Charting Thailand's Economy Monthly Brief, October 2015 by Ake Saroj

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

MONTHLY

October 2015 ISSN: 2286-6132

Charting Thailand’s Economy Monthly Brief, October 2 Publication Date: October 2nd, 2015 Number of pages: 72

DISCLAIMER All Rights Reserved. No part of this publication may be reproduced without the prior permission of the ChartingTHAILAND™. The facts of this report are believed to be correct at the time of publication but ca guaranteed. Please note that the findings, conclusions and recommendations that ChartingTHAILAND™ delivers will be based on information gathered in good faith primary and secondary sources, whose accuracy we are not always in a position to As such ChartingTHAILAND™ can accept no liability whatever for actions taken ba information that may subsequently prove to be incorrect.

ASK THE EDITOR ChartingTHAILAND™ team consists of editors, analysts, and researchers. For any q comments about this report, you can contact the chief editor directly at editor@chartingthailandeconomy.com.

2015

e publisher,

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About This Report This report is designed to chart out the economic outlook of Thailand on a monthly basis. It is ideal for corporate management, investors as well as anyone interested in the second largest economy in ASEAN.

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CONTENT SUMMARY

Growth

• Thailand GDP grew only 2.8% in 2Q15, a rather slow pace co • Tourism was by far the main driver of growth on the • Service was the main driver, while agriculture and ma drags • Manufacturing production continues to lag behind last year’ • Private consumption lags behind last year’s level while and P • Import declined faster than Export. Tourism was affected by • Unemployment rate decreased and stayed below 1% in Augu • Policy interest rate remains on the downward trend to boost • Businesses, Industries as well as Consumers were pessimistic • Consensus growth forecast is now 2.7Ͳ3.5% for 2015 and 3.7

Stability

• Headline CPI suggests deflation but it was heavily skewed by products actually increased over the past 12 months. • Bank’s loan is still growing, although slowly, and liquidity is s capital ratio remained high. NPL increased slightly. • Budget deficit in 2015 has so far almost doubled those of las increased but not too worrying yet. • Positive Balance of Payment so far in 2015, thanks to trade s been decreasing. THB continued to depreciate in September

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

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 is provided on the right side bar of each page.

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Slower pace of growth in 2Q15

Chart 1.05 â&#x20AC;&#x201C; Historical Real GDP growth rate Annual growth, percent 7.5%

7.2%

7.3%

6.3% 5.4% 5.0% 4.2%

2.8% 1.7% 0.8%

0.9%

-0.7% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

Last 5 Quarters

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. 3.0%

2.8%

2.1% 0.9% 1.0%

Historical growth for the Thai economy The cumulative annual growth rate between 2003-2014 was 3.4%. During the last 10 years, only one year (2009) that registered a negative growth. Growth in 2010 and 2012 were exceptionally high, representing the Vshape recovery from the global sub-prime debt and the country’s flood crisis respectively. Thailand GDP grew only 2.8% in 2Q15.

2Q14 3Q14 4Q14 1Q15 2Q15

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Service was the main driver in 2Q15, while ag manufacturing were the main drags on the ec Chart 1.06a – Real growth by sector, 2Q15

Chart 1.06b

YearͲonͲYear percentage change

Contribution

Hotel&Res

18.7

GDP

Construction

17.3

Transport

Financial

8.6

Hotel&Res

Transport

8.6

Financial

Other social

6.3

Trading

Health&Social

5.5

Construction

Private HH

5.5

RealEstate

Trading

3.7

Other social

GDP

2.8

Utilities

2.7

Health&Social

RealEstate

2.5

Education

2.2

PublicAdmin

1.3

Manufacture

-0.7

Fishing Mining Agriculture

-1.6 -3.9 -6.3

Private HH Fishing Mining Manufacture Agriculture Stat diff

Source: NESDB; ChartingTHAILAND analysis

griculture and conomy

b – Sectoral contributions, 2Q15 s to total Real GDP growth 2.8 0.8 0.8 0.6 0.5 0.5 0.2

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.

0.1 0.1 0.1 0.1 0.1 0.0 0.0

Most contributing sectors for the Thai economy in 2Q15 Chart A says that Hotel & Restaurant have grown most from 2Q14 to 2Q15, while Agriculture dropped the most. Chart B looks at the contributions to total growth from all sectors. Most sectors contributed positively to 2Q15 growth, except Agriculture, Manufacturing and Mining.

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Tourism was by far the main driver of growth

Chart 1.08a – Real growth by expenditure, 2Q15 Chart 1.08b – Ex YearͲonͲYear percentage change X (services)

Contributions to t 25.1

4.6

GDP X (services)

GDP

2.8

Discrpncy

I (capital)

2.5

1.9

1.5

I (capital)

M (services)

-0.2

M (goods)

-0.3

M (services)

X (goods)

-4.0

I (Inventory) X (goods)

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

Source: NESDB; ChartingTHAILAND analysis

in 2Q15

xpenditure Contributions, 2Q15

otal Real GDP growth 2.8 3.3 3.0 0.8

Source of Growth – Expenditure side 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.

0.8 0.6 0.1 0.0

Growth drivers for the Thai economy in 2Q15 Chart A shows that Tourism (X of services) grew the most in 2Q15. Chart B shows that it also contributed the most to the overall growth in 2Q15. Decreasing in export of goods was the main drag on the overall growth.

-0.2 -2.5

e in inventory

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CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

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Manufacturing production continues to lag be

Chart 1.10 â&#x20AC;&#x201C; Manufacturing Production Index (2000=100)

194.2 182.9 174.6

170.0

161.1

177.6 181.6 175.7

167.7

152.1

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: The Office of Industrial Economics

ehind last year’s level

Monthly Average

200.0

Manufacturing Production Index (MPI)

180.0

160.0

140.0

2014 2015

120.0

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.

