2.8

X (services)

-0.5

I (capital)

-0.6

M (goods) I

-6.3 -11.4

I (Inventory)

-0.3

Growth drivers for the Thai economy in 2014 Chart A says that Import of services, mainly tourism expenses, has grown most in 2014, while Investment registered the lowest growth. Chart B says that the decrease in Import of goods contributed most (+3.1%) to the overall GDP growth, followed by the increase in Export of goods (+0.5%), the increased in Government consumption (+0.3%), the increase in Private Consumption (+0.2%). Lower level of Inventory was the real drag on the overall growth.

-2.1

Source: NESDB; ChartingAsean analysis

Source of Growth – Expenditure side

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CONTENT SUMMARY

Growth

Stability

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Manufacturing production remained flat and trailing last year’s level Chart 1.10 – Manufacturing Production Index (2000=100)

Monthly Average 185.0

Manufacturing Production Index (MPI)

180.0

194.2 182.9 174.6

170.0

161.1

175.0

177.6 181.6 175.7

167.7

152.1

170.0

2015

2014

Manufacturing Production Index is a composite index calculated by the Office of Industrial Economics, Ministry of Industry. The composite includes all industries and weighted by their value added. The year 2000 is used as the base year and the figure is released monthly.

165.0

Latest development After its annual peak in 2010, Manufacturing Production Index has declined consistently at the rate of 3.6% per year. In January 2015, MPI dropped 1.3% from a year ago.

160.0

155.0

150.0

Y-o-Y

-1.3%

M-o-M

+0.1%

145.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

J F M A M J J A S O N D © ChartingASEAN™

Source: The Office of Industrial Economics

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Wood product has the highest growth in production from a year ago Chart 1.11a – Y‐on‐Y change in MPI by sector

Chart 1.11b – M‐on‐M change in MPI by sector

Jan 2015, percent

Wood products

21.6

Wood products

Apparel

10.9

Tobacco

Precision instru

10.9

Machineries

10.5

Transport Equip

Tobacco Petroleum

8.0

51.4 16.5 14.9 12.5

Mineral

9.5

Leather

4.7

Basic Mat

8.9

Food & Bev

4.4

Chemical

8.6

Electronic

4.2

Rubber&Plastic

8.1

Vehicles

7.0

Basic Mat

2.8

Vehicles

0.1

Food & Bev

4.5 3.7

Textiles

-0.3

Leather

Rubber&Plastic

-0.4

Precision instru

2.1

Paper

-0.6

Paper

1.8

Chemical

-2.3

Metal products

-0.2 -0.4

Mineral

-5.6

Textiles

Machineries

-6.6

Furniture

-1.8

Metal products

-7.8

Petroleum

-2.9

Transport Equip

-9.2

Electrical

-4.1

Office automate

-9.6

Electronic

-5.3

Apparel

-5.3

Furniture Electrical

-17.9 -23.9

MPI by sectors Chart A shows the year-on-year change in Manufacturing Production Index (MPI) by sector, that is comparing the MPI for the latest month with the MPI for the same month of the previous year. Chart B shows the month-on-month change in MPI by sector, that is comparing the MPI for the latest month with the MPI for the previous month.

Latest development More than half produced less than they did a year ago, while most sectors had their production increased substantially from last month.

Office automate -11.3 © ChartingASEAN™

Source: The Office of Industrial Economics; ChartingAsean analysis

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Capacity utilization rate increased slightly in January

Chart 1.12a – Overall Capacity Utilization Rate

Chart 1.12b – Capacity utilization rate by sector

Percent

Jan 2015, percent

70% 68% 66% 64% 62% Normal 60% Seasonally adjusted

58% 56% 54% 52% 50% Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Rubber&Plastic Electronic Textiles Furniture Electrical Metal products Basic Mat Precision instru Wood products Office automate Food & Bev Leather Chemical Transport Equip Mineral Vehicles Paper Machineries Petroleum Tobacco Apparel

89% 80%

Capacity Utilization rate

79%

Capacity utilization rate is a composite index of the capacity utilization rate of all major industries. The index is prepared by the Office of Industrial Economics, Ministry of Industry and released monthly. Chart A shows the composite Capacity Utilization rate in the last 6 months. Chart B shows the Capacity Utilization rate of the last month by industries.

72% 72% 69% 67% 67% 65% 65% 61%

Latest development

60%

Seasonally adjusted Capacity utilization rate increased more than 1% in January 2015. Rubber and Plastic has the highest utilization rate at 89%, while Apparel’s was the lowest at 26%.

57% 54% 51% 51% 47% 44% 41% 35% 26%

Source: The Office of Industrial Economics

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Thailand’s among the economies whose MPI dropped from a year ago Chart 1.13 – Manufacturing Production Index Latest, percent change on year ago China ‐ Dec

7.9

Taiwan ‐ Dec

7.8

Philippines ‐ Dec

7.4

Malaysia ‐ Dec

7.4

Vietnam ‐ Feb 5.2

US ‐ Jan

4.8

Australia ‐ Q3

3.8

Pakistan ‐ Dec

Latest development

2.4

India ‐ Dec

5 out of 18 major economies had negative MPI growth during the last period reported. Thailand’s growth is the forth lowest among the 18 economies.

1.7

Russia ‐ Jan

1.0

Singapore ‐ Jan

0.9

South Korea ‐ Dec

0.4

Euro Area ‐ Dec

-0.2

Thailand ‐ Jan

-1.3

Hong Kong ‐ Q3 Brazil ‐ Dec

Year-on-year change in Manufacturing Production Index from the latest period across major economies. The chart shows the current state of manufacturing production in the world. The figures are compiled by The Economist magazine.

7.0

Indonesia ‐ Dec

Japan ‐ Jan

Change in MPI in the world

-1.7 -2.6 -2.8 © ChartingASEAN™

Source: The Economist

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CONTENT SUMMARY

Growth

Stability

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Private consumption retreated slightly in January

Chart 1.14a – Composite Private Consumption Index*

Chart 1.14b – Y‐on‐Y change

(2010=100)

Jan 2015 vs 2014, percent

Composite Private Consumption Index

113.0

Non‐resident

112.0

111.0

19.2

Services

5.3

2014 110.0

Non‐durables

1.3

Semi‐durables

0.9

109.0

108.0

2015

107.0

106.0

Composite Index Y-o-Y

-0.1%

Latest development In January 2015, Composite Private Consumption Index dropped 0.1% from a year ago. However, not all components experienced a drop. Non-residents expenditure, Services, Non-durables and Semi durables have all increased from a year ago.

