Monthly Brief on Thailand's economy by Ake Saroj

สรุปสภาวะเศรษฐกิจไทย

Monthly Economic Brief for Executives

31 July 2012

Charting Thailand’s Economy®

| Monthly Economic Brief for Executives |

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About Charting Thailand’s Economy

Different ways to utilize us

Editor’s talk

Charting Thailand’s Economy® is a subscription‐only magazine providing monthly economic brief for executives.

For busy business people, this is an easy and very objective way of keeping up with the economy. If you are really busy, we also provide executive summary. You might also use this as your macro economic ‘desk reference’.

Dear readers,

We believe that following and understanding the economy should be exhaustive yet easy for everyone. Yet in reality it is so hard to make sense of all the information (news, opinions, etc.) presented to us. This is where we come in and offer an easy way to follow the Thai economy. Our report includes test results (economic indicators) and summary. All the data used in our charts are from official sources, but we try to present them in a way that make sense and easy to understand. We hope you like us, and if you do and want to learn more about the economy, visit our website at www.ChartingThailandEconomy.com

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For students and self‐learners, this is a great educational tool for you to further your understandings of the economy.

Charting Thailand’s Economy belongs to Chart Maker Co., Ltd.

We have been in e‐magazine format for 6 months already and I am proud to announce that we are starting the paper format with this issue. I also think that it’s a good time to recap why we exist at all, starting from our mission and the methodology that we believe will save you time in following the economy. For our regular check on the health of the Thai economy, June saw another set back in production sectors especially in Manufacturing. Private consumption and investment, which grew impressively so far this year, also cooled down. Export situation has not improved. Looking forward, Business and Industrial confidences are less optimistic. Concerns over budget and balance of payment deficits are still there. We hope you enjoy our new way of helping you making sense of all economic data. See you again next month.

Saroj Khongkhaprasertsin Managing Editor Editor@chartingthailandeconomy.com

Registered No. 0135555002491 Address: 19 Moo 11, Lamlukka rd., Lamlukka sub‐district , Lamlukka district Pathumthani 12150, Thailand Tel: +662 987 0919, Fax: +662 987 0917, Email: admin@chartingthailandeconomy.com

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Our way to save you time in following the economy Current problems

Our way to solve them

Understanding

• Many experts’ insights, not sure whose to believe

• Produce your own insights from a good understanding

Interpretations

• Explanations here and there

• Exhaustive and fact-based explanations

Information

• Information over load

• Only those that matter are selected • Visual graphic presentation

Data

• Multiple sources

• One source, one stop

OVERVIEW OF THAILAND’S ECONOMIC INDICATORS

Monthly Health check On the economy

GDP & Real sector

Wealth distribution

• Economic structure • Growth projections • Historical growth • Production side indicators • Expenditure side indicators • Leading indicators

• Income distribution (GINI) • Poverty line • Per Capita income • Unemployment • Household wealth

Monetary sector • Interest rates • Bank’s loan and deposit • Bank’s capital ratio • Bank’s NPL • Stock markets • Inflation

Fiscal sector • Budget balance • Public debt

External sector • Balance of Payment • Current Account • Trade balance • Export • Import • External debt • International reserves • Foreign Direct Investment • Exchange rates • Tourists 4

Why we call this

A Monthly Health check on the economy How is my daughter?

How is the economy?

She recovered quite well from the accident and will continue her development this year. Medicines and supplementary food worked well.

The economy recovered strongly and quicker than expected. Monetary and Fiscal policy have been promoting growth well.

She’s still growing disproportionately compared to other kids.

Income distribution, although improving, is still below international standard.

She’s quite healthy, only a little concern on her high sugar level.

Overall Economic stability is good. Low inflation, stable exchange rate, but budget deficit is still worrying. 5

OUR ONLY MISSION:

Saving you time, in following the economy “Charting Thailand's Economy provides a complete 360 degree viewpoint of the Thai economy and is extremely easy to follow. I would highly recommend it to anyone interested in Thailand's economy” Mr Gancanapol Van Compernolle Director, L.V. Technology Plc.

"Simple, Understandable, & Practical" Mr Sivakorn Srisuwan CEO, Pan Asia Insurance Brokers Co., Ltd.

