CTE Monthly Brief November 2015 by Ake Saroj

Charting Thailand’s Economy Monthly Brief, November 2015 Publication Date: November 3rd, 2015 Number of pages: 72

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CONTENT SUMMARY

Growth

• Thailand GDP grew only 2.8% in 2Q15, a rather slow pace compared to last quarter • Tourism was by far the main driver of growth on the expenditure side • Service was the main driver, while agriculture and manufacturing were the main drags • Manufacturing production continues to lag behind last year’s level • Private consumption and Private Investment recovered • Import declined faster than Export. Tourism was clearly affected by the Bangkok bomb. • Unemployment rate decreased and stayed below 1% in September • Policy interest rate remains on the downward trend to boost growth • Businesses, Industries as well as Consumers were less pessimistic in September • Consensus growth forecast is now 2.7‐3.4% for 2015 and 3.7‐4.0% for 2016.

Stability

• Headline CPI suggests deflation but it was heavily skewed by energy price. CPI for most products actually increased over the past 12 months. • Bank’s loan is still growing, although slowly, and liquidity is slightly squeezed. Bank’s capital ratio remained high. NPL continues to increase. • Budget deficit worsened in the first 9 months. Public debt also increased but not too worrying yet. • Positive Balance of Payment so far in 2015, thanks to trade surplus. External debt has been decreasing. THB was stable in October.

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 is provided on the right side bar of each page.

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Slower pace of growth in 2Q15

Chart 1.05 – Historical Real GDP growth rate Annual growth, percent

Last 5 Quarters 7.5%

7.2%

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.

7.3%

6.3% 5.4% 5.0% 4.2% 3.0%

2.8%

2.1% 1.7% 0.8%

0.9%

0.9% 1.0%

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

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

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 agriculture and manufacturing were the main drags on the economy Chart 1.06a – Real growth by sector, 2Q15

Chart 1.06b – Sectoral contributions, 2Q15

Year‐on‐Year percentage change

Contributions to total Real GDP growth

Hotel&Res

18.7

GDP

Construction

17.3

Transport

0.8 0.8

2.8

Financial

8.6

Hotel&Res

Transport

8.6

Financial

0.6

Trading

0.5 0.5

Other social

6.3

Health&Social

5.5

Construction

Private HH

5.5

RealEstate

Trading

3.7

0.2

Other social

0.1

GDP

2.8

Utilities

0.1

Utilities

2.7

Health&Social

0.1

RealEstate

2.5

Education

0.1

Education

2.2

PublicAdmin

0.1

PublicAdmin

1.3

Manufacture

-0.7

Fishing Mining Agriculture

-1.6 -3.9 -6.3

Private HH

0.0

Fishing

0.0

Mining Manufacture Agriculture Stat diff

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 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.

-0.1 -0.2 -0.3 -0.5 © ChartingTHAILAND™

Source: NESDB; ChartingTHAILAND analysis

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Tourism was by far the main driver of growth in 2Q15 Chart 1.08a – Real growth by expenditure, 2Q15 Chart 1.08b – Expenditure Contributions, 2Q15 Year‐on‐Year percentage change X (services)

Contributions to total Real GDP growth 25.1

4.6

GDP

2.8

X (services)

3.3

GDP

2.8

Discrpncy

I (capital)

2.5

0.8

1.9

0.8

1.5

3.0

I (capital)

0.6

M (services)

-0.2

M (goods)

0.1

M (goods)

-0.3

M (services)

0.0

X (goods)

-4.0

I (Inventory) X (goods)

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.

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

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; ChartingTHAILAND analysis

Source of Growth – Expenditure side

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CONTENT SUMMARY

Growth

Stability

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Manufacturing production continues to lag behind last year’s level

Chart 1.10 – Manufacturing Production Index (2000=100)

Monthly Average 200.0 180.0

2014

160.0

194.2 182.9 174.6

170.0

161.1

177.6 181.6 175.7

140.0

2015

167.7

152.1

120.0

Manufacturing Production Index (MPI) 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 3.6% year-on-year in September 2015, continuing to lag behind last year’s level.