-0.1

M-o-M

+0.2%

Durables

A composite index representing private consumption conditions. It comprises of 5 components including Non-durables Index, Semi-durables Index, Durables Index, Services Index, and Non-residents expenditure Index. Prepared by the Bank of Thailand using 2010 as the base year and is released monthly and each component was seasonally adjusted. Chart A shows the Composite Index movement over the latest 2 years. Chart B shows the annual change of each component.

-1.9

105.0

J F M A M J Note: (*) seasonally adjusted Source: Bank of Thailand

J A S O N D © ChartingASEAN™

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Private Investment slowed down in January

Chart 1.15a – Private Investment Index

Chart 1.15b – Y‐on‐Y change

(2010=100)

Jan 2015 vs 2014, percent

Composite Private Investment Index

111.5

Domestic Machinery sales* (2010 prices, Baht)

111.0

14.5

2015 110.5

2014

Construction Area permitted (sqm)

1.7

110.0

Composite Index

-0.2

Import of Capital Goods (2010 prices, Baht)

-0.6

109.5

109.0

108.5

108.0

Construction Material Sales Index Y-o-Y

-0.2%

107.5

J F M A M J

Latest development -4.0

M-o-M

+0.0%

A composite index representing private investment conditions. It is constructed from 5 components including Construction Area Permitted in Municipal Zone (9-month moving average), Construction Material Sales Index (3-month moving average), Imports of Capital Goods at 2010 Prices, Domestic Machinery Sales at 2010 Prices, Domestic Car Sales Index for investment (3month moving average.). The index is prepared by the Bank of Thailand, using 2010 as the base year. Chart A shows the Composite Index movement over the latest 2 years. Chart B shows the annual change of each component.

Domestic Commercial Car -15.7 Sales Index

In January 2015, Composite Private Investment Index dropped 0.2% from a year ago. However, not all components experienced a drop. Domestic Machinery Sales and Construction Area permitted have both increased from a year ago.

J A S O N D © ChartingASEAN™

Source: Bank of Thailand

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FDI value decreased by 6% in 2014

Chart 5.14 – Foreign Direct Investment Million USD

Monthly cumulative FDI*

Foreign Direct Investment

14,000

Foreign direct investment (FDI) reflects the lasting interests of Non-residents of an economy in a resident entity. A direct investor may invest in equity capital, lending to affiliates, or reinvested earnings. Investment in equity is treated as a direct investment when the direct investors own 10 per cent or more of the voting shares for an enterprise or the equivalent for an unincorporated enterprise. Data is compiled by BOT. The left chart shows the annual figures. The right chart shows the cumulative monthly figures for the current year and the year before.

12,807

2013

12,000

11,331 10,699

10,000

9,112 8,547 8,000

6,000

4,853

2014

4,000

3,861

Latest development FDI value decreased by 6% in 2014

2,000

07FY

08FY

09FY

10FY

11FY

12FY

13FY

(*) Preliminary figures

Source: BOT

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BOI’s net application almost doubled in 2014

Chart 5.15 – BOI net application of foreign direct investment* Billion Baht BOI net application Value is derived from total investment of all projects which have foreign equity participation (shown by registered capital amount) of one particular nation or the sum of all foreign registered capital from more than two nations of at least 10%. The chart shows the value of BOI net application for projects defined as FDI.

1,023

648 525

Latest development BOI’s net application almost doubled in 2014.

396 236

10FY

11FY

12FY

13FY

14FY

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

Source: Board of Investment

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FDI from Japan, the biggest source, has declined sharply in 2014

Chart 5.16 – BOI net application of FDI* breakdown by country group Percent of total

11%

Others

23%

USA ANIEs ASEAN

3% 6% 6%

27%

4% 10%

Europe

2% 7% 8%

17%

7% 10%

21%

25%

2% 6%

BOI net application by country

10%

13%

BOI net application of foreign direct investment projects breakdown by country. FDI from Japan, the biggest source, has declined sharply in 2014.

10% 17% 58%

Japan

44%

49%

54% 29%

10FY

11FY

12FY

13FY

14FY

Note: (*) Foreign investment (foreign equity>=10%) (**) ANIEs: Taiwan, Hong Kong, South Korea © ChartingASEAN™

Source: Board of Investment; ChartingAsean analysis

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Most key Property indicators have decreased in 2014

Chart 1.16a – Y‐on‐Y change

Chart 1.16b – M‐on‐M change

2014 vs 2013, percent

Dec vs Nov 2014, percent

Condo unit registered

New housing unit

5.8

-0.7

45.3

Key property indicators Chart A compares key property indicators during this year to the current month to those in the same period of the previous year. Chart B compares key property indicators in the current month to those of the previous month.

-37.4

Latest development Constr. Area in municipal -3.0

Value of land transaction-4.2

32.2

Most property indicators decreased in 2014 with the only exception in Condominium registration.

19.5

Source: Bank of Thailand; ChartingAsean analysis

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CONTENT SUMMARY

Growth

Stability

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Improved trade balance so far in 2015 is the case of import declining more than export Chart 5.03a – Trade balance* in THB

Chart 5.03b – Trade balance* in USD

First month, Billion Baht

First month, Billion USD 25

800

Trade balance Foreign trade statistics refer to transactions involving movements of goods out of or into the Kingdom of Thailand over a specific time period. It is not equal to the one shown on the Balance of Payment chart due to a few adjustments. The charts show the breakdown of Trade Balance into Export and Import.

700 20

600 500

15 400 300

2014 2015 -2.3%

-12.3%

-3.5%

-13.3%

Latest development Improved trade balance in both THB and USD terms in the first month of 2015. This is the case of import declining more than export.

200 5

100 0

-100 -200

Export

–

Import

Trade balance

-5

Export

–

Import

= Trade balance

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

Source: Bank of Thailand; ChartingAsean analysis

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Export declined 2.3% in the first month of 2015, with Agriculture the main drag Chart 5.05a – YTD annual change in Export in Baht Chart 5.05b – Sectoral contributions First month of 2015 vs those of 2014, percent Total export Optical instru Automotive Jewellery Other export Electronics Other manufacturing Machinery Metal Fishery Electrical Toiletries Agro products Apparels Forestry Footware Furniture Photo instru Petro‐chemical Agriculture Chemicals Petroleum Mining Re‐exports Aircrafts

Contributions to total export growth

-2.3 33.7 13.3 9.4 9.0 7.8 6.2 6.2 3.4 -0.1 -0.7 -3.0 -3.9 -4.6 -5.5 -6.1 -8.6 -9.5 -9.9 -19.9 -21.8 -27.7 -54.1 -54.2 -59.9

Total export Automotive Electronics Machinery Optical instru Other export Jewellery Other manufacturing Metal Fishery Footware Forestry Toiletries Electrical Re‐exports Furniture Photo instru Apparels Mining Agro products Petro‐chemical Aircrafts Chemicals Petroleum Agriculture

-2.3 1.6 1.1 0.5 0.3 0.3 0.2 0.2 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.2 -0.3 -0.4 -0.6 -0.8 -0.9

YTD change in Export by product The left chart shows the year-to-date change in Baht term of export value by product group. The right chart shows each group’s contribution to the total export growth.