100.0

Latest development Manufacturing production decreased 8.3% year-on-year in August 2015, continuing to lag behind last year’s level.

80.0 60.0 40.0 20.0 0.0

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Most sectors had their production decreased

Chart 1.11a – YͲonͲY change in MPI by sector

Chart 1.11b –

August 2015, percent

August 2015, p

Vehicles

13.6

Petroleum

Office automate

9.1

Transport Equip

Chemical

4.7

Apparel

Electrical

3.9

Electrical

Food & Bev

1.9

Furniture

Apparel

-1.3

Paper

Rubber&Plastic

-1.4

Petroleum

Paper

-1.9

Chemical

Metal products

-3.1

Textiles

Machineries

-3.2

Vehicles

Precision instru

-4.0

Mineral

Tobacco

-4.3

Rubber&Plastic

Mineral

-4.8

Precision instru

Furniture

-6.4

Food & Bev

Wood products

-8.6

Wood products

Textiles

-8.9

Electronic

Transport Equip

-9.5

Leather

-10.9

Electronic Basic Mat

-14.0 -24.5

Office automate -32.1 Source: The Office of Industrial Economics; ChartingTHAILAND analysis

Metal products Tobacco Machineries

Basic Mat -1

from a year ago

– MͲonͲM change in MPI by sector

percent 17.0 6.5 4.1 3.0 1.0 0.5 -0.3 -0.9 -1.7 -2.0 -3.0 -3.1 -3.7 -4.5

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 Most sectors had their production decreased from a year ago.

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Higher capacity utilization rate in August

Chart 1.12a â&#x20AC;&#x201C; Overall Capacity Utilization Rate

Chart 1.12b â&#x20AC;&#x201C;

Percent

August 2015, pe

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

60% 58%

Normal 56% 54% 52% 50% Mar-15

Apr-15

May-15

Jun-15

Source: The Office of Industrial Economics

Jul-15

Aug-15

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

Capacity utilization rate by sector rcent 92% 82%

Capacity Utilization rate

82%

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.

76% 74% 71% 68% 61% 61% 59% 58% 52% 47% 46% 45%

Latest development Seasonally adjusted Capacity utilization rate has increased to 58.7% in August. Rubber and Plastic has the highest utilization rate at 92% while Apparel has the lowest at 28%.

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Thailand’s MPI negative growth of Ͳ8.3% was on the list Chart 1.13 – Manufacturing Production Index Latest, percent change on year ago Vietnam Ͳ Sep China Ͳ Aug Malaysia Ͳ Jul Indonesia Ͳ Jul

Pakistan Ͳ Jul

4.7

India Ͳ Jul

4.2

Euro Area Ͳ Jul

1.9

Australia Ͳ Q2

1.2

US Ͳ Aug

0.9

Japan Ͳ Aug

0.2

Philippines Ͳ Jul

-0.5

Hong Kong Ͳ Q2

-1.3

South Korea Ͳ Jul

-3.3

Russia Ͳ Aug

-4.2

Taiwan Ͳ Aug

-5.5

Singapore Ͳ Aug Thailand Ͳ Aug

-7.1 -8.3

Brazil Ͳ Jul -9.0 Source: The Economist

the second lowest

10.1 6.1 6.1

5.7

Change in MPI in the world 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 8 out of 18 major economies had negative MPI growth during the last period reported. Thailand’s negative growth of -8.3% was the second lowest on the list.

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CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

Private consumption in overall is lagging behi despite big surge in tourist spending Chart 1.14a – Composite Private Consumption Index

Cha

(2010=100)

Aug

125.0

NonͲre

120.0

2014 115.0

Se 110.0

2015

NonͲdu

105.0 100.0

SemiͲdu 95.0

Composite

90.0 85.0

Du 80.0

Source: Bank of Thailand

nd last year’s level

rt 1.14b – YͲonͲY change 2015 vs 2014, percent Composite Private Consumption Index

sident

38.6

ervices

6.6

rables

3.9

rables

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.

1.8

Latest development Index

-1.4

Private consumption in overall is lagging behind last year’s level despite big surge in tourist spending.

rables -9.5

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Private Investment started to pick up and has year’s level Chart 1.15a – Private Investment Index

Cha

(2010=100)

Aug

121.0

Domestic M (2010

120.0

2015

2014

C p

119.0

118.0

117.0

Import (201

116.0

Constructio 115.0

Domestic Sa

114.0

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

s been above last

rt 1.15b – YͲonͲY change 2015 vs 2014, percent Composite Private Investment Index

Machinery sales* prices, Baht)

14.8

onstruction Area permitted (sqm)

3.5

Composite Index

2.7

of Capital Goods 0 prices, Baht)

on Material Sales Index

0.6

-0.7

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 Private Investment started to pick up and has been above last year’s level.

c Commercial Car -7.9 ales Index

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FDI value increased 40% in the first 7 months

Chart 5.14 â&#x20AC;&#x201C; Foreign Direct Investment Million USD 6,000

15,936 14,747

5,000

12,899 4,000

3,000

8,562 6,411

2,000

3,720

1,000

2,474 0

08FY

09FY

(*) Preliminary figures

Source: BOT

10FY

11FY

12FY

13FY

14FY

of 2015

Monthly cumulative FDI*

Foreign Direct Investment

2014

2015

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 FDI value increased 40% in the first 7 months of 2015.

F M A M

S O N D © ChartingTHAILAND™

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BOI’s net application almost doubled in 2014, months of 2015, it has almost been wiped ou

Chart 5.15 – BOI net application of foreign direct investment* Billion Baht

1,023

648 525 396 236

10FY

11FY

12FY

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

Source: Board of Investment

13FY

14FY

, but for the first 7 t

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.

Latest development BOI’s net application almost doubled in 2014, but for the first 7 months of 2015, it has almost been wiped out, registering only THB 45 billion.