80.0 60.0 40.0 20.0 0.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

Source: The Office of Industrial Economics

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Most sectors had their production decreased from a year ago but most managed to produce more from last month Chart 1.11a – Y‐on‐Y change in MPI by sector

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

September 2015, percent

Petroleum

Tobacco

10.6

Tobacco

8.3

Vehicles

5.2

Machineries

15.5

Transport Equip

11.8

Machineries

11.5

Electronic

1.9

10.5

Transport Equip

0.5

Office automate

9.9

Metal products

0.4

Metal products

9.5

Paper

0.3

Vehicles

7.4

Precision instru

-1.1

Furniture

6.7

Chemical

-1.2

Precision instru

6.5

Furniture

-1.7

Wood products

6.2

Rubber&Plastic

-3.7

Food & Bev

-4.6

Mineral

-5.5

Textiles

1.8

Leather

0.8

Rubber&Plastic

-1.5

Textiles

-7.3

Electrical

-1.6

Wood products

-7.9

Basic Mat

-1.8

Electrical

-8.1

Mineral

-1.9

Office automate

-8.4

Food & Bev

-2.3

Electronic

-10.7

Leather Basic Mat Apparel

-11.7 -18.2 -21.4

Petroleum

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 but most managed to produce more from last month.

-3.4

Paper

-4.7

Chemical Apparel

MPI by sectors

-6.2 -12.8 © ChartingTHAILAND™

Source: The Office of Industrial Economics; ChartingTHAILAND analysis

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Lower capacity utilization rate (seasonally adjusted) in September

Chart 1.12a – Overall Capacity Utilization Rate

Chart 1.12b – Capacity utilization rate by sector

Percent

September 2015, percent

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

60% 58%

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

May-15

Jun-15

Jul-15

Aug-15

Sep-15

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

89% 84% 81% 80% 76% 71% 68% 66% 66%

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.

60% 59%

Latest development

59%

Seasonally adjusted Capacity utilization rate has decreased to 58.3% in September. Rubber and Plastic has the highest utilization rate at 89% while Tobacco has the lowest at 30%.

51% 50% 47% 43% 41% 40% 39% 30% 30%

Source: The Office of Industrial Economics

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Thailand’s latest MPI change was among the lowest on the list

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

8.8

India ‐ Aug

6.4

China ‐ Sep

5.7

Pakistan ‐ Aug

4.8

Indonesia ‐ Aug

4.4

Philippines ‐ Aug

3.7

Malaysia ‐ Aug

3.0

South Korea ‐ Sep

Latest development

1.2

Euro Area ‐ Aug

7 out of 18 major economies had negative MPI growth during the last period reported. Thailand’s negative growth of -3.6% was the forth lowest on the list.

0.9

US ‐ Sep

0.4

Japan ‐ Sep

-0.9

Hong Kong ‐ Q2

-1.2

Russia ‐ Sep

-3.5

Thailand ‐ Sep

-3.6

Taiwan ‐ Sep

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.

2.4

Australia ‐ Q2

Singapore ‐ Sep

Change in MPI in the world

-4.8 -5.3

Brazil ‐ Aug -8.9 © ChartingTHAILAND™

Source: The Economist

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CONTENT SUMMARY

Growth

Stability

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Private consumption improved sharply and surpassed last year’s level in September Chart 1.14a – Composite Private Consumption Index

Chart 1.14b – Y‐on‐Y change

(2010=100)

Sep 2015 vs 2014, percent Composite Private Consumption Index

125.0

Non‐resident

120.0

13.4

2014 115.0

Services 110.0

4.8

2015 Non‐durables

105.0

2.2

100.0

Composite Index

0.4

95.0

Semi‐durables

90.0

-1.3

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.

Latest development Private consumption improved sharply and surpassed last year’s level in September. However, durables and semi-durables goods consumption are still lagging.

85.0

Durables -8.7 80.0

D © ChartingTHAILAND™

Source: Bank of Thailand

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

Chart 1.15b – Y‐on‐Y change

(2010=100)

Sep 2015 vs 2014, percent

Composite Private Investment Index

121.0

Domestic Machinery sales* (2010 prices, Baht)

120.0

2015

11.7

2014

119.0

Composite Index

1.1

118.0

Import of Capital Goods (2010 prices, Baht)

117.0

Construction Material Sales Index

116.0

115.0

Construction Area permitted (sqm)

0.1

-2.7

Latest development -3.4

114.0

Domestic Commercial Car -6.0 Sales Index

113.0

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

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.