Latest development Export, in THB, decreased 2.3% in the first month of 2015. The increase in Automotive and Electronics export were the growth drivers while Petroleum and Agriculture export were the main drag to total export growth.

-1.4 -1.8 © ChartingASEAN™

Source: Bank of Thailand; ChartingAsean analysis

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NAFTA and ASEAN were the only two growing markets for Thai export in the first month of 2015 Chart 5.07a – Export by country

Chart 5.07b – Change in Export

Percent of total export in THB term

In THB term, First month of 2015 vs those of 2014

100% =

฿ 6.1

฿ 6.7

฿ 7.1

฿ 6.9

฿ 7.3 (Trillion)

NAFTA Rest of the world

18.1

17.4

18.1

16.7

16.5

ASEAN

Middle East

5.0

4.7

5.1

5.2

Japan

10.5

10.7

10.2

9.7

9.6

11.3

10.9

9.5

9.8

10.3

NAFTA

11.7

11.1

11.4

11.5

12.0

East Asia ex‐Japan

20.4

21.0

21.2

20.3

23.0

24.3

24.6

25.9

26.1

10FY

11FY

12FY

13FY

14FY

ASEAN

7.5%

0.4%

Rest of the world

-0.6%

Japan

East Asia ex Japan

Middle East

-4.7%

Export destinations The left chart shows Export value (in Baht term) broken down by country of destination. The right chart shows change in export value to each destination.

Latest development NAFTA and ASEAN were the only two growing markets for Thai export in the first month of 2015. Middle East was the hardest hit market with export declining 10% from a year ago.

-6.4%

-7.5%

-10.0%

Source: Bank of Thailand; ChartingAsean analysis

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Big decrease in Import so far in 2015 due mainly to decrease in fuel import Chart 5.09a – YTD annual change in Import in Baht Chart 5.09b – Sectoral contributions First month of 2015 vs those of 2014, percent

Total import

Contributions to total import growth

Total import

-12.3

YTD change in Import by product class

-12.3

Capital goods

1.9

Capital goods

0.4

Intermediate ‐ Non fuel

0.3

Intermediate ‐ Non fuel

0.1

The left chart shows the year-to-date change (in Baht term) of import value by product group. The right chart shows each group’s contribution to the total import growth.

Latest development Consumer goods

-1.6

Others

Intermediate ‐ Fuel

-15.6

-46.4

Consumer goods

-0.1

Others

Intermediate ‐ Fuel

Import has decreased 12.3% in the first month of 2015, due mainly to the decrease in Fuel import.

-1.2

-11.5

Source: Bank of Thailand; ChartingAsean analysis

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Intermediate goods has gained more share this year

Chart 5.08 – Import by economic classification Percent of total import in Baht term 100% =

Others Capital goods

฿ 5.9

฿ 7.0

฿ 7.8

฿ 7.7

฿ 7.4

฿ 0.6

10.2

12.4

11.4

12.2

8.1

7.3

21.3

24.4

23.3

20.9

24.2

(Trillion)

Import composition

25.5

Import value (in Baht term) breakdown by economic classification into Consumer goods, Intermediate goods, Capital goods and Others.

Latest development

Intermediate – Non‐Fuel

44.0

40.0

37.5

35.7

38.3

Intermediate ‐ Fuel

17.4

18.9

20.8

15.2

Consumer goods

7.5

7.8

8.0

8.7

9.6

10FY

11FY

12FY

13FY

14FY

15/1MO

42.5

Intermediate is the major class in Thailand’s import, implying major portion of import is for reproduction. It has gained more share so far this year.

Source: Bank of Thailand; ChartingAsean analysis

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Tourist arrivals dropped 7% in 2014

Chart 5.18 – International Tourist Arrivals Million visits

Monthly cumulative 30.0

26.5

CAGR

10.6%

24.8

Tourist arrivals

25.0

22.4

2013 20.0

19.2 15.9 14.5 11.7

Latest development

15.0

Tourist arrivals dropped 7% in 2014, the first time in since 2009.

14.1

11.5

10.0

Number of the international tourist arrivals into Thailand. Prepared by Department of Tourism using data from Immigration Bureau, Police Department.

10.0

2014 5.0

Y-o-Y

-7% 0.0

05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY

F M A M J

J A S O N D © ChartingASEAN™

Source: Department of Tourism

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Cambodia and Myanmar have been the two highest growing markets for tourists in 2014 Chart 5.19a International Tourist Arrivals by country of nationality

Chart 5.19b 10 Highest Change in International Tourist Arrivals by country of nationality

Percent of total

2014 vs 2013, Thousands

Rest of world Americas

Europe

15.6

14.7

13.8

5.3

5.0

4.8

27.9

26.5

25.3

11.9

Cambodia

4.4

4.5

Myanmar

23.8

24.8

72.2

20.7

Philippines

16.5

Italy

East Asia

51.2

53.8

59.9

58.8

Israel Switzerland 10FY

11FY

12FY

13FY

Structure of tourist nationalities has changed a bit over the years. East Asia has been the largest group in the last six years and the figure is increasing every year. Cambodia and Myanmar have been the two highest growing markets for tourists in 2014.

9.3

Bangladesh United Kingdom

Latest development

12.8

Brazil

56.0

Chart A shows the composition of international tourist arrivals by their nationalities grouped by region. Chart B shows the top 10 highest change in arrivals by country and the percent of total arrival change.

36.4

France

Tourist arrivals by nationality

6.0 4.3 3.1 0.7

14FY © ChartingASEAN™

Source: Department of Tourism; ChartingAsean analysis

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CONTENT SUMMARY

Growth

Stability

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Unemployment rate increased to 1.06% in January Unemployment rate

Chart 2.08 – Unemployment rate Percent

Monthly Average 1.40

1.83 1.20

1.51

1.49 1.38

1.00

1.38

2015

0.80

1.04 0.84 0.68

0.66

0.60

2014

0.72

Unemployment rate calculated from labor Force Survey conducted and compiled by the National Statistical Office (NSO). Unemployment rate equals unemployed persons divided by total labor force. Unemployed persons is defined as persons with the age of 15 years and over who during the week in which the survey is conducted, do not work, have no job, business enterprise or farm of their own. Persons in this category include those who are looking for a job, applying for a job or waiting to be called to work during the past 30 days prior to the interview date and those who are not looking for work during the past 30 days prior to the interview date, but are otherwise available for work during the 7 days prior to the interview date. Total labor force comprises current labor force and seasonally inactive labor force.