"It's exactly what I'm looking for to update on Thai economy in a few minutes. Really save my time.“ Ms Pikun Phitya‐isarakul Fund Manager, Phillips Securities (Thailand) Plc. 6

Executive summary Growth Real GDP in 1Q/2012, grew 0.3% y‐o‐y or 12.6% q‐o‐q despite manufacturing having not fully recovered from the flood damage. The strong growth was driven mainly by the service sector on the production side and Investment on the expenditure side. Another set back in Real sector’s recovery in June especially for Manufacturing production. Private consumption and Private Investment also cooled down but the current level is still higher than a year ago. Property sector shows signs of improvement . Export situation has not got better as there is only 0.5% growth in the first half of 2012 while Import grew 12.7%. FDI, on the other hand, grew 112% in the first 5 months of 2012 compared to the same period last year. BOI’s net application grew 66% in the first half of 2012, with Japan as the biggest source. Lastly a good sign from tourism, a 8% increase in tourist arrivals in the first half of 2012. Looking forward, both Fiscal and Monetary policies are pro‐growth. Government spending in the first half of 2012 has increased substantially with compensation for flood victims and new investments among the extra items.

Policy rate is still at 3%, a rather low level. Bank’s loan continued to increase in May, reacting positively to the policy rate cuts earlier this year. Both Business and Industrial sentiments dropped slightly in June, but their respective levels are still considered healthy. Consumers are less pessimistic. The consensus projection is still between 5.7‐ 6.0% for 2012 and between 4.7‐5.8% for 2013 Employment and wealth distribution Thailand’ unemployment rate decreased slightly in May 2012 to 0.92%, the lowest among major and emerging economies. Thailand’s per capita income was at USD 4,420 in 2011, ranked83th in the world. An average Thai is slightly poorer than an average Chinese but more than three times richer than an average Indian. Income distribution in Thailand is among the worst in Asia but the trend has been slightly improving. Absolute Poverty reduction seems to be working over the past six years as number of poor people decreasing and current level is low by international standard.

Stability Price stability is maintained with Head line inflation at 2.8% and Core inflation at 1.8% in July. This is very low by historical and international standards. Banking system is quite healthy. Bank’s capital ratio is at 15.1% in May. Total system’s NPL decreased to 2.55% in 2Q12. Fiscal stability is still worrying as budget deficits in the first half of 2012 is THB 174 billion worse off than the same period last year. Budget deficit for Thailand is still expected to be ‐2.3% of GDP. Public debt as percentage of GDP increased slightly this year due mainly to direct government debt. Majority of the public debt is domestic based. Thai Baht depreciated slightly against a basket of key currencies in July . Balance of Payment deficit in the first half of 2012 due largely to deteriorating Trade Balance. External debt increased slightly this year but capability to repay is not a concern as debt service ratio continued to decline and international reserves is at healthy level.

www.ChartingThailandEconomy.com

CONTENT

Executive summary Page

Growth

Income distribution

Stability

9 12

• Thailand’s unemployment rate decreased slightly in May 2012 to 0.92%, the lowest among major and emerging economies. • Thailand’s Income distribution is among the worst in Asia but has been improving in the past 5 years. • Absolute Poverty reduction seems to be working over the past six years as number of poor people decreasing and current level is low by international standard.

• Price stability is maintained with Head line inflation at 2.8% and Core inflation at 1.8% in July. • Banking system is quite healthy. Bank’s capital ratio is at 15.1% in May. Total system’s NPL decreased to 2.55% in 2Q12. • Fiscal stability is still worrying as budget deficits in the first half of 2012 is THB 174 billion worse off than the same period last year. Public debt is increasing but not too worrying just yet. • Balance of Payment deficit is also worrying. THB depreciated slightly in July. External debt has been increasing but still not dangerous.