Private Investment started to pick up and has been above last year’s level. Domestic Machinery Sales increased the most from a year ago in September.

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FDI value increased 28% in the first 8 months of 2015

Chart 5.14 – Foreign Direct Investment Million USD

Monthly cumulative FDI*

Foreign Direct Investment

6,000

15,936

2014

14,747

5,000

12,899 4,000

2015 3,000

8,562 6,411

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

2,000

FDI value increased 28% in the first 8 months of 2015. 3,720

1,000

2,474 0

08FY

09FY

10FY

11FY

12FY

13FY

14FY

F M A M

S O N D

(*) Preliminary figures

Source: BOT

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BOI’s net application almost doubled in 2014, but for the first 8 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

525 396

BOI’s net application almost doubled in 2014, but for the first 8 months of 2015, it has almost been wiped out, registering only THB 50 billion.

288

236 50

10FY

11FY

12FY

13FY

14FY

2014/8M

2015/8M

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

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%

2% 6%

13%

10%

13%

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.

10% 17% 58%

Japan

19%

49%

30%

54% 5% 29% 20%

11FY

12FY

13FY

14FY

2015/8M

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

Source: Board of Investment; ChartingTHAILAND analysis

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Big surge in Condominium registration in August

Chart 1.16a – Y‐on‐Y change

Chart 1.16b – M‐on‐M change

First 8 months of 2015 vs those of 2014, percent

Aug vs Jul 2015, percent

Condo unit registered

31.8

107.4

Key property indicators

New housing unit

1.3

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.

-1.8

Latest development Constr. Area in municipal

Value of land transaction

-4.7

-6.1

Big surge in Condominium registration in August while the value of land transaction and construction area has decreased from last year in the first 8 months.

-8.1

4.6

Source: Bank of Thailand; ChartingTHAILAND 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 9 months, Billion Baht

First 9 months, Billion USD 200

6,000

Trade balance 180

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.

5,000 160 140

4,000 2014

3,000

2015 -1.9%

-7.6%

120 100

-5.0%

-10.5%

Latest development

2,000

Improved trade balance in both THB and USD terms in the first 9 months of 2015. This is the case of import declining more than export.

60 1,000 40 20

0 -1,000

Export

–

Import

Trade balance

-20

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; ChartingTHAILAND analysis

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Export recovered in September but the first 9 months is still lower than the same period last year Chart 5.05a – YTD annual change in Export in Baht Chart 5.05b – Sectoral contributions First 9 months of 2015 vs those of 2014, percent Total export Optical instru Other export Jewellery Automotive Machinery Other manufacturing Photo instru Electrical Electronics Metal Forestry Agro products Toiletries Apparels Footware Agriculture Petro‐chemical Furniture Fishery Aircrafts Chemicals Petroleum Re‐exports Mining

Contributions to total export growth

-1.9 28.5 25.5 6.3 6.2 3.5 2.3 1.9 1.7 0.5 -0.3 -1.5 -2.3 -4.0 -5.0 -6.2 -6.5 -7.8 -8.0 -14.3 -17.6 -23.0 -24.5 -25.0 -49.4

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

-1.9 0.9 0.4 0.3 0.3 0.2 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.2 -0.2 -0.2 -0.3 -0.5 -0.5

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, recovered in September but the first 9 months is still lower than the same period last year. The increase in Automotive and Machinery export were the growth drivers while Petroleum, Chemicals and Agriculture were the main drags to total export growth.

-0.9 -1.2 © ChartingTHAILAND™

Source: Bank of Thailand; ChartingTHAILAND 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 9 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

8.3%

Rest of the world

-0.8%

-3.0%

East Asia ex Japan

-3.3%

ASEAN

-3.4%

Japan

-4.1%

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 9 months of 2015. Middle East was the hardest hit market with export declining 9.8% from a year ago.

-9.8%

Source: Bank of Thailand; ChartingTHAILAND 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 9 months of 2015 vs those of 2014, percent

Total import

Contributions to total import growth

Total import

-7.6

Consumer goods

6.3

Intermediate ‐ Non fuel

-0.3

YTD change in Import by product class

-7.6

Consumer goods

0.5

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.