0.40

Latest development Unemployment rate in Thailand has been declining over the past 10 years. Unemployment rate increased to 1.06% in January.

0.20

0.00 05-Avg 06-Avg 07-Avg 08-Avg 09-Avg 10-Avg 11-Avg 12-Avg 13-Avg 14-Avg

J F M A M J J A S O N D © ChartingASEAN™

Source: National Statistical Office, Bank of Thailand

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Thailand’s unemployment rate is lowest comparing to other leading economies Chart 2.09 – Unemployment rate Latest, percent Thailand ‐ Jan Singapore ‐ Q4 Malaysia ‐ Dec Hong Kong ‐ Jan

1.1 1.9 3.0

Unemployment rates in the world

3.3

Japan ‐ Jan

3.6

Vietnam ‐ 2013

3.6

A comparison of unemployment rates across different countries (economies) compiled by The Economist magazine.

South Korea ‐ Jan

3.8

Latest development

Taiwan ‐ Jan

3.8

Thailand’s unemployment rate is the lowest among leading economies. Euro area still has the highest unemployment rate, followed by India.

China ‐ Q4 Brazil ‐ Jan Russia ‐ Jan US ‐ Jan Indonesia ‐ Q3 Philippines ‐ Q4 Pakistan ‐ 2013 Australia ‐ Jan India ‐ 2013 Euro Area ‐ Dec

4.1 5.3 5.5 5.7 5.9 6.0 6.2 6.4 8.8 11.4

Source: The Economist

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CONTENT SUMMARY

Growth

Stability

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Policy interest rate unchanged again in February

Chart 3.01a – BOT’s policy rate

Mar-14

Chart 3.01b – BIBOR overnight rate 2.10%

2.10%

2.00%

1.90%

1.80% Feb-15

Mar-14

10.00%

Chart A shows the Bank of Thailand’s policy rate (1-day repo rate) over the last 12 months. Chart B shows the Inter bank overnight rate over the last 12 months. Chart C shows the minimum and maximum of the saving deposit rate over the last 12 months. Chart D shows the minimum and maximum of commercial bank’s MLR over the last 12 months.

Latest development

Chart 3.01d – Commercial bank MLR*

Chart 3.01c – Saving deposit rate*

Interest rates

Max

7.50%

10.00% 7.50%

No change in policy interest rate in February. FX and growth outlook is pressuring BOT to lower its policy rate again sometimes in 2015.

Min Max

5.00%

2.50%

Min Mar-14

0.00% Feb-15

Mar-14

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

Source: Bank of Thailand

0.00% Feb-15 © ChartingASEAN™

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Government spending in the first month of 2015 rose 2.4%

Chart – Monthly cumulative Fiscal expenditure Billion Baht 2500

2000

Government Spending

2014

The current government is trying to boost the economy by fiscal spending. In the first month of 2015, government spending rose 2.4% from the same period last year. While the effectiveness of such program is still in doubt, we see bigger spending from the government in the calendar year of 2015.

1500

1000

500

2015 0

Source: Bank of Thailand; ChartingAsean analysis

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CONTENT SUMMARY

Growth

Stability

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Business and Industries sentiments worsened in January

Chart 1.18a – Business Sentiment Index* 100

Chart 1.18b – Thai Industries Sentiment Index** 200

Better

100 49.1

48.9

48.7

48.6

49.0

49.0 88.7

Worse

86.1

87.5

89.7

92.7

91.1

Worse

Business and Thai Industries Sentiment Indices Chart A shows Business Sentiment Index has been compiled with BOT survey data of 1,500 businesses. Index = 50 indicates that business sentiment remains stable. Index > 50 indicates that business sentiment has improved. Index < 50 indicates that business sentiment has worsened. Chart B shows Thai Industries Sentiment Index, from The Federation of Thai Industries survey of more than 1,000 industrial enterprises. Index = 100 indicates that industries sentiment remains stable. Index > 100 indicates that industries sentiment has improved. Index < 100 indicates that industries sentiment has worsened.

Latest development

0 Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

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

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

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

Business and Industries were pessimistic in January. Business Sentiment Index stayed below 50, indicating that businesses were pessimistic. Thai Industries Sentiment Index went down and stayed below the cut off level, indicating that industries were more pessimistic.

Source: Bank of Thailand, The Federation of Thai Industries

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Worsening Consumer Confidence in January

Chart 1.17 – Consumer Confidence Index Overall

100

On job

100

On future income

100

Consumer Confidence Index

Better

50 Worse

Prepared by Ministry of Commerce through monthly consumer survey nationwide. The index ranges from 0 to 100. 50 means consumer confidence is equal to those of the prior month. Over 50 means consumer confidence is better than those of the prior month. Under 50 means consumer confidence is worse than those of the prior month.

50 Worse

Worse

Latest development Consumers in general were more pessimistic in January 2015 as the overall index dropped and stayed below the cut off level. 0

0 Jul-14

Sep-14

Nov-14

Jan-15

0 Jul-14

Sep-14

Nov-14

Jan-15

Jul-14

Sep-14

Nov-14

Jan-15

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

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CONTENT SUMMARY

Growth

Stability

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The Economist Poll consensus was revised up to 4.2% for 2015 growth Chart 1.03a – Real GDP growth projections

Chart 1.03b – Real GDP growth projections

For 2014, Annual percentage change

For 2015, Annual percentage change 6.00

6.00

5.00

BOT The Economist poll

4.00

NESDB

4.00

FPO

3.00

2.00

FPO BOT

NESDB 1.00 The Economist poll

1.00

Oct-14

Nov-14

Dec-14

Jan-15

Real GDP growth projections from Bank of Thailand, National Economic and Social Development Board (NESDB), Fiscal Policy Office (FPO) and the weekly poll conducted by the Economist magazine. The charts also show growth projections as of past dates, which highlight any significant change in projections from each of the forecasters. The changes in projections normally reflect the economic outlook as seen by each forecaster.

Growth projections for the Thai economy The Economist Poll consensus was revised up to 4.2% for 2015 growth. Consensus growth forecast is now 4.0-4.2% for 2015.

