150331 meb eng by Ake Saroj

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

MONTHLY

April 2015

Charting Thailand’s Economy Monthly Brief, April 2015 Publication Date: April 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 increased 3.6% from a year ago, the first increase in 2 years • Private consumption and Private Investment retreated • Import declined faster than Export. Tourist arrivals grew from last year’s low base. • Unemployment dropped sharply • Policy interest rate cut by 0.25% to accommodate growth • Industries and Consumers were more pessimistic • Consensus growth forecast is now 3.8‐4.0% for 2015 and 3.9‐4.3% for 2016

Stability

• Core inflation decreased slightly to 1.31% while Headline dropped to ‐0.57% and stayed in the deflation zone • 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 improved. • Lower 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 11‐month in a row in March.

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

Contributions to total Real GDP growth

M (services)

3.3

2.8

GDP M (goods)

X (goods)

0.9

X (goods)

GDP

0.7

0.3

X (services)

-2.8

M (services)

-11.4

0.3

0.1

Discrpncy

0.5

0.2

-2.8

-6.3

3.1

I (capital)

M (goods)

0.7

-0.3

X (services)

-0.5

I (capital)

-0.6

I (Inventory)

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 increased 3.6% from a year ago, the first increase in two years 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

2015 167.7 170.0

152.1

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 Manufacturing production increased 3.6% from a year ago, the first increase in almost two years.

160.0

155.0

150.0

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

Feb 2015, percent

Tobacco

39.0

Wood products

18.3

Electrical

14.5

Furniture

12.8

Petroleum

14.7

Apparel

Precision instru

13.5

Vehicles

Food & Bev

12.0

Machineries

4.6

Apparel

10.4

Transport Equip

4.3

Transport Equip

9.6

11.3 8.8

Tobacco

3.8

Electronic

4.3

Office automate

Leather

4.1

Mineral

Paper

3.4

Food & Bev

Vehicles

3.0

Basic Mat

-1.0

Chemical

2.8

Metal products

-1.1

Electrical

2.5

Textiles

-1.1

3.2 1.9 -0.1

Textiles

-0.8

Rubber&Plastic

-1.4

Mineral

-1.2

Leather

-1.7

Rubber&Plastic

-1.5

Paper

-1.8

Office automate

-1.9

Wood products

Machineries

-3.9

Electronic

Metal products

-5.3

Chemical

Basic Mat Furniture

-7.3 -18.3

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 more than they did a year ago, while most sectors had their production decreased from last month.

-3.5 -4.0 -5.3

Precision instru -6.8 Petroleum -6.9 © ChartingASEAN™

Source: The Office of Industrial Economics; ChartingAsean analysis

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Capacity utilization rate continue to increase in February

Chart 1.12a – Overall Capacity Utilization Rate

Chart 1.12b – Capacity utilization rate by sector

Percent

Feb 2015, percent

70% 68% 66% 64% Seasonally adjusted

62%

Normal 60% 58% 56% 54% 52% 50% Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

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

86% 83% 78% 74% 74% 72% 70% 69% 69%

Capacity Utilization rate 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.

63% 63%

Latest development

61%

Seasonally adjusted Capacity utilization rate increased more than 1% in February 2015. Textile has the highest utilization rate at 86%, while Apparel’s was the lowest at 26%.

60% 56% 53% 51% 48% 47% 40% 34% 26%

Source: The Office of Industrial Economics

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Thailand’s growth of 3.6% was the fifth highest on the list

Chart 1.13 – Manufacturing Production Index Latest, percent change on year ago Vietnam ‐ Mar

9.1

Malaysia ‐ Jan

7.0

China ‐ Feb

6.8

Indonesia ‐ Jan

5.0

Thailand ‐ Feb

3.6

US ‐ Feb

3.5

Taiwan ‐ Feb

3.3

Philippines ‐ Jan

3.3

Australia ‐ Q4

3.3

India ‐ Jan

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.

Latest development 6 out of 18 major economies had negative MPI growth during the last period reported. Thailand’s growth of 3.6% was the fifth highest on the list.