0.0

Latest development Others

-0.4

Intermediate ‐ Non fuel

Capital goods

-2.2

Capital goods

Intermediate ‐ Fuel

-34.5

Intermediate ‐ Fuel

-0.1

Import has decreased 7.6% in the first 9 months of 2015, due mainly to the decrease in Fuel import.

-0.5

-7.5

Source: Bank of Thailand; ChartingTHAILAND analysis

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Most categories have gained more share this year at the expense of Fuel 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

฿ 5.2

10.2

12.4

11.4

12.2

8.1

8.5

20.9

21.3

24.4

23.3

(Trillion)

Import composition 24.2

25.5

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

Latest development

Intermediate – Non‐Fuel

44.0

40.0

37.5

35.7

38.3

Intermediate ‐ Fuel

17.4

18.9

20.8

15.4

Consumer goods

7.5

7.8

8.0

8.7

9.7

10FY

11FY

12FY

13FY

14FY

15/9MO

40.8

Most categories have gained more share this year at the expense of Fuel.

Source: Bank of Thailand; ChartingTHAILAND analysis

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Tourist arrivals dropped significantly after the Bangkok bomb incident 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 dropped significantly after the Bangkok bomb incident. For the first 9 months, Tourist arrivals still grew impressively at 27.2%.

1.5

11.5

10.0

Latest development

1.0

0.5

0.0

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

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

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 9 months 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

26.5

53.8

25.3

56.0

11.9

China

4.4

4.5

Malaysia

23.8

24.8

59.9

58.8

11FY

12FY

13FY

885.8

Hong Kong

191.4

Korea

177.8

Taiwan

163.6

Vietnam

149.9

Japan

128.2

India

118.1

Singapore

112.9

USA 10FY

2,917.3

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.

69.6

14FY © ChartingTHAILAND™

Source: Department of Tourism; ChartingTHAILAND analysis

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

www.ChartingThailand.com

Unemployment rate decreased and stayed below 1% in September Chart 2.08 – Unemployment rate

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 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 September.

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

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

Source: National Statistical Office, Bank of Thailand

www.ChartingThailand.com

Thailand’s unemployment rate is lowest comparing to other leading economies Chart 2.09 – Unemployment rate Latest, percent Thailand ‐ Sep Singapore ‐ Q3

0.8 2.0

Malaysia ‐ Aug

3.2

South Korea ‐ Sep

3.2

Hong Kong ‐ Sep

Unemployment rates in the world

3.3

Japan ‐ Sep

3.4

Vietnam ‐ 2014

3.4

Taiwan ‐ Sep China ‐ Q3 India ‐ 2013 US ‐ Sep Russia ‐ Sep Indonesia ‐ Q1 Pakistan ‐ 2014 Australia ‐ Sep Philippines ‐ Q3 Brazil ‐ Sep Euro Area ‐ Sep

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.

3.8 4.1 4.9 5.1 5.2 5.8 6.0 6.2 6.5 7.6 10.8

Source: The Economist

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

www.ChartingThailand.com

No change in policy interest rate in October

Chart 3.01a – BOT’s policy rate

Nov-14

Chart 3.01b – BIBOR overnight rate 2.50%

2.50%

2.25%

2.00%

1.75%

1.50%

1.25% Oct-15

Nov-14

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

Chart 3.01c – Saving deposit rate*

Chart 3.01d – Commercial bank MLR* 10.00%

10.00%

Max 7.50%

7.50%

Min Max

5.00%

2.50%

Min Nov-14

0.00% Oct-15

Nov-14

0.00% Oct-15

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

Source: Bank of Thailand

No change in policy interest rate in October. 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 9 months of 2015 increased 9%

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 8 months of 2015, government spending increased 9% 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

2015

1500

1000

500

D © ChartingTHAILAND™

Source: Bank of Thailand

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

www.ChartingThailand.com

Businesses and Industries were still pessimistic in September

Chart 1.18a – Business Sentiment Index*

Chart 1.18b – Thai Industries Sentiment Index** Business and Thai Industries Sentiment Indices

200

100

Better

100

50 50.3

49.1

45.2

46.4

47.3 86.2

Worse

85.4

84.0

83.0

82.4

82.8

Worse

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

0 Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-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

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-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

Businesses and Industries were still pessimistic in September. Business Sentiment Index improved bust was still below the cutoff level. TISI dropped and remained lower than the cutoff.