Actual 0.00

Sep-14

Real GDP growth projections

Feb-15

Forecast as of, month ending

0.00 Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Forecast as of, month ending © ChartingASEAN™

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

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Growth for Thailand in 2015 is projected to be around the middle of the pack Chart 1.04a – Real GDP growth projections

Chart 1.04b – Real GDP growth projections

2014, Annual % change, as of Feb 28th

2015, Annual % change, as of Feb 28th 2015

China Philippines India Vietnam Malaysia Pakistan Indonesia Taiwan South Korea Singapore Australia Hong Kong US Euro Area Thailand Russia Japan Brazil

2015

China Philippines India Vietnam Pakistan Malaysia Indonesia Thailand South Korea Taiwan US Singapore Australia Hong Kong Euro Area Japan Brazil Russia-3.5

7.4 6.0 6.0 6.0 6.0 5.4 5.1 3.6 3.5 2.8 2.8 2.4 2.4 0.8 0.7 0.6 0.3 0.1

7.2 6.7 6.6 6.2 5.6 5.5 5.5 4.2 3.7 3.7 3.3 3.1

International real GDP growth projections Real GDP growth projection consensus for major economies in the world as a result of a weekly survey by the Economist magazine. It offers a good comparison across economies in the world.

Growth outlook for the Thai economy According to the Economist poll, Thailand’s GDP growth is expected to be 4.2% for 2015, around the middle when compared to other major and emerging economies.

2.6 2.5 1.2 1.1 0.0

Source: The Economist

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CONTENT SUMMARY

Growth

Stability

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Thai economy stayed in deflation state in February

Chart 3.07a – Y‐o‐Y change in CPI

Chart 3.07b – Y‐o‐Y change in CPI by product

Percent

February 2015, percent Food away from home

2.00%

1.50%

Core* 1.00%

3.7

Prepared food at home

3.1

Seasoning

2.9

Tobacco & alcohol

2.4

-0.50%

Head line

1.3

Medical care

1.1

Meat

1.0

Non alcoholic beverage

0.9

Latest development

Apparel and footware

0.8

Recreation & Education

0.7

In February 2015, Core inflation decreased slightly to 1.45% while Headline dropped to 0.52% and stayed in the deflation zone.

Rice

0.7

Veg & fruit

-0.2

Eggs & milk -1.00% Sep-14

Oct-14

Nov-14 Dec-14

Jan-15

Feb-15

-2.8

Transport & Commu Energy

-6.4 -12.9

Note: (*) exclude raw food and energy

Source: Bureau of Trade and Economic Indices; ChartingAsean analysis

CPI is the general price level of goods and services purchased by consumers. Prepared by Bureau of Trade and Economic Indices, Ministry of Commerce. Available in various definitions and by product groups. Change in CPI is normally used as main indicator for inflation.

Housing & furnishing

0.50%

0.00%

Consumer Price Index

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Along with Euro area and Singapore, Thailand is in deflation state Chart 3.08 – Consumer Price Index Annual percentage change

Latest

Russia ‐ Jan

15.0

Brazil ‐ Jan

7.8

7.1

Indonesia ‐ Feb

6.3

India ‐ Jan

6.4

5.1

Hong Kong ‐ Jan

7.2

4.1

Pakistan ‐ Feb

4.4

3.2

Philippines ‐ Jan

2.4

Japan ‐ Jan

2.4

Australia ‐ Q4

7.2 4.2 2.7

1.7

Malaysia ‐ Jan

1.0

China ‐ Jan

0.8

South Korea ‐ Jan

0.8

Vietnam ‐ Feb -0.1

Euro Area ‐ Feb

-0.3

Singapore ‐ Jan

-0.4

Thailand ‐ Feb

-0.5 -0.9

Change in Consumer Price Index across major economies in the world. Also the projected CPI change for the full year by the Economist poll.

Russia has by far the highest inflation among major and emerging economies. Along with Taiwan, Euro area, US and Singapore, Thailand is in deflation state.

3.1 2.1 1.3 4.1 1.5 0.4 1.1 1.9 1.2

Note: (*) The Economist Poll

Source: The Economist

Inflation in the world

Latest development

2.5

0.3

US ‐ Jan

Taiwan ‐ Jan

2014*

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Deep deflation at the producer level

Chart 3.09a – Y‐o‐Y change in PPI

Chart 3.09b – Y‐o‐Y change in PPI by product

Percent

February 2015, percent

3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% Sep-14

Oct-14

Nov-14 Dec-14

Jan-15

Feb-15

Mechinery Metal Crop Pulp & paper Non‐metallic mineral Transport equip Forestry Wood Leather & footware Textile Electrical equip Food Other manu goods Basic metals Livestocks Chemical Fishing Rubber & plastic Energy Petroleum products

2.0 1.3 0.1

Producer Price Index

0.1

Inflation at the producer level is measured by a change in Producer Price Index. Prepared by Bureau of Trade and Economic Indices, Ministry of Commerce. The chart shows the changes of the overall PPI and also the PPI of each industry.

0.1 0.1 0.0 -0.2 -0.6

Latest development

-0.7

Producer price level dropped from a year ago, resulting in deflation. In February, the PPI dropped almost 5% from a year ago. PPI of Petroleum products dropped the most at 30.5%.

-0.9 -1.0 -1.9 -2.3 -3.4 -4.8 -6.6 -6.8 -17.2 -30.5

Source: Bureau of Trade and Economic Indices; ChartingAsean analysis

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CONTENT SUMMARY

Growth

Stability

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Slight bank’s loan growth suggesting a pick up in economic activities from earlier months Chart 3.02a – Commercial Banks’ Loan THB billion 11,400 11,200 M-o-M

11,000

Bank’s Loan and Loan-to-deposit ratio

+1.5%

10,800 Y-o-Y

10,600

+5.0%

10,400 Jan-14

Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Commercial banks take deposits and give out loans. Chart A shows the outstanding loan by commercial banks in Thailand. Chart B shows the commercial banks’ loan to deposit ratio, a liquidity indicators in the banking system.

Chart 3.02b – Commercial Banks’ Loan/Deposit* ratio

Latest development

Percent

Bank’s loan increased slightly in December. Liquidity in the system remained unchanged with Loan-to-Deposit ratio at 95.7%. Together they suggested a pick up in economic activities from earlier months.

100% 97.5% 96.0%

95.9%

97.9%

97.7%

97.8%

97.2% 96.4%

96.3%

95.0%

95.7%

Nov-14

Dec-14

95%

90% Jan-14

Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Source: Bank of Thailand

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Gross NPL continued to rise in absolute value in 2014, but remained unchanged as percentage of total loan Chart 3.03a – Total Financial Institutions’ Gross NPLs Outstanding Billion Baht

Non-performing loan 458

07YE

401

08YE

380

09YE

317

270

256

267

278

10YE

11YE

12YE

13YE

14YE

2015/Q1 2015/Q2 2015/Q3

Gross NPLs: the outstanding amount of loans classified as substandard, doubtful, doubtful of loss, and loss. The chart shows Gross Non-performing loan from all Financial Institutions in Thailand, both in the absolute and percentage of total terms.