18 24 35 39 42

48 52

61 65 71

Thailand waking up from the flood crisis

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

7.8% 7.1% 6.3%

CAGR* 2000‐2011 = 3.9%

5.3% 4.8%

4.6%

2.2%

5.1% 5.0%

2.5% 0.1%

0.3%

-2.3%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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

1Q12 2Q12 3Q12 4Q12

9 www.ChartingThailandEconomy.com

Trading, Transport, Utilities among others have contributed positively to 1Q12 GDP growth Chart 1.06a – Real growth by sector, 1Q12

Chart 1.06b – Sectoral contributions, 1Q12

Year‐on‐Year percentage change

Contributions to total Real GDP growth

GDP

0.3

Utilities

9.1

Financial

6.5

Hotel&Res

5.2

0.3

Trading

0.6

Transport

0.4

Utilities

0.3

Trading

4.1

Agriculture

0.3

Agriculture

3.9

Financial

0.3

Transport

3.8

Hotel&Res

0.2

Health&Social

2.5

Education

0.1

Education

2.3

Health&Social

0.0

Construction

0.8

PublicAdmin

0.0

PublicAdmin

0.7

Construction

0.0

Other social

-0.3

Private HH RealEstate Mining Fishing

-1.0 -1.3 -2.0 -2.4

Manufacture-4.2 Source: NESDB; CTE analysis

Private HH

0.0

Other social

0.0

Fishing

0.0

Mining

0.0

RealEstate

0.0

Manufacture -1.7

10 www.ChartingThailandEconomy.com

Investment and Private consumption have been key growth engines in 1Q12 Chart 1.08a – Real growth by expenditure, 1Q12 Chart 1.08b – Expenditure Contributions, 1Q12 Year‐on‐Year percentage change GDP

GDP

0.3

20.5

‐M

4.5

Contributions to total Real GDP growth

2.7

-1.6

-3.2

0.3

4.0

1.3

-0.1

Discrpncy

-0.2

-2.3

‐M

-2.4

11 Source: NESDB; CTE analysis

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

• Thai economy recovered faster than expected with 1Q12 GDP growth of 0.3% Y-o-Y. • Another set back in Real sector’s recovery in June especially for Manufacturing production. • Private consumption and Private Investment also cooled down but the current level is still higher than a year ago. Property sector shows signs of improvement. • High FDI and tourist growth, but Export situation has not improved. • Both Fiscal and Monetary policies are pro-growth. • Latest round of surveys show Businesses and Industries being less optimistic, and Consumers less pessimistic. • The consensus projection is still between 5.7-6.0% for 2012 and between 4.7-5.8% for 2013 • Thailand’s unemployment rate decreased slightly in May 2012 to 0.92%, the lowest among major and emerging economies. • Thailand’s Income distribution is among the worst in Asia but has been improving in the past 5 years. • Absolute Poverty reduction seems to be working over the past six years as number of poor people decreasing and current level is low by international standard. • Price stability is maintained with Head line inflation at 2.8% and Core inflation at 1.8% in July. • Banking system is quite healthy. Bank’s capital ratio is at 15.1% in May. Total system’s NPL decreased to 2.55% in 2Q12. • Fiscal stability is still worrying as budget deficits in the first half of 2012 is THB 174 billion worse off than the same period last year. Public debt is increasing but not too worrying just yet. • Balance of Payment deficit is also worrying. THB depreciated slightly in July. External debt has been increasing but still not dangerous.

Agriculture production dropped in June from the month before but increased strongly compared to last year Chart 1.10 – Agriculture production index (2005=100)

Monthly Average 250.0

CAGR

2.5%

116.0

200.0

M‐o‐M ‐5.8%

113.1 111.8

112.0

110.2

Y‐o‐Y 7.0%

150.0

106.7

2012 100.0

2011 100.0 50.0

0.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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

13 Source: Office of Agricultural Economics, Ministry of Agriculture and Cooperatives

www.ChartingThailandEconomy.com

Big set back for MPI in June

Chart 1.11 – Manufacturing Production Index (2000=100)

Monthly Average 250.0

CAGR

5.1% 190.1 172.4 159.5

179.1 166.3

172.6

200.0

2012

149.9 137.6

150.0

123.9 109.9 100.0

M‐o‐M ‐3.5%

2011

Y‐o‐Y

‐9.6% 50.0

0.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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