2.6

Euro Area ‐ Jan

1.2

Pakistan ‐ Jan

1.1

Russia ‐ Feb

-1.4

Japan ‐ Feb

-2.6

Singapore ‐ Feb

-3.6

Hong Kong ‐ Q4

-3.7

South Korea ‐ Feb Brazil ‐ Feb

Change in MPI in the world

-4.7 -9.1 © ChartingASEAN™

Source: The Economist

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CONTENT SUMMARY

Growth

Stability

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Private consumption in overall dropped 2.6% from a year ago despite big increase in tourists’ spending Chart 1.14a – Composite Private Consumption Index

Chart 1.14b – Y‐on‐Y change

(2010=100)

Feb 2015 vs 2014, percent Composite Private Consumption Index

130.0

Non‐resident

120.0

37.0

Services

110.0

6.1

2014 100.0

Semi‐durables

4.7

2015 90.0

Non‐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.

1.4

Latest development 80.0

Composite Index

In February 2015, Private consumption in overall dropped 2.6% from a year ago despite big increase in tourists’ spending.

-2.6

70.0

Durables

-3.8

60.0

D © ChartingASEAN™

Source: Bank of Thailand

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Private Investment showed a slight year‐on‐year growth in February Chart 1.15a – Private Investment Index

Chart 1.15b – Y‐on‐Y change

(2010=100)

Feb 2015 vs 2014, percent

Composite Private Investment Index

110.5

Domestic Machinery sales* (2010 prices, Baht)

110.0

14.0

2015 Import of Capital Goods (2010 prices, Baht)

109.5

2014 109.0

4.1

Construction Area permitted (sqm)

1.3

Composite Index

0.5

108.5

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.

Latest development

108.0

Construction Material Sales Index

-2.6

107.5

Domestic Commercial Car -12.6 Sales Index

107.0

Note: (*) figures are 1‐month delayed Source: Bank of Thailand

In February 2015, Composite Private Investment Index increased 0.5% from a year ago. However, not all components increased. Construction material sales and Domestic Commercial car sales have both dropped from a year ago.

D © ChartingASEAN™

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FDI value almost double from a year ago in January

Chart 5.14 – Foreign Direct Investment Million USD

Foreign Direct Investment

Monthly cumulative FDI* 14,000

14,416

2014

12,000

12,899

12,728 10,000

9,112

8,000

8,547

6,000

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.

Latest development 4,853

FDI value for January 2015 was at USD 2,888 million, almost double from a year ago.

4,000

2015 2,000

2,474

08FY

09FY

10FY

11FY

12FY

13FY

14FY

F M A M J

A S O N D

(*) Preliminary figures

Source: BOT

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BOI’s net application almost doubled in 2014, but for the first two months of 2015, it has almost been wiped out

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

Latest development

525

BOI’s net application almost doubled in 2014, but for the first two months of 2015, it has almost been wiped out, registering only THB 3 billion.

396 236 47

10FY

11FY

12FY

13FY

14FY

2014/2M

2015/2M

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

27%

4% 10%

USA ANIEs ASEAN Europe

2% 7% 8%

7% 10%

21%

25% 34%

2% 6%

BOI net application by country

10%

13%

10% 17% 58%

Japan

49%

12FY

13FY

1% 23%

9% 10%

54% 29%

11FY

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

14FY

23%

2015/2M

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 dropped heavily from last month

Chart 1.16a – Y‐on‐Y change

Chart 1.16b – M‐on‐M change

First month of 2015 vs those of 2014, percent

Jan 2015 vs Dec 2014, percent

New housing unit

21.2

-57.2

Key property indicators

Condo unit registered

-2.1

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.

-22.0

Latest development Value of land transaction

-6.8

Constr. Area in municipal

-7.5

Most property indicators dropped heavily in January (from December 2014).

-48.6

-37.9

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 2 months, Billion Baht

First 2 months, Billion USD 40

1,400

Trade balance 1,200

1,000

30 25

800 600

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.

2014 2015 -4.6%

-6.4%

-4.8%

-6.7%

Latest development

Improved trade balance in both THB and USD terms in the first 2 months of 2015. This is the case of import declining more than export.