Latest development

Chart 3.03b – Total Financial Institutions’ Gross NPLs Outstanding

Gross NPLs of the total system has been declining since the recovery from the 1997 crisis. Gross NPL continued to rise in absolute value in 2014, but remained unchanged as percentage of total loan.

Percentage of Total Loans

7.31% 5.29%

4.85% 3.60%

07YE

08YE

09YE

10YE

2.75%

11YE

2.26%

2.16%

12YE

13YE

14YE

2015/Q1 2015/Q2 2015/Q3 © ChartingASEAN™

Source: Bank of Thailand

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Banks’ capital ratio decreased but remained high in December

Chart 3.04 – Capital ratio of all commercial banks* % of risk assets, at year end

Month End 17.5%

15.8%

16.2%

16.1%

14.9%

2014

15.7%

Capital ratio of all commercial banks

17.0%

14.8% 14.0%

13.9% 13.3% 12.4%

16.5%

2013 16.0%

Capital funds of commercial banks mean stockholders’ equity. Risk assets mean summary of all risk-weighted assets including contingent liabilities converted into assets and weighted by risk ratio. The higher the ratio the safer and more stability in the banking system.

Latest development Banks’ capital ratio decreased in December to 16.8%, still a rather high level.

15.5%

15.0%

14.5% 2004

2005

2006

2007

2008

2009

2010

2011

2012

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

Source: Bank of Thailand

2013

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Thailand’s real interest rate is almost zero Chart 3.05 – Real interest rates Percent, as of Mar 2nd 2015

3M risk‐free interest rates Russia

─ 18.0

Brazil

Expected 2014 inflation*

Real interest rates

7.8

12.0

10.2

6.3

5.7

Pakistan

8.5

7.2

1.3

India

8.4

7.2

1.2

Indonesia

6.8

Vietnam

5.0

China

4.9

Malaysia

6.4 4.1

2.0

Thailand

2.0

Philippines

1.9

Taiwan

0.9

Hong Kong

0.4

Singapore

0.4

0.3

Japan

0.1

Euro Area

0.0

2.8 3.1

2.4

South Korea

0.9

2.1

3.8

Australia

0.4

0.7

2.5

-0.1

1.3

0.7

1.9

0.1 4.2

1.2

Latest development There are quite a few countries with negative real interest rates. Countries with negative real interest rates seems to have low nominal interest rates to begin with. Thailand’s real interest rate is close to zero.

1.1

-4.0 -0.7

1.5

-1.2 2.7

-2.6 -0.4

Note: (*) The Economist Poll

Source: The Economist

Chart shows one way to calculate real interest rates across different currencies and economies in the world. Today’s Real interest rates = Nominal interest rates (represented here by 3-month risk free interest rates) – expected inflation.

-0.3 4.4

0.4

-2.3

Real interest rates in the world

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SET index increased slightly in February despite continued foreign sell off Chart 3.06a – Monthly performance of SET index

Chart 3.06c – Change since Dec 31st 2013

Percent change from prior month, at month end

Percent, as of Feb 25th 2015 China (SSEA)

5.6% 1.5%

0.6%

India (BSE) 0.4%

Pakistan (KSE)

34.0% 27.4%

Thailand (SET) -6.0%

Oct-14

37.0%

Indonesia (JSX)

-0.1%

Sep-14

52.8%

Nov-14

Dec-14

Jan-15

Feb-15

22.4%

China (SSEB, $ terms)

19.2%

US (NAScomp)

18.9%

Germany (DAX)

17.4%

Euro Area (FTSE Euro 100)

14.8%

US (S&P 500)

14.4%

Japan (Nikkei 225)

14.1%

France (CAC 40)

13.6%

0.0

Taiwan (TWI)

12.6%

-2.0

Australia (All Ord.)

-4.0

US (DJIA)

-6.0

Singapore (STI)

-8.0

HK (Hang Seng)

-10.0

UK (FTSE 100)

Chart 3.06b – Cumulative net foreign fund flow SET & MAI, Billion Baht, Month end

-12.0

S Korea (KOSPI)

-14.0 J-15

F-15 M-15 A-15 M-15 J-15

J-15

A-15 S-15 O-15 N-15 D-15

Malaysia (KLSE)

Stock market performance Chart A shows the monthly performance of the SET index. Chart B shows the performance, change in the index level, of key stock markets in the world, since the end of last year.

Latest development SET index increased 0.4% in February despite continued foreign sell off. Globally, SET index outperformed most markets since the end of 2013.

Source: SET, The Economist; ChartingAsean analysis

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CONTENT SUMMARY

Growth

Stability

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Higher government deficit as percentage of GDP in 2014

Chart 4.1 – Government budget and cash balance as percentage of nominal GDP Budget balance vs GDP

Percent

Overall Cash balances are the sum of budget and non budget cash balances. Budget cash balances are the government revenues net of the government expenditures. Non budget cash balances include changes in governmental agencies’ deposit accounts and net positions of government’s revolving funds. The chart shows both Overall Cash balances and Budget cash balances as percentage of nominal GDP.

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

1.4%

1.1%

Latest development

-0.3%

-0.5%-0.6%

-0.7% -1.1%-1.1%

-0.9%

-1.7% -2.0%

-2.0% -2.2% -2.6% -3.6% -4.1%

-4.0% -4.4%

05FY

06FY

07FY

08FY

09FY

-2.4%-2.5%

10FY

11FY

12FY

13FY

Government budget and cash balances have been in deficit in 7 of the last 10 years. The magnitude of the deficits in the past 5 years have been huge. The worst deficits in relative to GDP were in 2009 (calendar year), with budget deficit of 4%. Huge government budget deficit in 2012, only slightly better than in 2009. Higher budget and cash deficit as percentage of GDP in 2014.

Source: Bank of Thailand; ChartingAsean analysis

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Budget deficit in the first month of 2015 was 14 billion Baht higher than the same period in 2014 Chart 4.2 – Government budget balance Billion Baht Monthly cumulative Budget balance Budget balance

(Billion Baht) 2,075

Revenue 1,241

1,751 1,390

1,455

1,498

2,158

Budget balances are the government revenues net of the government expenditures. The left chart shows government revenue, government expenditure and budget balance (line). The right chart shows monthly cumulative of budget balance of the last two years.

50.0 2,076

1,902 0.0

1,484

2015 -50.0

Budget balance

-36

Latest development

110 -174

-75

-100

-100.0

-27

-364

-414

-267

-296

2014 -150.0

-1,277

-200.0

-1,280 -1,629

Expenditure

-1,598 -1,849

-1,825

-250.0

-1,930 -2,489

-2,424

-2,371

Government budget balances have been in deficit in 9 of the last 10 years. The magnitude of the deficits in the past 5 years have been huge. The worst deficits in absolute term were in 2012 (calendar year), with budget deficit of 414 Billion Baht. In 2014, Budget deficit increased from 2013. Budget balance in the first month of 2015 was 14 billion Baht higher than the same period in 2014.