14 Source: The Office of Industrial Economics

www.ChartingThailandEconomy.com

Set back from prior month in most sector MPIs

Chart 1.12a – Y‐on‐Y change in MPI by sector

Chart 1.12b – M‐on‐M change in MPI by sector

June 2012, percent

Vehicles

40.3

Tobacco

16.7

Electrical

7.4

15.0

Basic Mat

-3.6

12.4

Wood products

2.7

10.0

Machineries

6.0

Chemical

5.0

Mineral

4.4

Food & Bev

4.3

Furniture

1.5

Precision instru

0.7

Petroleum

-1.1

Paper

-2.4

Rubber&Plastic

-3.1

Transport Equip

-6.9 -3.4 -7.2 -4.9 -9.5 2.2 -0.6 -8.4 0.2 -0.6

-8.9

Metal products

-12.1

Apparel

-16.5

Textiles

-16.6

Leather OA

0.7

-2.5 -13.7 -0.3 4.7

-23.3

-2.0

-31.4

Electronic -39.8 Source: The Office of Industrial Economics; CTE analysis

-1.6 -10.4

15 www.ChartingThailandEconomy.com

Slight drop in Capacity utilization rate with some industries running over normal capacity Chart 1.13a – Overall Capacity Utilization Rate

Chart 1.13b – Capacity utilization rate by sector

Percent

June 2012, percent 74.3

72.4

67.2 62.4

61.1

58.3

Jan-12

Feb-12

Mar-12

Apr-12

May-12 Jun-12

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

139.8 113.8 107.1 90.8 84.7 79.0 72.6 72.5 71.0 69.7 65.9 62.6 58.0 55.3 49.2 44.8 43.5 41.5 35.3 32.5 20.7

16 Source: The Office of Industrial Economics

www.ChartingThailandEconomy.com

Thailand ranks lowest in the latest round industrial production growth Chart 1.14 – Manufacturing Production Index Latest, percent change on year ago China ‐ Jun

9.5

Taiwan ‐ Feb

8.4

Singapore ‐ Jun

7.6

Malaysia ‐ May

7.6

Japan ‐ May

6.0

US ‐ Jun

4.7

Australia ‐ Q1

4.7

Indonesia ‐ May

3.0

South Korea ‐ May

2.6

India ‐ May

2.4

Russia ‐ Jun

2.0

Hong Kong ‐ Q1

-1.7

Pakistan ‐ Apr

-2.0

Euro Area ‐ May

-2.6

Brazil ‐ May Thailand ‐ Jun

-4.3 -9.6

17 Source: The Economist

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Despite a little set back compared to last month, Private consumptions continued its impressive growth from last year Chart 1.15 – Composite Private Consumption Index* (2000=100)

Monthly Average 155.0

CAGR

M‐o‐M ‐2.5%

3.1% 150.0

118.1 105.9

126.0 121.9 124.1

130.5

134.1

138.9

2012

127.1 145.0

Y‐o‐Y

4.4%

111.4 140.0

2011

135.0

130.0

125.0 02-Avg 03-Avg 04-Avg 05-Avg 06-Avg 07-Avg 08-Avg 09-Avg 10-Avg 11-Avg

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

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

19 www.ChartingThailandEconomy.com

Strong recovery in consumptions across the board so far this year despite a little set back in June Chart 1.16a – Y‐on‐Y change

Chart 1.16b – M‐on‐M change

First 6 months of 2012 vs 2011, percent

Jun vs May 2012, percent

Commercial Car (Unit)

46.2

Passenger Car (Unit)

4.7

30.5

NGV (kg.)

19.0

LPG (litre)

17.7

HH electricity (kilowatt/hour)

3.9 0.0 1.0

14.5

Real VAT (2000 prices, baht)

-5.7

12.1

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

7.8

Diesel (litre)

7.1

Motocycle (Unit)

2.6

Benzene & Gasohol (litre)

1.5

-6.3 -18.4 5.6 -13.6 1.6

20 Source: Bank of Thailand; CTE analysis

www.ChartingThailandEconomy.com

Private Investment is stronger than ever

Chart 1.17 – Private Investment Index (2000=100)

Monthly Average 300.0

CAGR

250.0

6.1%

2012

202.2 169.6 172.2 171.9 154.4

186.4

178.0

2011 200.0

156.6 150.0

132.4

M‐o‐M 0.0%

118.3 100.0

Y‐o‐Y

18.3%

50.0

0.0 02-Avg 03-Avg 04-Avg 05-Avg 06-Avg 07-Avg 08-Avg 09-Avg 10-Avg 11-Avg

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

21 Source: Bank of Thailand

www.ChartingThailandEconomy.com

Impressive Private Investment growth across the board in the first 6 months of this year Chart 1.18a – Y‐on‐Y change