261

2014/6M

2015/6M

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FDI from Japan, the biggest source, has declin

Chart 5.16 â&#x20AC;&#x201C; BOI net application of FDI* breakdown by country Percent of total

11%

Others

27%

4% 10%

USA ANIEs ASEAN Europe

2% 7% 8%

7% 10%

21%

2% 6% 10%

17 58%

Japan

49%

54%

11FY

12FY

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

Source: Board of Investment; ChartingTHAILAND analysis

13FY

14F

ned sharply in 2014

group

18%

14%

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

31%

17%

2015/6M

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Property indicators have largely declined so fa picked up strongly in July Chart 1.16a – YͲonͲY change

Chart 1.16b –

First 7 months of 2015 vs those of 2014, percent

Jul vs Jun 2015

Condo unit registered

17.8

New housing unit

Constr. Area in municipal

Value of land transaction

-3.8

12.0

-7.0

-9.2

Source: Bank of Thailand; ChartingTHAILAND analysis

1.2

ar this year but

– MͲonͲM change

5, percent

17.8

Key property indicators

41.4

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.

Latest development Property indicators have largely declined so far this year but picked up strongly in July.

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CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

Improved trade balance so far in 2015 is the c declining more than export Chart 5.03a â&#x20AC;&#x201C; Trade balance* in THB

Chart 5.0

First 8 months, Billion Baht

First 8 month

6,000

160

5,000

140

120

4,000 2014

3,000

100

2015 -2.9%

-6.2%

-4.9

2,000 60 1,000 40 0 20 -1,000

Export

â&#x20AC;&#x201C;

Import

Trade balance

Expo

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; ChartingTHAILAND analysis

case of import

3b – Trade balance* in USD

hs, Billion USD

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.

ort

-8.2%

Latest development Improved trade balance in both THB and USD terms in the first 8 months of 2015. This is the case of import declining more than export.

–

Import

Trade balance

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Export declined 2.9% so far in 2015, with Petr and Agriculture the main drags

Chart 5.05a – YTD annual change in Export in Baht Chart 5.05b First 8 months of 2015 vs those of 2014, percent Total export Optical instru Other export Jewellery Automotive Machinery Photo instru Other manufacturing Electrical Electronics Forestry Metal Agro products Apparels Toiletries Footware Agriculture Furniture PetroͲchemical Fishery Aircrafts Chemicals Petroleum ReͲexports Mining-52.1

-2.9 17.9 13.4 6.8 3.5 3.4 2.5 2.4 0.8 -0.5 -0.9 -1.1 -3.2 -5.8 -6.0 -6.1 -6.4 -8.3 -8.9 -14.4 -21.5 -21.7 -22.3 -29.6

Source: Bank of Thailand; ChartingTHAILAND analysis

Contributions t Total export Automotive Machinery Other export Jewellery Optical instru Other manufacturing Electrical Photo instru Forestry Footware ReͲexports Furniture Metal Electronics Toiletries Fishery Apparels Aircrafts Mining Agro products Agriculture PetroͲchemical Chemicals Petroleum

roleum, Chemicals

b – Sectoral contributions

to total export growth -2.9 0.5 0.3 0.2 0.2 0.2 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1 -0.1 -0.2 -0.2 -0.3 -0.4 -0.5 -0.5 -0.8 -1.1

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 2.9% in the first 8 months of 2015. The increase in Automotive and Machinery export were the growth drivers while Petroleum, Chemicals and Agriculture were the main drags to total export growth.

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NAFTA is the only growing markets for Thai ex

Chart 5.07a – Export by country

Chart

Percent of total export in THB term

In THB t

᪛ 6.1

᪛ 6.7

᪛ 7.1

᪛ 6.9

Rest of the world

18.1

17.4

18.1

16.7

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

11.7

11.1

11.4

11.5

12.0

East Asia exͲJapan

20.4

21.0

21.2

20.3

ASEAN

23.0

24.3

24.6

25.9

26.1

100% =

EU NAFTA

᪛ 7.3 (Trillion)

16.5

Rest of

East Asi

M 10FY

11FY

12FY

13FY

Source: Bank of Thailand; ChartingTHAILAND analysis

14FY

xport so far in 2015

t 5.07b – Change in Export

term, First 8 months of 2015 vs those of 2014

NAFTA

7.2%

f the world

-2.0%

-3.6%

ASEAN

-3.7%

a ex Japan

-4.7%

Japan

-5.1%

Middle East

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 6 months of 2015. Middle East was the hardest hit market with export declining 12% from a year ago.

-12.0%

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Big decrease in Import so far in 2015 due mai fuel import

Chart 5.09a – YTD annual change in Import in Baht Chart 5.09b First 8 months of 2015 vs those of 2014, percent

Total import

Contributions t

Total imp

-6.2

Others

7.7

Consumer goods

7.2

Intermediate Ͳ Non fuel

0.8

Capital goods

Intermediate Ͳ Fuel

-0.8

-34.0

Source: Bank of Thailand; ChartingTHAILAND analysis

Consumer goo

Oth

Intermediate Ͳ Non f

Capital goo

Intermediate Ͳ F

nly to decrease in

b – Sectoral contributions

to total import growth

ort

YTD change in Import by product class

-6.2

ods

0.6

ers

0.6

Latest development

uel

0.3

ods

uel

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.

Import has decreased 6.2% in the first 8 months of 2015, due mainly to the decrease in Fuel import.