-300.0

-350.0

05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY

Source: Bank of Thailand; ChartingAsean analysis

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Huge budget and cash deficit already in the first month of 2015

Chart 4.3 – Government cash balance Billion Baht Budget cash balance Overall Cash balance (including non-budgetary deficit/ surplus)

Budget and Cash balance Overall Cash balances are the sum of budget and non budget cash balances. Budget cash balances are the government revenues net of the government expenditures. Non budget cash balances include changes in governmental agencies’ deposit accounts and net positions of government’s revolving funds. The chart shows both Overall Cash balances and Budget cash balances in absolute term.

110 88

-27

-36 -45

-58

-75

-95

-100 -96

-109

-144

2012 saw the biggest budget and cash deficit in THB term. Apart from 2010, Budget cash balance and Overall cash balance are typically in line with each other. Huge budget and cash deficit already in the first month of 2015.

-174 -242 -266

Latest development

-267 -296 -305

-364 -401

-414 -466

05FY

06FY

07FY

08FY

09FY

10FY

11FY

12FY

13FY

14FY

Source: Bank of Thailand; ChartingAsean analysis

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Thailand’s budget deficit is expected to be around 2.3% of GDP, same as Indonesia’s Chart 4.4 – Government Budget balance as percentage of GDP 2014*, percent Hong Kong South Korea

0.8

Singapore Russia

Budget balance in the world

0.5

Consensus projection of Government budget balance as percentage of GDP across major countries in the world for the current year. The data is compiled by the Economist poll.

-0.2

Philippines Taiwan

-0.7 -1.4

Indonesia Thailand China Euro Area

-2.3

Latest development

-2.3

Most governments in the world are expected to have budget deficits in 2013, except South Korea, Hong Kong, Singapore and Russia. The magnitude of the expected budget deficits are greatest in US and Japan, the leading economies in the world. Thailand budget deficit is expected to be around 2.3% of GDP, same as Indonesia’s.

-2.4 -2.6

Australia US

-2.6 -2.8

Malaysia India

-3.6 -4.2

Vietnam Pakistan Brazil Japan

0.5

-4.7 -5.5 -6.1 -8.0

Note: (*) The Economist Poll

Source: The Economist

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A slight increase in Public debt so far in 2015

Chart 4.5a – Composition of Public debt

Chart 4.5b – Composition of Public debt

THB Trillion

As percentage of nominal GDP

6.0

50% 45%

5.0 40%

Public debt from State Enterprises

4.0

35% 30%

Bond to Compensate FIDF's Loss & Prefunding debt

3.0

Bond to Compensate FIDF's Loss & Prefunding debt

25% 20%

2.0 15%

Direct Government debt

1.0

Direct Government debt

10% 5%

0.0

Composition of Public debt Public debt includes direct government debt, Bond to Compensate FIDF's Loss, Debt Prefunding, Non-Financial State Enterprise Debt, Special Financial Institutions Guaranteed Debt, and others. Chart A shows the level of debt in THB. Chart B shows the level as percentage of nominal GDP.

Latest development Public debt as percentage of GDP increased significantly since 2009 then dropped slightly in 2011 before increasing again. Public debt increased in absolute term and relative to GDP in 2012 and 2013, due largely to direct government debt. A slight increase in Public debt so far in 2015, at THB 5.7 trillion, or 46% of GDP. Majority of the public debt is domestic based.

2011

2012

2013

2014

Jan-15

2011

2012

2013

2014

Jan-15

Source: Public Debt Management Office

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Thailand’s public debt is not high compared to international 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

226 175 133 131 128 124 114 113 111 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 data

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

Int’l rule of thumb <60% of GDP

Public debt in the world Public debt as percentage of nominal GDP, data is compiled by CIA.

Latest development High public debt ratio in most developed countries. Thailand’s public debt ratio, at 46% of GDP in 2013, is below international rule of thumb of 60%. Japan has the highest public debt level compared to GDP, at 226%. Majority of countries with high public debt level comes from Europe, leading by Greece, Italy, Portugal, Iceland and Ireland.

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CONTENT SUMMARY

Growth

Stability

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Positive Balance of Payment so far in 2015, thanks to trade and net service surplus Trade Balance (F.O.B) 29.8

Chart 5.01 – Balance of Payment decomposition

24.6

Billion USD

17.0 6.0

6.7 1.4

10FY

31.3

11FY

12FY

13FY

14FY

15/1mo

Net service income & transfer 1.1

+ 1.2

-9.1

-10.4

11FY

12FY

13FY

14FY

0.7 10FY

-1.2 12FY

13FY

14FY

15/1mo

Net Capital Movement + errors and omissions

-5.0 11FY

-7.5

-19.7

5.3

10FY

-8.1

15/1mo

21.3

10FY

11FY

-1.8

-2.6 -15.4 12FY

Balance of Payments is a summary of economic transactions between residents and nonresidents that takes place during a specific time period. Balance of Payments include Trade balance, Net services income & transfers, Capital and financial account and Net errors & omissions. Trade balance refers to net export (export less import) of goods. Net Services are the net result of foreign trade related to services, defined as the net export (export less import) of services. Income consists of compensation of employees, investment income, and donation and grant. Capital Account encompasses receipts and payments pertaining to (1) transfers in cash or in kind, and (2) acquisition and disposal of nonproduced, non-financial assets. Financial Account refers to net flows of financial transactions between residents and nonresidents. Net errors & omissions reflects the discrepancy between the overall balance and the sum of each sub-account of the balance of payments.

Latest development

6.7 -7.7

Balance of payment decomposition

13FY

14FY

Positive Balance of Payment so far in 2015 of USD 0.7 billion, thanks to trade and net service surplus.

15/1mo

Source: Bank of Thailand; ChartingAsean analysis

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Strong Asian export engines reflecting in huge current account surplus Chart 5.02 – Current Account balance As % of 2014 GDP*

Last 12 months, USD Billion

Singapore ‐ Q4

21.9%

Taiwan ‐ Q4

58.8

11.7%

South Korea ‐ Jan

65.3

5.9% 4.2%

15.2

Vietnam ‐ 2013

4.2%

9.5

Philippines ‐ Sep

4.0%

10.2

2.7%

Thailand ‐ Q4

2.6%

Euro Area ‐ Dec

2.4%

China ‐ Q4

2.2%

Hong Kong ‐ Q3

1.9%

Japan ‐ Dec -1.8%

Pakistan ‐ Q4

-2.0%

US ‐ Dec

-2.3%

Indonesia ‐ Q4

-3.0%

Australia ‐ Q3

-3.0%

Brazil ‐ Jan

56.6 14.2 309.1 213.8 7.1

0.4%

India ‐ Dec

-4.1%

Current Account represents the net sum of trade in goods and services, primary income and secondary income. The left chart shows the consensus projection of 2012 Current Account Balance as percentage of GDP by the Economist poll. The right chart shows last 12-month Current Account Balance of major economies in the world, in absolute dollar term

92.8

Malaysia ‐ Q4

Russia ‐ Q4

Current Account Balance

24.3 -23.4

Countries that are expected to have huge Current Account surplus are mostly from Emerging Asian economies. US is still expected to be net spenders. Thailand’s Current Account balance in 2014 is expected to be 2.6% of GDP.