Source: Bank of Thailand, The Federation of Thai Industries

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Consumers were less pessimistic in September

Chart 1.17 – Consumer Confidence Index 100

100

Overall

100

On job

On future income 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 were less pessimistic in September as the overall index increased from 34.6 to 35.4. As the index is still below the cut off level, consumers are still pessimistic about the economy. 0

0 Mar-15

May-15

Jul-15

Sep-15

0 Mar-15

May-15

Jul-15

Sep-15

Mar-15

May-15

Jul-15

Sep-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

www.ChartingThailand.com

FPO revised down 2015 growth again in October

Chart 1.03a – Real GDP growth projections

Chart 1.03b – Real GDP growth projections

For 2015, Annual percentage change

For 2016, Annual percentage change 6.00

6.00

5.50

5.00

4.50

NESDB

4.00 The Economist poll

FPO

BOT

M-15

A-15

M-15

The Economist poll

J-15

A-15

S-15

4.00

FPO BOT

3.50

4.50

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.

3.50

Growth projections for the Thai economy

3.00

FPO revised down 2015 growth again in October. Consensus growth forecast is now 2.7-3.4% for 2015 and 3.7-4.0% for 2016.

2.50

2.00

O-15

Forecast as of, month ending

M-15

A-15

M-15

J-15

A-15

S-15

O-15

Forecast as of, month ending © ChartingTHAILAND™

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

www.ChartingThailand.com

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 Oct 31st

2016, Annual % change, as of Oct 31st 2015

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

2015

India China 6.8 Vietnam 6.4 Philippines 6.3 Malaysia 5.7 Indonesia 5.4 Pakistan 4.8 Thailand Singapore South Korea Taiwan Australia US Hong Kong Euro Area Japan Russia Brazil 7.4

3.4 3.2 2.9 2.5 2.4 2.4 2.3 1.5 0.7 -2.7 -3.8

7.7 6.5 6.5 6.3 6.1 5.1 4.7 4.0 3.0 2.8 2.6 2.6 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 3.4% for 2015 and 4.0% for 2016, around the middle when compared to other major and emerging economies.

2.1 1.7 1.2 -0.3 -0.9 © ChartingTHAILAND™

Source: The Economist

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

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Headline CPI suggests deflation but it was heavily skewed by energy price Chart 3.07a – Y‐o‐Y change in CPI

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

Percent

Oct 2015, percent Veg & fruit

1.50%

1.00%

Core* 0.50%

9.0

Tobacco & alcohol

2.1

Food away from home

1.8

Recreation & Education

1.2

Prepared food at home

1.1

Medical care

1.0

Non alcoholic beverage

0.5

Apparel and footware

0.4

Latest development

Meat

0.3

Housing & furnishing

0.1

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

Rice

0.1

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.

0.00%

-0.50%

Head line -1.00%

-1.50%

May-15 Jun-15

Jul-15 Aug-15 Sep-15 Oct-15

Seasoning

-0.2

Eggs & milk

-0.2

Transport & Commu

-6.5

Energy

-15.5

Note: (*) exclude raw food and energy

Source: Bureau of Trade and Economic Indices; ChartingTHAILAND analysis

www.ChartingThailand.com

Along with Singapore, Thailand’s latest CPI is still lower than a year ago Chart 3.08 – Consumer Price Index Annual percentage change

Latest

Russia ‐ Sep

2015* 15.7

Brazil ‐ Sep

15.2

9.5

Indonesia ‐ Sep

8.9

6.8

India ‐ Sep

6.4

4.4

Malaysia ‐ Sep

5.1

2.6

Hong Kong ‐ Sep

2.0

China ‐ Sep

3.1

1.6

Pakistan ‐ Sep

1.3

Australia ‐ Q3

1.5

South Korea ‐ Sep

0.6

Philippines ‐ Sep

0.4

Japan ‐ Sep

0.0

US ‐ Sep

0.0

Vietnam ‐ Oct

0.0

Euro Area ‐ Oct

0.0

Taiwan ‐ Sep

0.3

Singapore ‐ Sep

-0.6

Thailand ‐ Oct

-0.8

Inflation in the world

2.5

1.6 3.9 1.7

Latest development Along with Singapore, Thailand’s latest CPI is still lower than a year ago.