-0.2

-7.5

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Intermediate goods has gained more share th

Chart 5.08 – Import by economic classification Percent of total import in Baht term Ѯ 5.9

Ѯ 7.0

Ѯ 7.8

Ѯ 7.7

Others

10.2

12.4

11.4

12.2

Capital goods

20.9

21.3

24.4

23.3

Intermediate – NonͲFuel

44.0

40.0

37.5

35.7

Intermediate Ͳ Fuel

17.4

18.9

20.8

Consumer goods

7.5

7.8

8.0

10FY

11FY

12FY

13FY

100% =

Source: Bank of Thailand; ChartingTHAILAND analysis

his year

Ѯ 7.4

Ѯ 4.6

8.1

8.7

24.2

(Trillion)

25.4

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

Latest development 38.3

40.7

20.8

15.5

8.7

9.6

14FY

15/8MO

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.

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Tourist arrivals dropped slightly in August foll bomb incident Chart 5.18 â&#x20AC;&#x201C; International Tourist Arrivals Million visits

26.5

CAGR

10.6%

24.8 22.4 19.2 15.9

14.5 11.7

14.1

11.5

10.0

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

Source: Department of Tourism

owing the Bangkok

Monthly arrivals Million visits 3.0

2015

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

2.5

2.0

2014

Latest development Tourist arrivals dropped slightly in August following the Bangkok bomb incident. For the first 8 months, Tourist arrivals grew almost 30% from the same period last year.

1.5

1.0

0.5

0.0

www.ChartingThailand.com

China and Malaysia have been the two highes for tourists in 2015 Chart 5.19a International Tourist Arrivals by country of nationality

Chart 5.19b 10 Highest Chan by country of n

Percent of total

First 8 months of 2

Rest of world Americas

Europe

East Asia

15.6 5.3

27.9

51.2

14.7 5.0

26.5

53.8

13.8 4.8

25.3

56.0

11.9

China

4.4

4.5

Malaysia

23.8

59.9

24.8

58.8

Hong Kong Korea

164.9

Taiwan

164.9

Vietnam

145.7

Singapore

127.5

Japan

122.4

India

104.8

USA 10FY

11FY

12FY

13FY

14FY

Source: Department of Tourism; ChartingTHAILAND analysis

203.6

63.9

st growing markets

nge in International Tourist Arrivals ationality

2015 vs those of 2014, Thousands 2,809.1 850.8

Tourist arrivals by nationality 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.

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.

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

Unemployment rate decreased and stayed be

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

1.83

1.51

1.49 1.38

1.38

1.04 0.84 0.68

0.66

0.72

0 05-Avg 06-Avg 07-Avg 08-Avg 09-Avg 10-Avg 11-Avg 12-Avg 13-Avg 14-Avg

Source: National Statistical Office, Bank of Thailand

elow 1% in August

Unemployment rate

Monthly Average

1.40

1.20

1.00

2015

0.80

0.60

2014

0.40

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.

Latest development

0.20

Unemployment rate decreased and stayed below 1% in August.

www.ChartingThailand.com

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

1.0 2.0 3.2

Hong Kong Ͳ Aug

3.3

Japan Ͳ Jul

3.3

Vietnam Ͳ 2014

3.4

South Korea Ͳ Aug

3.4

Taiwan Ͳ Aug China Ͳ Q2 India Ͳ 2013 US Ͳ Aug Russia Ͳ Aug Indonesia Ͳ Q1 Pakistan Ͳ 2014 Australia Ͳ Aug Philippines Ͳ Q3 Brazil Ͳ Aug Euro Area Ͳ Jul Source: The Economist

3.7 4.0 4.9 5.1 5.3 5.8 6.0 6.2 6.5

paring to other

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

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

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

No change in interest rates in the market in Se

Chart 3.01a – BOT’s policy rate

Chart 3.01b – BI 2.50% 2.25% 2.00% 1.75% 1.50%

Oct-14

1.25% Sep-15

Chart 3.01c – Saving deposit rate*

Oct-14

Chart 3.01d – Co 10.00% 7.50% 5.00%

Max

2.50%

Min Oct-14

0.00% Sep-15

Oct-14

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

Source: Bank of Thailand

eptember

BOR overnight rate 2.50% 2.25% 2.00% 1.75% 1.50% 1.25% Sep-15

Interest rates 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

ommercial bank MLR* 10.00%

Max 7.50%

Min

No change in interest rates in the market in September. It’s worth noting that the BOT’s policy rate is at 1.50%, which is quite low. This could limit the option to further stimulate growth through monetary policy (by lowering interest rate further).

www.ChartingThailand.com

Government spending in the first 8 months of

Chart â&#x20AC;&#x201C; Monthly cumulative Fiscal expenditure Billion Baht 2500

2000

2015

1500

1000

500

Source: Bank of Thailand

f 2015 increased 12%

Government Spending The current government is trying to boost the economy by fiscal spending. In the first 8 months of 2015, government spending increased 12% 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

D © ChartingTHAILAND™

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

Businesses and Industries were still pessimist

Chart 1.18a â&#x20AC;&#x201C; Business Sentiment Index* 100

Chart 1.18b â&#x20AC;&#x201C; T 200

Better

100

52.4

50.3

49.1

45.2

46.4

87.7

Worse

0 Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-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 Source: Bank of Thailand, The Federation of Thai Industries

Mar-15

Apr

Note: (*) Below is th Index = 100 Index > 100 Index < 100

tic in August

Thai Industries Sentiment Index** Business and Thai Industries Sentiment Indices

6.2

85.4

84.0

83.0

82.4

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

r-15

May-15

Jun-15

Jul-15

Aug-15

he interpretation of the index: 0 indicates that industries sentiment remains stable 0 indicates that industries sentiment has improved 0 indicates that industries sentiment has worsened

Businesses and Industries were still pessimistic in August. Business Sentiment Index dropped to 46.4 and the Thai Industries Sentiment Index dropped to 82.4.

www.ChartingThailand.com

Consumers were less pessimistic in August

Chart 1.17 â&#x20AC;&#x201C; Consumer Confidence Index 100

100

Overall

Better

On job

Better

50 Worse

Worse

0 Feb-15

Apr-15

Jun-15

Aug-15

Feb-15

Apr-15

Jun-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

Aug-15

100

On future income Consumer Confidence Index 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.