400 10 200 5 0 0 -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 4.6% in the first 2 months of 2015, with Agriculture the main drag Chart 5.05a – YTD annual change in Export in Baht Chart 5.05b – Sectoral contributions First 2 months of 2015 vs those of 2014, percent Total export Jewellery Optical instru Other manufacturing Automotive Machinery Electronics Metal Electrical Photo instru Forestry Agro products Apparels Footware Furniture Toiletries Petro‐chemical Fishery Agriculture Chemicals Petroleum Other export Mining Aircrafts Re‐exports

Contributions to total export growth

-4.6 30.4 26.7 5.9 4.5 3.9 3.0 2.6 -0.2 -0.6 -5.6 -6.4 -7.0 -7.7 -8.8 -9.6 -10.0 -13.4 -19.1 -21.6 -27.4 -27.6 -40.3 -45.2 -49.4

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

-4.6 0.8 0.6 0.4 0.3 0.3 0.2 0.1 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1 -0.2 -0.2 -0.6 -0.6 -0.7 -0.8 -0.8 -1.3 -1.7

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 4.6% in the first two months 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.

Source: Bank of Thailand; ChartingAsean analysis

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NAFTA is the only growing markets for Thai export so far in 2015

Chart 5.07a – Export by country

Chart 5.07b – Change in Export

Percent of total export in THB term

In THB term, First 2 months 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

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

6.7%

ASEAN

-4.3%

Rest of the world

-4.5%

Middle East

East Asia ex Japan

Japan

-5.4%

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 is the only growing markets for Thai export in the first two months of 2015. Japan was the hardest hit market with export declining 9.4% from a year ago.

-6.2%

-8.0%

-9.4%

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 2 months of 2015 vs those of 2014, percent

Total import

Contributions to total import growth

Total import

-6.4

Others

11.2

Consumer goods

7.1

YTD change in Import by product class

-6.4

Intermediate ‐ Non fuel

1.3

Others

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.

0.8

Latest development Intermediate ‐ Non fuel

3.4

Capital goods

0.8

Capital goods

3.2

Consumer goods

0.6

Intermediate ‐ Fuel

-42.6

Intermediate ‐ Fuel

Import has decreased 6.4% in the first two months of 2015, due mainly to the decrease in Fuel import.

-9.9

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

฿ 1.1

10.2

12.4

11.4

12.2

8.1

8.7

21.3

24.4

23.3

20.9

24.2

(Trillion)

Import composition

25.8

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

Consumer goods

7.5

7.8

8.0

8.7

9.7

10FY

11FY

12FY

13FY

14FY

15/2MO

41.6

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.

14.2

Source: Bank of Thailand; ChartingAsean analysis

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Tourist arrivals bounced back in January, increasing 16% from last year’s extraordinarily low base Chart 5.18 – International Tourist Arrivals Million visits

Monthly arrivals Million visits 3.0

2015

26.5

CAGR

10.6%

24.8

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

2.5

22.4 19.2

2.0

2014 15.9 14.5 11.7

14.1

Tourist arrivals bounced back in January, increasing 16% from a year ago, where there was political demonstrations in Bangkok.

1.5

11.5

10.0

Latest development

1.0

0.5

0.0

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

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Source: Department of Tourism

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China and Malaysia have been the two highest growing markets for tourists in 2015 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

First month of 2015 vs those of 2014, Thousands

Rest of world Americas

Europe

East Asia

15.6

14.7

13.8

5.3

5.0

4.8

27.9

51.2

10FY

26.5

53.8

11FY

25.3

56.0

12FY

11.9

China

4.4

4.5

Malaysia

23.8

24.8

59.9

13FY

58.8

Singapore

203.4

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.

134.4 23.1

Vietnam

18.7

Korea

17.7

Hong Kong

16.4

Taiwan

16.3

Cambodia

13.5

India

11.6

Laos

11.1

Tourist arrivals by nationality

Latest development 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. China and Malaysia have been the two highest growing markets for tourists in 2015.