0.8 2.4 0.7 0.3 2.5 0.1 0.1 0.2 0.8

Note: (*) The Economist Poll

Source: The Economist

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

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PPI continues to be lower than a year ago, due largely to energy price Chart 3.09a – Y‐o‐Y change in PPI

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

Percent

Oct 2015, percent

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

May-15 Jun-15

Jul-15 Aug-15 Sep-15 Oct-15

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

3.9 3.1 2.2

Producer Price Index

2.2

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.

0.7 0.5 0.5 0.2 0.0 0.0 -0.1 -0.4 -1.3

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 -2.9 -4.2 -4.9 -11.0 -26.5 © ChartingTHAILAND™

Source: Bureau of Trade and Economic Indices; ChartingTHAILAND analysis

www.ChartingThailand.com

CONTENT SUMMARY

Growth

Stability

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Bank’s loan is still growing and liquidity is slightly squeezed Chart 3.02a – Commercial Banks’ Loan THB billion 11,600 11,400 11,200

Bank’s Loan and Loan-to-deposit ratio

11,000 10,800 10,600 Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

M-o-M

Y-o-Y

+0.3%

+4.8%

Jun-15

Jul-15

Aug-15

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

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

Percent 100% 97.2% 96.4%

95.7%

96.5%

95.7%

97.3%

Jul-15

Aug-15

95.4%

94.9%

94.8%

94.5%

Jan-15

Feb-15

Mar-15

Apr-15

95%

97.1%

Bank’s loan increased only 0.3% in August 2015. Liquidity in the system was squeezed further as the Loan-to-Deposit ratio increased to 97.3%.

90% Sep-14

Oct-14

Nov-14

Dec-14

May-15

Jun-15

Source: Bank of Thailand

www.ChartingThailand.com

Gross NPL continued to rise in both absolute value and percentage of total loan in the 3Q15 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

299

312

361

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.

Chart 3.03b – Total Financial Institutions’ Gross NPLs Outstanding

Latest development

Percentage of Total Loans

Gross NPL continued to rise in 3Q15. The absolute value increased from THB 312 billion to THB 361 billion or 2.38% to 2.79% of the total loan.

7.31% 5.29%

4.85% 3.60%

07YE

08YE

09YE

10YE

2.75%

11YE

2.26%

2.16%

12YE

13YE

14YE

2.29%

2.38%

2.79%

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

Source: Bank of Thailand

www.ChartingThailand.com

Banks’ capital ratio increased in July and still remained 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%

Capital ratio of all commercial banks

15.7% 17.0%

14.8%

2015

14.0%

13.9% 13.3%

2014

12.4%

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 17.2% in August and still remained high.

15.5%

15.0%

14.5% 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

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

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

Source: Bank of Thailand

www.ChartingThailand.com

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

─

3M risk‐free interest rates Brazil

14.4

Russia

3.0

Singapore*

2.5

Australia

2.3

2.6 2.2

2.5

3.8

China

2.0

3.9

4.7

Malaysia

1.9

5.1

6.5

Vietnam

-2.8

6.4

7.1

Pakistan

5.5 15.2

8.3

India

Real interest rates

8.9

12.4

Indonesia

Expected 2015 inflation*

2.5

1.3 1.4

1.6 0.2

2.3

1.7

0.6

Philippines

1.8

South Korea

1.6

0.8

Thailand

1.5

0.8

0.7

Taiwan

0.9

Hong Kong

0.4

0.3

Japan

0.1

Euro Area

-0.1

2.4

-0.6

0.1

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%.

0.0 -0.6 -0.2

Note: (*) Applying 10-year bond for Singapore due to lack of 3-month interest rate data

Source: The Economist

Latest development

-2.7

0.3

0.1

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.

0.8 3.1

0.7

Real interest rates in the world

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SET index gained 3.4% in October when foreign sell out seemed to stop 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 Oct 28th 2015 3.4%

China (SSEB, $ terms)

22.0%

France (CAC 40) 0.6%

14.5%

Germany (DAX)

10.5%

Euro Area (FTSE Euro 100)

9.8%

Japan (Nikkei 225) -2.0%

May-15

US (NAScomp)

-2.4%

Jun-15

-4.3%

-4.0%

Jul-15

Aug-15

Sep-15

8.3%

Oct-15

7.6%

S Korea (KOSPI)

6.6%

Pakistan (KSE)

6.0%

China (SSEA)

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

4.3%

US (S&P 500)

1.5%

US (DJIA)

-0.2%

Australia (All Ord.)