Better 50 Worse

Latest development Consumers were less pessimistic in August as the overall index increased from 33.7 to 34.6. As the index is still below the cut off level, consumers are still pessimistic about the economy. 0 Feb-15

Apr-15

Jun-15

Aug-15

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

BOT revised down projected growth for 2015

Chart 1.03a – Real GDP growth projections

Chart 1.03b –

For 2015, Annual percentage change

For 2016, Annu 6.00

5.50

5.00

4.50

NESDB The Economist poll

FPO

4.00

3.50

3.00

BOT

2.50

2.00 F-15

M-15

A-15

M-15

J-15

A-15

S-15

Forecast as of, month ending

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

F-15

M-15

A-1

Foreca

as well as 2016

– Real GDP growth projections

ual percentage change

6.00

5.50

5.00

The Economist poll

4.50

4.00

BOT

3.50

3.00

2.50

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 BOT revised down projected growth for 2015 as well as 2016. Consensus growth forecast is now 2.7-3.5% for 2015 and 3.74.1% for 2016.

2.00 M-15

J-15

A-15

S-15

www.ChartingThailand.com

Growth for Thailand is projected to be around pack Chart 1.04a â&#x20AC;&#x201C; Real GDP growth projections

Chart 1.04

2015, Annual % change, as of Sep 30th 2015

2016, Annual

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

India China 6.9 Vietnam 6.6 Philippines 6.3 Malaysia 5.7 Indonesia 5.4 Pakistan 4.8 Thailand 3.5 Singapore 3.4 South Korea 3.1 Taiwan 2.6 Australia 2.4 US 2.4 Hong Kong 2.4 Euro Area 1.4 Japan 0.8 7.5

-1.9 -3.6

Source: The Economist

Russia Brazil

0.3 0.2

d the middle of the

4b – Real GDP growth projections % change, as of Sep 30th 2015

7.8 6.7 6.5 6.4 6.1 5.2 4.7 4.1 3.2 3.1 2.7 2.7 2.6

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 3.5% for 2015 and 4.1% for 2016, around the middle when compared to other major and emerging economies.

2.1 1.7 1.5

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

Headline CPI suggests deflation but it was hea energy price Chart 3.07a – YͲoͲY change in CPI

Chart 3.07b –

Percent

Sep 2015, percent

Veg

1.50%

Tobacco & a

Food away from

1.00%

Recreation & Edu

Core* 0.50%

Prepared food at

Medic

Non alcoholic bev 0.00%

Apparel and foo

Sea -0.50%

-1.00%

Housing & furn

Eggs

Head line -1.50%

Apr-15 May-15 Jun-15

Jul-15 Aug-15 Sep-15

Transport & C

Note: (*) exclude raw food and energy

Source: Bureau of Trade and Economic Indices; ChartingTHAILAND analysis

avily skewed by

YͲoͲY change in CPI by product & fruit

5.9

alcohol

2.1

Consumer Price Index

m home

1.8

ucation

1.3

t home

1.0

al care

0.9

verage

0.5

otware

0.5

Latest development

soning

0.3

Meat

0.3

Headline CPI suggests deflation but it was heavily skewed by energy price. CPI of most products actually increased from a year ago.

Rice

0.2

nishing

0.1

& milk

-1.5

Commu

Energy

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.

-7.1 -16.6 © ChartingTHAILAND™

www.ChartingThailand.com

Along with Euro area, Taiwan and Singapore, is still lower than a year ago Chart 3.08 – Consumer Price Index Annual percentage change

Latest

Russia Ͳ Aug

15.8

Brazil Ͳ Aug

9.5

Indonesia Ͳ Aug

7.2

India Ͳ Aug

3.7

Malaysia Ͳ Aug

3.1

Hong Kong Ͳ Aug

2.5

China Ͳ Aug

2.0

Pakistan Ͳ Aug

1.7

Australia Ͳ Q2

1.5

South Korea Ͳ Aug

0.7

Philippines Ͳ Aug

0.6

Japan Ͳ Aug

0.2

US Ͳ Aug

0.2

Vietnam Ͳ Sep

0.0

Euro Area Ͳ Sep Taiwan Ͳ Aug Singapore Ͳ Aug Thailand Ͳ Sep Note: (*) The Economist Poll

Source: The Economist

-0.1 -0.4 -0.8 -1.1

1. 0.9

0.7 0.4

0.2 0.2 0.2 0.8

Thailand’s latest CPI

2015* 14.8 8.6 6.4 5.3

Inflation in the world

2.5 3.1

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

3.9

Latest development

2.4

Along with Euro area, Taiwan and Singapore, Thailand’s latest CPI is still lower than a year ago.

2.8

www.ChartingThailand.com

PPI continues to be lower than a year ago, du price Chart 3.09a – YͲoͲY change in PPI

Chart 3.09b –

Percent

Sep 2015, perce

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

Apr-15 May-15 Jun-15

Jul-15 Aug-15 Sep-15

C Other manu go Pulp & pa Tex W Leather & footw NonͲmetallic min Mechin Mechin Fore M F Ene Electrical eq Rubber & pla Livesto Chem Basic me Fish Petroleum prod

Source: Bureau of Trade and Economic Indices; ChartingTHAILAND analysis

e largely to energy

YͲoͲY change in PPI by product

Crop oods aper xtile Wood ware neral nery nery estry Metal Food ergy quip astic ocks mical etals hing ucts

2.3 2.0 1.9 0.7 0.3 0.2 0.1 0.1

Producer Price Index 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 0.0 -0.4 -0.5 -1.6

Latest development PPI continues to be lower than a year ago, due largely to energy price. However, PPI of other products, almost half, also decreased from a year ago.