14FY © ChartingASEAN™

Source: Department of Tourism; ChartingAsean analysis

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CONTENT SUMMARY

Growth

Stability

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Unemployment rate dropped sharply to 0.82% in February 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 dropped sharply to 0.82% in February.

0.20

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

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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 ‐ Feb Singapore ‐ Q4 Malaysia ‐ Jan Hong Kong ‐ Feb Japan ‐ Feb Vietnam ‐ 2013 Taiwan ‐ Feb China ‐ Q4 South Korea ‐ Feb US ‐ Feb Russia ‐ Feb

0.8 1.9 3.1

Unemployment rates in the world

3.3

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

3.5 3.6 3.7

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

4.1 4.6 5.5 5.8

Brazil ‐ Feb

5.9

Indonesia ‐ Q3

5.9

Pakistan ‐ 2013 Australia ‐ Feb Philippines ‐ Q1 India ‐ 2013 Euro Area ‐ Feb

6.2 6.3 6.6 8.8 11.3 © ChartingASEAN™

Source: The Economist

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CONTENT SUMMARY

Growth

Stability

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BOT’s overnight policy interest rate was cut by 25 basis point to 1.75% to accommodate growth Chart 3.01a – BOT’s policy rate

Apr-14

Chart 3.01b – BIBOR overnight rate 2.50%

2.50%

2.25%

2.00%

1.75%

1.50% Mar-15

Chart 3.01c – Saving deposit rate*

Apr-14

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* 10.00%

Interest rates

Max

7.50%

10.00% 7.50%

BOT’s overnight policy interest rate was cut by 25 basis point to 1.75% to accommodate growth. Saving and Loan rates have adjusted down a little so far.

Min Max

5.00%

2.50%

Min Apr-14

0.00% Mar-15

Apr-14

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

Source: Bank of Thailand

0.00% Mar-15 © ChartingASEAN™

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Government spending in the first two months of 2015 dropped from the same period last year Chart – Monthly cumulative Fiscal expenditure Billion Baht 2500

Government Spending 2000

The current government is trying to boost the economy by fiscal spending. In the first 2 months of 2015, government spending dropped 6% 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.

2014

1500

1000

500

2015 0

Source: Bank of Thailand; ChartingAsean analysis

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CONTENT SUMMARY

Growth

Stability

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Businesses were less pessimistic but Industries were more so in February Chart 1.18a – Business Sentiment Index* 100

Chart 1.18b – Thai Industries Sentiment Index** 200

Better

100 48.9

48.7

48.6

49.0

49.4 86.1

Worse

87.5

89.7

92.7

91.1

88.9

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 Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-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

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-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 February. Business Sentiment Index went up but still stayed below 50, indicating that businesses were less 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 February

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 February 2015 as the overall index dropped and stayed below the cut off level. 0

0 Aug-14

Oct-14

Dec-14

Feb-15

0 Aug-14

Oct-14

Dec-14

Feb-15

Aug-14

Oct-14

Dec-14

Feb-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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Both BOT and The Economist Poll revised down 2015 growth to 3.8% and 3.9% respectively Chart 1.03a – Real GDP growth projections

Chart 1.03b – Real GDP growth projections

For 2015, Annual percentage change

For 2016, Annual percentage change

BOT The Economist poll

6.00

5.50

5.00

5.00 The Economist poll

4.50

4.00

NESDB

4.00

FPO

BOT 3.50

Oct-14

Nov-14

Dec-14

Jan-15

4.50

Feb-15

3.50

3.00

2.50

2.00

Mar-15

Forecast as of, month ending

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Real GDP growth projections 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 Both BOT and The Economist Poll revised down 2015 growth to 3.8% and 3.9% respectively. Consensus growth forecast is now 3.8-4.0% for 2015 and 3.9-4.3% for 2016.