-3.3 -388.1 -26.2 -42.9 -90.4

Note: (*) The Economist Poll

Source: The Economist

Latest development

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External debt increased slightly so far in 2014

Chart 5.10a – External Debt Level Billion USD External Debt

59.3

69.0

74.4

76.1

75.3

05YE

06YE

07YE

08YE

09YE

100.6

104.3

10YE

11YE

130.7

139.9

143.5

12YE

13YE

14/3Q

Chart 5.10b – External Debt as % of GDP

External debt refers to the remaining outstanding portion of liabilities (excluding equity) which residents have over nonresidents of an economy. Prepared by the Bank of Thailand and released quarterly. Chart A shows external debt level in USD term. Chart B shows external debt level as percentage of GDP.

Latest development External debt level increased slightly to USD 144 Billion at the end of 3Q14. External debt as percentage of GDP increased slightly at 38.8%.

37.0%

05YE

38.5%

06YE

35.4%

07YE

31.4%

28.8%

08YE

09YE

35.2%

33.7%

10YE

11YE

38.0%

38.2%

38.8%

12YE

13YE

14/3Q

Source: Bank of Thailand

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Structure of external debt does not change from end of last year

Chart 5.11a – External debt breakdown

Chart 5.11b – External debt breakdown

Private vs Public

Long‐Term vs Short‐Term

Private Public = General Government and Monetary Authorities

13%

16%

20%

18%

Long term Short term

External debt composition 18%

50%

45%

44%

43%

41%

Breakdown of external debt. Chart A shows the external debt breakdown by borrowers. Chart B shows the external debt breakdown by maturity.

Latest development Structure of external debt does not change much from end of last year. 87%

84%

80%

82%

50%

10YE

11YE

12YE

13YE

14/3Q

10YE

55%

56%

57%

59%

11YE

12YE

13YE

14/3Q

Source: Bank of Thailand

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Capability to repay external debt deteriorated but not yet a concern as debt service ratio is low and reserves at healthy level Chart 5.12a – International reserves

Chart 5.12b – Debt service ratio*

As % of ST external debt

Percent External Debt repayment capability A look at the country’s capabilities of servicing the external debt. Chart A shows the country’s international reserves as percentage of short-term external debt. Chart B shows the external debt service ratio (Debt service payment / Export of goods and services).

7.6%

418% 370% 340% 312% 279%

272%

4.7%

4.6% 4.2%

4.0%

International reserves (as % of ST external debt) is still at healthy level (272%). Debt service ratio increased to 4.6% in 3Q14. All in all, capability to repay external debt is not yet a concern at the moment.

3.4%

09YE

10YE

11YE

12YE

13YE

14/3Q

09FY

10FY

11FY

12FY

13FY

14/3Q

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

Source: Bank of Thailand; ChartingAsean analysis

Latest development

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Net International reserves decreased slightly in 2015 but still considered excessive Chart 5.13a – International reserves level* At the end of period, Billion USD

73.9

2006

106.5

118.0

2007

2008

International reserves

154.1

2009

191.7

206.4

205.8

190.2

180.2

178.2

2010

2011

2012

2013

2014

Jan-15

Chart 5.13b – International reserves as number of months of import**

International reserve assets refer to external assets that are held or controlled by central bank and are readily available for immediate uses, for instance, in financing payment imbalances or in implementing exchange rate policy. The figures also include the net forward position (future assets/liabilities arising from currency forward contracts between BOT and the market). Chart A shows international reserves level in US$ term. Chart B shows as number of months that it can finance import.

Latest development 13.8

12.6 10.8

9.1 6.9

2006

2007

9.9

7.9

2008

2009

2010

2011

2012

9.1

9.5

2013

2014

Jan-15

Note: (*) Including Net Forward position (**) For the last period using average monthly import value during the last 12 months

Source: Bank of Thailand; ChartingAsean analysis

International reserves in US$ term have been decreasing since its peak in 2011. So far in 2015, the reserves decreased slightly but the number of months that it can finance import remained at 9.5 months, which is considered excessive.

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THB continued to appreciate in February

Chart 5.17a – Nominal Effective Exchange Rate

Chart 5.17b – Y‐o‐Y change in FX rate*

2007=100

Percentage change in avg. selling rate as of Feb 27th 2015

Exchange rates EUR ‐ 36.5663 114.0

Baht appreciates

112.0

AUD ‐ 25.5298

108.0

MXN ‐ 2.1689

106.0

IDR ‐ 2.7019

M‐o‐M

104.0

+1.3%

MYR ‐ 9.1453

102.0

Y‐o‐Y +10.6%

Baht depreciates Feb-14

May-14

Aug-14

JPY ‐ 27.4285

110.0

100.0

Nov-14

98.0

15.6 13.9 11.3 10.5 8.9

SGD ‐ 24.1033 VND ‐ 0.0015

94.0 Feb-15

TWD ‐ 1.0337

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 $

17.8

GBP ‐ 50.3004

96.0

Note: (*) Positive numbers mean the Baht has been depreciated against those currencies, the opposite applies to negative numbers

23.0

7.9

4.5 3.7

CNY ‐ 5.2293

2.8

USD ‐ 32.5227

0.7

INR ‐ 0.5595

0.3

PHP ‐ 0.749

Latest development Nominal Effective Exchange Rate increased 1.3% in February, meaning that THB appreciated against key currencies over the past month, making it 10 months in a row. Over the last 12 months THB appreciated 10.6% against key currencies, an alarming rate for the export-oriented economy.

6.7

KRW ‐ 0.0295

Nominal Effective Exchange Rate (NEER) has been constructed from the weighted average of bilateral exchange rates of the baht vis-à-vis Thailand’s 23 major trading partners and trade competitors. The weight of each currency varies according to how important the country is as a trading partner and trade competitor. An increase in NEER refers to an appreciation. Chart B shows the year-on-year change of average selling rates of selected currencies.

-0.6

Baht depreciates

Source: Bank of Thailand; ChartingAsean analysis

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