-2.1 -2.9 -3.0 -4.1 -4.4 -7.3 -28.9 © ChartingTHAILAND™

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

Bank’s loan is still growing and liquidity is slig Chart 3.02a – Commercial Banks’ Loan THB billion 11,600 11,400 11,200 11,000 10,800 10,600 Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Chart 3.02b – Commercial Banks’ Loan/Deposit* ratio Percent 100% 97.8%

97.2% 96.4%

95.7%

95.7% 94.9%

94.8%

94.5%

Jan-15

Feb-15

Mar-15

95%

90% Aug-14

Source: Bank of Thailand

Sep-14

Oct-14

Nov-14

Dec-14

ghtly squeezed

Bank’s Loan and Loan-to-deposit ratio

Apr-15

M-o-M

Y-o-Y

+0.2%

+4.9%

May-15

Jun-15

Jul-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.

Latest development

96.5%

97.1%

Bank’s loan increased only 0.2% in July 2015. Liquidity in the system was squeezed further as the Loan-to-Deposit ratio increased to 97.1%.

95.4% 94.5%

Apr-15

May-15

Jun-15

Jul-15 © ChartingTHAILAND™

www.ChartingThailand.com

Gross NPL continued to rise in both absolute v percentage of total loan in the 2Q15

Chart 3.03a – Total Financial Institutions’ Gross NPLs Outstandin Billion Baht

458

07YE

401

08YE

380

09YE

317

270

256

267

10YE

11YE

12YE

13YE

Chart 3.03b – Total Financial Institutions’ Gross NPLs Outstandin Percentage of Total Loans

7.31% 5.29%

4.85% 3.60%

07YE

08YE

Source: Bank of Thailand

09YE

10YE

2.75%

11YE

2.26%

2.16%

12YE

13YE

value and

Non-performing loan 299

278

4YE

312

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 Gross NPL continued to rise in 2Q15. The absolute value increased from THB 299 billion to THB 312 billion or 2.29% to 2.38% of the total loan.

16%

4YE

2.29%

2.38%

2015/Q1 2015/Q2 2015/Q3 © ChartingTHAILAND™

www.ChartingThailand.com

Banksâ&#x20AC;&#x2122; capital ratio increased in July and still

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

15.8%

16.2%

16.1%

14.9%

15.7%

14.8% 14.0%

13.9% 13.3% 12.4%

2004

2005

2006

2007

2008

2009

2010

2011

2012

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

Source: Bank of Thailand

2013

remained high

Month End 17.5%

17.0%

Capital ratio of all commercial banks

2015 2014

16.5%

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 increased to 16.9% in July and still remained high.

15.5%

15.0%

14.5%

www.ChartingThailand.com

Thailand’s real interest rate is around 1% Chart 3.05 – Real interest rates Percent, as of Sep 30th 2015

൞

3M riskͲfree interest rates Brazil

Expected 2015 inflat

14.9

Russia

8.6

12.7

Indonesia

8.2

India

7.1

Pakistan

6.6

Vietnam

6.4 5.3 3.9 2.8

4.6

Malaysia

2.5

3.8

China

3.2

Australia

2.4

1.5 1.7

Philippines

1.7

Thailand

1.7

0.8

South Korea

1.6

0.9

2.4

Taiwan

0.9

Hong Kong

0.4

0.3

0.4

Japan

0.1

0.7

Euro Area Note: (*) The Economist Poll

Source: The Economist

0.0

0.2 3.1

0.2

tion*

Real interest rates 6.3

14.8

-2.1 1.8 1.8 2.7 1.8 1.3 1.7 0.7 -0.7 0.9

Real interest rates in the world 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.

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 around 1%.

www.ChartingThailand.com

SET index decreased 2.4% in September amid big foreign sell out Chart 3.06a – Monthly performance of SET index

Chart 3.06c

Percent change from prior month, at month end

Percent, as of Se China (SSEB, $ terms) France (CAC 40)

1.4%

0.6%

Japan (Nikkei 225) Pakistan (KSE) S Korea (KOSPI)

-2.0%

Apr-15

May-15

-2.4%

Jun-15

-4.3%

-4.0%

Jul-15

Aug-15

US (NAScomp) Euro Area (FTSE Euro 100)

Sep-15

Germany (DAX) China (SSEA)

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

US (S&P 500) India (BSE) Australia (All Ord.)

0.0

UK (FTSE 100)

-20.0

Thailand (SET)

-40.0

Malaysia (KLSE) US (DJIA)

-60.0

HK (Hang Seng)

-80.0

Taiwan (TWI)

-100.0

Singapore (STI)

-120.0 J-15 F-15 M-15 A-15 M-15 J-15

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

Source: SET, The Economist; ChartingTHAILAND analysis

Indonesia (JSX)

d another round of – Change since Dec 31st 2014

ep 23rd 2015 9.7% 3.7% 3.5% 2.2% 1.5% 0.4% -0.8% -2.0% -3.7% -5.8% -6.1% -6.6% -8.1%

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 2.4% in September amid another round of big foreign sell out. Along with other markets in the region and the world, SET has declined heavily year-todate.

www.ChartingThailand.com

Capturing The Vietnam

Download the presentation http://goo.gl/6FZNS9

m Growth Opportunity

Contact Information FinAdvice Department â&#x20AC;&#x201C; Private Fund Tel 02-635-1700 ext. 757, 771, 777 pfadmin@phillip.co.th , fa@phillip.co.th

CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

www.ChartingThailand.com

Higher government deficit as percentage of G

Chart 4.1 â&#x20AC;&#x201C; Government budget and cash balance as percentage Percent Budget cash balance Overall Cash balance (including non-budgetary deficit/ surplus)

1.3%

1.0%

-0.2%

-0.5%-0.6%

-0.7% -1.0%-1.0%

-0.8%

-1.6% -1.9% -2.5%

-3.8% -4.2%

05FY

06FY

07FY

08FY

Source: Bank of Thailand; ChartingTHAILAND analysis

09FY

10FY

11FY

GDP in 2014

of nominal GDP Budget balance vs GDP 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.