Mar-15

Forecast as of, month ending © ChartingASEAN™

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

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

Chart 1.04b – Real GDP growth projections

2015, Annual % change, as of April 1st

2016, Annual % change, as of April 1st 2015

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

2015

India China 7.0 6.7 Philippines Vietnam 6.2 Malaysia 5.7 Indonesia 5.5 Pakistan 5.1 Thailand 3.9 South Korea 3.8 Singapore 3.7 Australia 3.2 Taiwan 3.1 US 2.6 Hong Kong 2.5 Japan 1.3 Euro Area 1.1 Brazil 0.0 Russia 7.2

-3.8

7.1 6.8 6.5 6.4 5.6 5.6 4.7 4.3 3.8

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 3.9% for 2015 and 4.3% for 2016, around the middle when compared to other major and emerging economies.

3.2 3.1 2.9 2.9 2.1 1.7 1.6 1.5 0.4

Source: The Economist

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CONTENT SUMMARY

Growth

Stability

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Thai economy stayed in deflation state in March

Chart 3.07a – Y‐o‐Y change in CPI

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

Percent

March 2015, percent Food away from home

2.00%

3.3

Seasoning

2.5

Prepared food at home

1.50%

Core* 1.00%

2.2

Consumer Price Index 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.

Tobacco & alcohol

1.5

Housing & furnishing

1.4

Medical care

1.1

Non alcoholic beverage

1.0

Apparel and footware

0.8

Latest development

Recreation & Education

0.6

Rice

0.4

In March 2015, Core inflation decreased slightly to 1.31% while Headline dropped to 0.57% and stayed in the deflation zone.

Meat

0.3

0.50%

0.00%

-0.50%

Head line

Veg & fruit

-0.1

Eggs & milk -1.00%

Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

-3.0

Transport & Commu Energy

-6.0 -12.1

Note: (*) exclude raw food and energy

Source: Bureau of Trade and Economic Indices; ChartingAsean analysis

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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 ‐ Feb

16.7

Brazil ‐ Feb

7.2

6.4

India ‐ Feb

5.2

5.4

Hong Kong ‐ Feb

6.0

4.6

Pakistan ‐ Mar

2.5

Philippines ‐ Feb

2.5

Japan ‐ Feb

3.0 1.0

1.5

0.4

Vietnam ‐ Mar

1.5

0.9

US ‐ Feb

0.0

Euro Area ‐ Mar

-0.1

Singapore ‐ Feb

-0.3 -0.6 -0.2

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

3.1

1.4

South Korea ‐ Mar

Latest development

1.7

0.1

China ‐ Feb

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

4.6

1.7

Malaysia ‐ Feb

Inflation in the world

3.3

2.2

Australia ‐ Q4

Taiwan ‐ Feb

13.4

7.7

Indonesia ‐ Mar

Thailand ‐ Mar

2015*

3.6 0.3 0.0 0.4 1.3 1.0

Note: (*) The Economist Poll

Source: The Economist

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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

March 2015, percent

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

Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

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

3.5 2.1 1.1

Producer Price Index

0.5

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.

0.2 0.1 0.1 0.0 -0.5

Latest development

-0.6

Producer price level dropped from a year ago, resulting in deflation. In March, the PPI dropped 5% from a year ago. PPI of Petroleum products dropped the most at 28.8%.

-0.9 -1.2 -3.0 -3.6 -3.8 -4.3 -4.5 -5.6 -9.0 -28.8

Source: Bureau of Trade and Economic Indices; ChartingAsean analysis

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CONTENT SUMMARY

Growth

Stability

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Bank’s loan decreased almost 1% in January 2015, the first big decrease in years Chart 3.02a – Commercial Banks’ Loan THB billion 11,400 11,200

Bank’s Loan and Loan-to-deposit ratio

11,000 10,800 M-o-M -0.8%

10,600 10,400 Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Y-o-Y

+4.3% Dec-14

Jan-15

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 decreased almost 1% in January 2015, the first big decrease in years. Liquidity in the system, in effect, increase substantially with Loan-to-Deposit ratio at 94.9%. Together they suggested a slow down in economic activities.