-0.3%

0.0

India (BSE)

-1.7%

-20.0

UK (FTSE 100)

-2.0%

-40.0

HK (Hang Seng) Malaysia (KLSE)

-60.0

Thailand (SET)

-80.0

Taiwan (TWI)

-100.0 -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

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

Latest development SET index increased 3.4% in October when the foreign sell out seemed to stop. Along with other emerging markets, SET has declined year-to-date.

-2.7% -4.2% -5.9% -6.9%

Singapore (STI)

-9.6%

Indonesia (JSX)

Source: SET, The Economist; ChartingTHAILAND analysis

www.ChartingThailand.com

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)

1.3%

1.0%

Latest development

-0.2%

-0.5%-0.6%

-0.7% -1.0%-1.0%

-0.8%

-1.6% -1.9%

-1.9% -2.1% -2.5% -3.4% -3.8%

-3.8% -4.2%

05FY

06FY

07FY

08FY

09FY

-2.2%-2.3%

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; ChartingTHAILAND analysis

www.ChartingThailand.com

Budget deficit in the first 9 months of 2015 is almost THB 20 billion worse off than the same period last year 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

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

1,484 -50

Budget balance

-36

110 -174

-75

-100 -364

Latest development

-100

-27 -414

-267

2015

-295 -150

-1,277

-200

-1,280 -1,629

Expenditure

2014

-1,598 -1,849

-1,825

-250

-1,930 -2,489

-2,424

-2,371

Government budget balances have been in deficit in 9 of the last 10 years. The magnitude of the deficits in the past 5 years have been huge. The worst deficits in absolute term were in 2012 (calendar year), with budget deficit of 414 Billion Baht. In 2014, Budget deficit increased from 2013. Budget deficit in the first 9 months of 2015 is almost THB 20 billion worse off than the same period last year.

-300

-350

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

F M A M J

Source: Bank of Thailand; ChartingTHAILAND analysis

www.ChartingThailand.com

Budget and cash deficits in the first 9 months were in line

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

Budget and Cash balance

110 88

-21 -20

-27

-36 -45 -75

-95

-100 -96

Latest development

-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. Budget and cash deficits in the first 9 months were in line .

-174 -242 -266

-267 -295 -305

-364 -401

-414 -466

05FY

06FY

07FY

08FY

09FY

10FY

11FY

12FY

13FY

14FY

Source: Bank of Thailand; ChartingTHAILAND analysis

www.ChartingThailand.com

Thailand’s budget deficit is expected to be around 2% of GDP

Chart 4.4 – Government Budget balance as percentage of GDP 2015*, percent South Korea Hong Kong

0.3 0.0

Singapore Taiwan

-0.7 -1.0

Philippines Indonesia

-1.9 -2.0

Thailand Euro Area

-2.0

-2.6 -2.7 -2.8

India Malaysia

-3.8 -4.0

Vietnam Pakistan Brazil Japan

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.

-2.4

China Russia

-4.2 -5.1 -6.0 -6.8

Note: (*) The Economist Poll

Source: The Economist

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

-2.1

Australia US

Budget balance in the world

www.ChartingThailand.com

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

45% 40%

5.0

Public debt from State Enterprises

4.0

3.0

35% 30%

Bond to Compensate FIDF's Loss & Prefunding debt

25% 20%

2.0

15% 10%

Direct Government debt

1.0

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

2011

2012

2013

2014

Aug-15 6%

2011

2012

2013

2014

Aug-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, 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 states 40 Croatia 43 Israel 48 Uruguay 50 Pakistan 56 Brazil 63 Malaysia 67 India 71 Thailand 72 Philippines 78 Laos 80 Vietnam 93 Mexico 96 Sweden 101 Argentina 103 South Korea 105 Hong kong 108 Turkey 126 Nepal 129 Norway 133 Indonesia 137 China 147 Russia 149 Nigeria 164 Saudi 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

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

Chart 5.01 – Balance of Payment decomposition

24.6

Billion USD

24.9

17.0 6.7

10FY

31.3

11FY

12FY

6.7

13FY

14FY

15/9mo

Net service income & transfer

-8.1

+ 5.3

-4.0 -8.2

-11.8

-9.2

-19.7

1.2 -1.2 11FY

12FY

13FY

14FY

11FY

12FY

13FY

14FY

15/9mo

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

Net Capital Movement + errors and omissions

-5.0 10FY

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.