Latest development

-1.9% -2.1%

-2.2%-2.3%

-3.4% -3.8%

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.

www.ChartingThailand.com

Budget deficit in 2015 has so far almost doub Chart 4.2 â&#x20AC;&#x201C; Government budget balance Billion Baht

2,075

Revenue 1,241

Budget balance

-36

1,751 1,390

1,455

1,498

-174

-100

-267

-295

-2,424

-2,371

1,484

110 -75

-27 -414

-1,280 -1,629

Expenditure

2,076

1,902

-364

-1,277

2,158

-1,598 -1,849

-1,825

-1,930 -2,489

05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY Source: Bank of Thailand; ChartingTHAILAND analysis

led those of last year

Monthly cumulative Budget balance (Billion Baht)

Budget balance

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

-100

Latest development 2014

-150

2015 -200

-250

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 deficit in 2015 has so far almost doubled those of last year.

-300

-350 J

F M A M J

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Sizable budget and cash deficit in the first 8 m

Chart 4.3 â&#x20AC;&#x201C; Government cash balance Billion Baht Budget cash balance Overall Cash balance (including non-budgetary deficit/ surplus) 110 88

-27

-36 -45 -75

-95

-100 -96 -144 -174

-266

-364 -401

-414

-4

05FY

06FY

07FY

08FY

Source: Bank of Thailand; ChartingTHAILAND analysis

09FY

10FY

11FY

12FY

months

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.

-71 -123

Latest development 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. Sizable budget and cash deficit in the first 8 months.

-242 -267 -295 -305

466

13FY

14FY

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Thailandâ&#x20AC;&#x2122;s budget deficit is expected to be aro

Chart 4.4 â&#x20AC;&#x201C; Government Budget balance as percentage of GDP 2015*, percent South Korea Hong Kong Singapore Taiwan Philippines Indonesia

-2.0

Thailand

-2.0

-1.9

Euro Area

-2.1

Australia US

-2.4 -2.6

China Russia

-2.7 -2.8

India Malaysia

-3.8 -4.0

Vietnam Pakistan Brazil Japan Note: (*) The Economist Poll

Source: The Economist

-4.2 -5.1 -6.0 -6.8

ound 2% of GDP

0.3 0.0 -0.7 -1.1

Budget balance in the world 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.

Latest development 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% of GDP.

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A slight increase in Public debt so far in 2015

Chart 4.5a – Composition of Public debt

Chart 4.5b –

THB Trillion

As percentage

6.0

5.0

Public debt from State Enterprises

4.0

3.0

Bond to Compensate FIDF's Loss & Prefunding debt

2.0

Direct Government debt

1.0

0.0

2011 8%

2012 8%

2013 7%

Source: Public Debt Management Office

2014 7%

Jul-15 6%

2011

External debt as percent of total

2012

– Composition of Public debt

e of nominal GDP 45% 40%

Public debt from State Enterprises

35% 30%

Bond to Compensate FIDF's Loss & Prefunding debt

25% 20% 15% 10%

Direct Government debt

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 43% of GDP. Majority of the public debt is domestic based.

2013

2014

Jul-15

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Thailandâ&#x20AC;&#x2122;s public debt is not high compared to standard Chart 4.6 â&#x20AC;&#x201C; Public debt in the world Percentage of GDP, 2014 est. 1 Japan 2 Zimbabwe 3 Greece 4 Lebanon 5 Italy 6 Jamaica 7 Portugal 8 Cyprus 9 Ireland 10 Grenada 11 Singapore 12 Belgium 13 Eritrea 14 Barbados 15 Spain 16 France 17 Iceland 18 Egypt 19 Puerto rico 20 Canada 21 Bhutan 22 Jordan 23 Antigua and barbuda 24 UK 25 Cabo verde Source: CIA fact book

228 181 175 142 134 132 131 119 119 110 107 102 101 101 98 96 94 94 94 93 92 90 89 87 86

39 United 40 C 43 48 Ur 50 Pa 56 63 Ma 67 71 Th 72 Philip 7 80 Vie 93 M 96 Sw 101 Arg 103 South 105 Hong 108 T 126 129 N 133 Indo 137 147 149 N 164 Saudi

o international

states Croatia 3 Israel ruguay akistan 6 Brazil alaysia 7 India hailand ppines 8 Laos etnam Mexico weden entina Korea g kong Turkey Nepal orway onesia 7 China Russia Nigeria arabia

71 70 67 65 64 59 54 51 49 48 46 46 41 40 38 37 37 37 30 30 24 22 13 12 2

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 49% of GDP in 2014, is below international rule of thumb of 60%. Japan has the highest public debt level compared to GDP, at 228%. Majority of countries with high public debt level comes from Europe, leading by Greece, Italy, Portugal and Ireland.

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CONTENT SUMMARY

Growth

Stability

ompared to last quarter expenditure side anufacturing were the main

s level Private Investment recovered the Bangkok bomb. ust t growth c in August 7Ͳ4.1% for 2016.

y energy price. CPI for most lightly squeezed. Bank’s

st year. Public debt also

Reading This Report

surplus. External debt has r.

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Positive Balance of Payment so far in 2015, th surplus Trade Bala 29.8

Chart 5.01 â&#x20AC;&#x201C; Balance of Payment decomposition Billion USD

10FY

31.3

Net service

+ 5.3

-19.7

4.4

1.2 10FY

-1.2

Net Capita

-5.0 10FY

11FY

12FY

13FY

14FY

15/8mo

21.3

10FY

Source: Bank of Thailand; ChartingTHAILAND analysis

hanks to trade

nce (F.O.B)

Balance of payment decomposition 24.6

17.0

11FY

6.7

12FY

13FY

14FY

20.9

15/8mo

e income & transfer -1.5 -8.1

-8.2

11FY

12FY

-11.8

13FY

-9.2

14FY

15/8mo

l Movement + errors and omissions

6.8

Latest development

12FY

Positive Balance of Payment so far in 2015 of USD 4.4 billion, thanks to trade surplus.