100% 97.5% 95.9%

97.9%

97.7%

97.8%

97.2% 96.4%

96.3%

95.0%

95.7%

95.7% 94.9%

95%

90% Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15 © ChartingASEAN™

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 remains high

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%

17.0%

14.8% 14.0%

13.9%

Capital ratio of all commercial banks

15.7%

2015

13.3% 12.4%

16.5%

2014 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 slightly in January to 16.75%, 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 April 1st 2015

3M risk‐free interest rates Russia

─

Expected 2014 inflation*

Real interest rates

16.0

Brazil

2.6

13.0

Pakistan

8.0

India

7.9

Indonesia 5.0

China

4.9

Malaysia

2.4

Philippines

2.3

South Korea

1.8

Thailand

1.7

Taiwan

1.9

6.0

1.7

5.2

1.4

3.6

3.4

1.5

3.7

Australia

3.4

4.6

6.9

Vietnam

5.8

7.2

0.6

3.1

0.7

1.7 3.0

-0.7 0.3

1.5

0.4

1.3

0.9

Hong Kong

0.4

Singapore

0.4

0.0

0.3

0.0

Japan

0.1

Euro Area

0.0

3.3

0.0

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.

-2.9

-0.9 0.0

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.

-0.1

1.0

Real interest rates in the world

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SET index decreased more than 5% in March, despite foreign fund inflow Chart 3.06a – Monthly performance of SET index

Chart 3.06c – Change since Dec 31st 2014

Percent change from prior month, at month end

Percent, as of Mar 31st 2015 Germany (DAX)

5.6% 0.6%

0.4%

Euro Area (FTSE Euro 100)

18.0%

France (CAC 40)

17.8%

China (SSEA)

-0.1%

15.8%

Japan (Nikkei 225) -5.1%

-6.0%

Oct-14

22.0%

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Chart 3.06b – Cumulative net foreign fund flow

10.1%

Australia (All Ord.)

8.8%

China (SSEB, $ terms)

6.9%

S Korea (KOSPI)

6.5%

Indonesia (JSX)

5.6%

HK (Hang Seng)

5.5%

Malaysia (KLSE)

3.9%

US (NAScomp)

3.5%

0.0

UK (FTSE 100)

3.2%

-2.0

Taiwan (TWI)

3.0%

-4.0

Singapore (STI)

-6.0

India (BSE)

-8.0

Thailand (SET)

0.6%

-10.0

US (S&P 500)

0.4%

SET & MAI, Billion Baht, Month end

-12.0 -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

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 decreased 5.1% in March despite foreign fund inflow. Globally, SET index underperformed most markets year-to-date.

2.4% 1.7%

US (DJIA)

-0.3%

Pakistan (KSE)

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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Lower budget deficit in the two first months of 2015, compared to same period in 2014 Chart 4.2 – Government budget balance Billion Baht Monthly cumulative Budget balance (Billion Baht) 2,075

Revenue 1,241

1,751 1,390

1,455

1,498

2,158

Budget balance

50.0

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.

2,076

1,902 0.0

1,484

2015 -50.0

Budget balance

-36

110 -174

-75

-100 -364

Latest development

-100.0

-27 -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. Lower budget deficit in the two first months of 2015, compared to 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 2 months 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

-61

-75

-95

-100 -96

-118

-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 two months 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 1.9% of GDP, same as Indonesia’s Chart 4.4 – Government Budget balance as percentage of GDP 2015*, percent South Korea Hong Kong

0.5 0.1

Singapore Taiwan

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.

-0.3 -1.2

Indonesia Thailand

-1.9 -1.9

Philippines Euro Area

-2.0

Latest development

-2.2

Russia Australia

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 1.9% of GDP, same as Indonesia’s.

-2.3 -2.3

US China

-2.5 -2.9

India Vietnam

-4.1 -4.3

Malaysia Brazil Pakistan Japan

Budget balance in the world

-4.7 -4.9 -5.1 -7.0

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

10FY

31.3

11FY

6.0

6.7

12FY

13FY

4.0 14FY

15/2mo

Net service income & transfer 2.1

+ 10FY

-1.2

-10.4

11FY

12FY

13FY

14FY

13FY

14FY

15/2mo

Net Capital Movement + errors and omissions

-5.0 12FY

-9.1

2.9

1.2

11FY

-7.5

-19.7

5.3

10FY

-8.1

15/2mo

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 non-produced, 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

21.3 6.7 -2.6

-7.7

10FY

Balance of payment decomposition

11FY

-3.1

Positive Balance of Payment so far in 2015 of USD 2.9 billion, thanks to trade and net service surplus.