Latest development

4.9 10FY

Balance of payment decomposition

15/9mo

21.3 6.8

0.1

-7.7

10FY

11FY

12FY

13FY

-16.6

-16.0

14FY

15/9mo

Source: Bank of Thailand; ChartingTHAILAND 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 ‐ Q2

21.2%

Taiwan ‐ Q2

69.5

12.8%

South Korea ‐ Aug

72.8

6.7%

Russia ‐ Q3

104.8

4.9%

Philippines ‐ Jun

64.3

4.1%

11.7

China ‐ Q2

3.1%

Hong Kong ‐ Q2

2.8%

Japan ‐ Aug

2.8%

Euro Area ‐ Aug

2.8%

Vietnam ‐ 2014

2.7%

9.1

Malaysia ‐ Q2

2.5%

8.8

Thailand ‐ Q2

2.4%

Pakistan ‐ Q2

-0.7%

India ‐ Q2

-1.1%

Indonesia ‐ Q2

-2.5%

US ‐ Q2

-2.5%

Australia ‐ Q2 Brazil ‐ Sep

-3.7% -4.2%

Current Account Balance

287.8 7.4 118.8 353.4

24.4 -2.6

Latest development 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 -429.0 -47.4 -79.3

Note: (*) The Economist Poll

Source: The Economist

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

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External debt decreased slightly so far in 2015

Chart 5.10a – External Debt Level Billion USD External Debt

69.0

74.4

76.1

75.3

06YE

07YE

08YE

09YE

100.6

104.3

10YE

11YE

130.7

139.9

140.7

136.6

12YE

13YE

14YE

15/2Q

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

38.5%

06YE

35.4%

07YE

31.4%

28.8%

08YE

09YE

35.2%

33.7%

10YE

11YE

38.0%

38.2%

12YE

13YE

34.5%

33.2%

14YE

15/2Q

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 16%

20%

18%

17% 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 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%

11YE

80%

12YE

82%

13YE

82%

14YE

83%

15/2Q

55%

56%

57%

60%

11YE

12YE

13YE

14YE

15/2Q

Source: Bank of Thailand

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Big surge in external debt payment in 2Q15

Chart 5.12a – International reserves

Chart 5.12b – Debt service ratio*

As % of ST external debt

Percent External Debt repayment capability

370%

8.1%

340% 312% 279%

277%

293%

Latest development

4.7%

4.7% 4.2%

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%

3.4%

10YE

11YE

12YE

13YE

14YE

15/2Q

10FY

11FY

12FY

13FY

14FY

15/2Q

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

Source: Bank of Thailand; ChartingTHAILAND analysis

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).

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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

168.8

2010

2011

2012

2013

2014

Sep-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

9.7

2013

2014

Sep-15

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

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 9.7 months, which is still considered excessive.

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THB was stable in October

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 Oct 30th 2015 MYR ‐ 8.429 114.0

Baht appreciates

MXN ‐ 2.15

13.0

112.0

AUD ‐ 25.6645

12.8

110.0

EUR ‐ 39.4362

4.6

108.0

IDR ‐ 2.7675

4.0

M‐o‐M

‐0.0%

106.0

‐0.4%

Baht depreciates Oct-14

Jan-15

Apr-15

Jul-15

JPY ‐ 29.7506

0.5

SGD ‐ 25.6677 104.0

Y‐o‐Y

19.4

0.0

KRW ‐ 0.0313

-1.0

102.0

TWD ‐ 1.0991

-2.3

100.0 Oct-15

INR ‐ 0.5772

-2.4

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 $

PHP ‐ 0.7737

-4.5

GBP ‐ 54.9621

-4.8

CNY ‐ 5.6739

-5.3

VND ‐ 0.0016 USD ‐ 35.7589

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 Nominal Effective Exchange Rate was unchanged in October. Over the last 12 months THB depreciated 0.4% against key currencies. USD has appreciated the most against THB during the period.

-6.3 -8.7 Baht depreciates

Source: Bank of Thailand; ChartingTHAILAND analysis

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