0.1

-7.7

11FY

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.

13FY

-16.6

-15.0

14FY

15/8mo

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Strong Asian export engines reflecting in huge surplus Chart 5.02 – Current Account balance As % of 2015 GDP* Singapore Ͳ Q2

21.2%

Taiwan Ͳ Q2

12.8%

South Korea Ͳ Jul

7.8%

Russia Ͳ Q2

4.9%

Philippines Ͳ Jun

4.1%

China Ͳ Q2

3.0%

Hong Kong Ͳ Q2

2.8%

Vietnam Ͳ 2014

2.7%

Japan Ͳ Jul

2.7%

Euro Area Ͳ Jul

2.6%

Malaysia Ͳ Q2

2.5%

Thailand Ͳ Q2

2.4%

Pakistan Ͳ Q2 India Ͳ Q2

-0.7% -1.2%

Indonesia Ͳ Q2

-2.4%

US Ͳ Q2

-2.6%

Australia Ͳ Q2 Brazil Ͳ Aug Note: (*) The Economist Poll

Source: The Economist

-3.2% -4.1%

-429.0

e current account

Last 12 months, USD Billion 69.5

Current Account Balance

72.8 104.3 65.0 11.7 287.8 7.4

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

8.9

Latest development

107.8 316.9 8.8 24.4 -2.6

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 2.4% of GDP.

-25.9 -21.6

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External debt decreased slightly so far in 2015

Chart 5.10a – External Debt Level Billion USD

69.0

74.4

76.1

75.3

06YE

07YE

08YE

09YE

100.6

104.3

10YE

11YE

130.

12YE

Chart 5.10b – External Debt as % of GDP

38.5%

06YE

35.4%

07YE

Source: Bank of Thailand

31.4%

28.8%

08YE

09YE

35.2%

33.7%

10YE

11YE

38.0%

12YE

External Debt

139.9

140.7

136.6

13YE

14YE

15/2Q

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 decreased slightly to USD 136.6 Billion at the end of 2Q15. External debt as percentage of GDP decreased slightly to 33.2%.

38.2%

13YE

34.5%

33.2%

14YE

15/2Q

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External debt structure has continued to shift term debt Chart 5.11a – External debt breakdown

Chart 5.11b – E

Private vs Public

LongͲTerm vs Sho

Private Public = General Government and Monetary Authorities

16%

84%

11YE

20%

80%

12YE

Source: Bank of Thailand

18%

82%

13YE

18%

82%

14YE

Long term Short term

17% 45%

44%

55%

56%

11YE

12Y

83%

15/2Q

t toward more longͲ

External debt breakdown

ortͲTerm

External debt composition

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 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.

57%

60%

13YE

14YE

15/2Q

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Big surge in external debt payment in 2Q15

Chart 5.12a – International reserves

Chart 5.12b – D

As % of ST external debt

Percent

370% 340% 312% 279%

277%

293%

4.7% 3.4%

10YE

11YE

12YE

13YE

14YE

15/2Q

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

Source: Bank of Thailand; ChartingTHAILAND analysis

10FY

11FY

Debt service ratio* External Debt repayment capability 8.1%

Latest development

4.7% 4.2%

12FY

Debt service ratio increased sharply to 8.1% in 2Q15. However, International reserves (as % of ST external debt) is still at healthy level (293%). Capability to repay external debt is not yet a concern at the moment.

4.0%

13FY

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).

14FY

15/2Q

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

73.9

2006

106.5

118.0

2007

2008

154.1

2009

191.7

206.4

205.8

2010

2011

2012

Chart 5.13b â&#x20AC;&#x201C; International reserves as number of months of im 13.8

12.6 10.8

9.1 6.9

2006

2007

9.9

7.9

2008

2009

2010

2011

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

Source: Bank of Thailand; ChartingTHAILAND analysis

2012

in 2015 but still

International reserves

190.2

180.2

169.6

2013

2014

Aug-15

port**

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

9.1

9.5

9.4

2013

2014

Aug-15

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 9.4 months, which is still considered excessive.

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THB depreciated further in September agains

Chart 5.17a – Nominal Effective Exchange Rate

Chart 5.17b –

2007=100

Percentage change MYR Ͳ 8.3064 114.0

Baht appreciates

112.0

AUD Ͳ 25.868

110.0

IDR Ͳ 2.6319

108.0

KRW Ͳ 0.0305

MͲoͲM

Ͳ1.2%

106.0

Ͳ0.2%

Baht depreciates Sep-14

Dec-14

Mar-15

Jun-15

JPY Ͳ 30.6478

102.0

INR Ͳ 0.5817

100.0 Sep-15

TWD Ͳ 1.1058

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

Source: Bank of Thailand; ChartingTHAILAND analysis

EUR Ͳ 41.2624 SGD Ͳ 25.7733

104.0

YͲoͲY

MXN Ͳ 2.1459

GBP Ͳ 55.5579 VND Ͳ 0.0016 PHP Ͳ 0.7915 CNY Ͳ 5.7923 USD Ͳ 36.5344

t key currencies

YͲoͲY change in FX rate* in avg. selling rate as of Sep 30th 2015 21.0 12.3 10.2 9.1 1.3 0.3 -0.4 -2.5

Exchange rates 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.

Latest development

-3.2

Nominal Effective Exchange Rate decreased 1.2% in September. Over the last 12 months THB depreciated 0.2% against key currencies. USD has appreciated the most against THB.

-3.4 -4.7 -6.3 -7.2 -8.2 -11.0

aht depreciates

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