-15.4 12FY

13FY

14FY

15/2mo

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 2015 GDP*

Last 12 months, USD Billion

Singapore ‐ Q4

22.6%

Taiwan ‐ Q4

58.8

12.3%

South Korea ‐ Jan

65.3

5.7%

Russia ‐ Q4

59.5

Philippines ‐ Sep

3.8%

12.7

Malaysia ‐ Q4

3.4%

15.2

3.0%

Euro Area ‐ Jan

2.4%

Thailand ‐ Q4

2.3%

China ‐ Q4

2.1%

Hong Kong ‐ Q4

1.8%

Japan ‐ Jan

1.7%

Pakistan ‐ Q4 India ‐ Q4 US ‐ Q4

313.3

-2.8%

Indonesia ‐ Q4

-2.9% -4.1%

Latest development

14.2 219.7 5.6 40.1 -3.5

-1.6%

Australia ‐ Q4 Brazil ‐ Feb

9.5

-0.6%

-2.2%

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

4.6%

Vietnam ‐ 2013

Current Account Balance

-27.4 -410.6 -40.1 -26.2 -89.8

Note: (*) The Economist Poll

Source: The Economist

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 2015 is expected to be 2.3% of GDP.

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External debt increased slightly in absolute term 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

140.7

12YE

13YE

14/4Q

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 140.7 Billion at the end of 4Q14. External debt as percentage of GDP decreased slightly to 37.4%.

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%

37.4%

12YE

13YE

14/4Q

Source: Bank of Thailand

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External debt structure has continued to shift toward more long‐ term debt 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

Long term Short term

External debt composition 13%

16%

20%

18%

50%

45%

44%

43%

40%

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

Latest development

87%

External debt structure has continued to shift toward more long-term debt, which lowers the risk of not having enough foreign exchange to service external debt. 84%

80%

82%

50%

10YE

11YE

12YE

13YE

14/4Q

10YE

55%

56%

57%

60%

11YE

12YE

13YE

14/4Q

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%

277%

4.7%

4.7% 4.2%

Latest development

4.0%

International reserves (as % of ST external debt) is still at healthy level (277%). Debt service ratio increased to 4.7% in 4Q14. All in all, capability to repay external debt is not yet a concern at the moment.

3.4%

09YE

10YE

11YE

12YE

13YE

14/4Q

09FY

10FY

11FY

12FY

13FY

14/4Q

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

Source: Bank of Thailand; ChartingAsean analysis

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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

177.7

2010

2011

2012

2013

2014

Feb-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

Feb-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 March

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 Mar 31st 2015

Exchange rates EUR ‐ 35.5211 114.0

Baht appreciates

112.0

Mar-14

Jun-14

20.0

JPY ‐ 27.3534

16.4

108.0

MXN ‐ 2.1428

16.3

106.0

IDR ‐ 2.6905

M‐o‐M

104.0

+1.0%

MYR ‐ 8.9377

102.0

Y‐o‐Y +11.1% Sep-14

AUD ‐ 25.2162

110.0

100.0

Baht depreciates

26.4

Dec-14

98.0

11.9

SGD ‐ 23.9007 INR ‐ 0.5529

94.0 Mar-15

KRW ‐ 0.0295

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 $

13.3

GBP ‐ 48.5279

96.0

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

14.4

8.8

3.1 2.1

VND ‐ 0.0015

0.0

USD ‐ 32.7028

-0.4

CNY ‐ 5.3064

-0.4

PHP ‐ 0.7412

-0.5

Baht depreciates

Latest development Nominal Effective Exchange Rate increased 1% in March, meaning that THB appreciated against key currencies over the past month, making it 11 months in a row. Over the last 12 months THB appreciated 11.1% against key currencies, an alarming rate for the export-oriented economy.

4.0

TWD ‐ 1.0462

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.

Source: Bank of Thailand; ChartingAsean analysis

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