Chart 1.18b – M‐on‐M change

First 6 months of 2012 vs 2011, percent

Jun vs May 2012, percent

Domestic commercial car sales (unit)

25.3

Import of Capital Goods (2000 prices, Baht)

Construction Area permitted (sqm)

19.6

6.2

Domestic Machinery sales* (2000 prices, Baht)

4.6

Domestic Cement sales (ton)

4.5

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

2.9

-1.2

-1.7

7.1

3.3

22 www.ChartingThailandEconomy.com

Improvements in Property indicators in May

Chart 1.19a – Y‐on‐Y change

Chart 1.19b – M‐on‐M change

First 5 months of 2012 vs 2011, percent

May vs Apr 2012, percent

Condo unit registered

66.5

New housing unit

Value of land transaction

Constr. Area in municipal

12.4

26.8

-62.7

-0.6

-11.8

33.8

-17.0

23 Source: Bank of Thailand; CTE analysis

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

FDI grows 112% in the first 5 months of 2012

Chart 5.14 – Foreign Direct Investment Million USD

Monthly cumulative FDI 12,000

11,331

9,690

9,460

10,000

9,511

8,547

8,000

8,048

6,000

2012

4,000

4,853

2011 2,000

-2,000

05FY

06FY

07FY

08FY

09FY

10FY

11FY

F M A M J

A S O N D

25 Source: BOT

www.ChartingThailandEconomy.com

BOI’s net application for the first 6 months of 2012 grew 66%

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

396 351 297

278 236 167

08FY

09FY

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

Source: Board of Investment

10FY

11FY

2011/6M

2012/6M

26 www.ChartingThailandEconomy.com

Japan has been the biggest source of FDI for Thailand

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

Others

20%

17%

USA ANIEs

3% 6%

10%

15%

12%

ASEAN

3% 6% 6%

17% 27% 3% 6% 2% 7% 8%

12%

Europe

23%

17%

23% 27%

Japan

11% 0%

63% 44%

49%

35% 22%

08FY Note: (*) Foreign investment (foreign equity>=10%) (**) ANIEs: Taiwan, Hong Kong, South Korea

Source: Board of Investment; CTE analysis

09FY

10FY

11FY

2012/6M 27 www.ChartingThailandEconomy.com

Tourist arrivals increased 8% y‐o‐y for the first 6 months of 2012

Chart 5.18 – International Tourist Arrivals Million visits

Monthly cumulative 25.0

19.1

CAGR

6.5% 15.9 13.8 11.7

14.5

14.6

20.0

14.1 15.0

11.5

10.8 10.0 10.0

2012

2011

5.0

0.0

02FY 03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY

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

28 Source: Department of Tourism

www.ChartingThailandEconomy.com

More European tourists so far this year

Chart 5.19 – International Tourist Arrivals breakdown by country of nationality Percent of total

Rest of world

14.0

14.3

15.3

15.6

15.0

14.2

Americas

6.4

6.2

6.0

5.3

5.0

5.2

Europe

27.0

27.3

28.7

27.9

25.9

28.3

East Asia

52.6

52.1

50.0

51.2

54.1

52.3

07FY

08FY

09FY

10FY

11FY

2012/6M 29

Source: Department of Tourism; CTE analysis

www.ChartingThailandEconomy.com

Worsened trade balance so far in 2012

Export**

Chart 5.03 – Trade balance* decomposition Billion Baht

6,897 5,302

5,851

6,176 5,195 3,466

593 432 320

07FY

─

08FY

09FY

10FY

12/6MO

Import***

-77

-111

11FY

6,974 5,962 -363

4,870

5,857 4,602 3,829

07FY

08FY

09FY

10FY

11FY

12/6MO

07FY

08FY

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; CTE analysis

09FY

10FY

11FY

12/6MO

30 www.ChartingThailandEconomy.com

Slow growth in Export after 6 months in 2012 Chart 5.05a – YTD annual change in Export in Baht Chart 5.05b – Sectoral contributions First 6 months of 2012 vs 2011, percent Total export Re‐exports Petroleum Mining Automotive Forestry Toiletries Agro products Photo instru Machinery Jewellery Aircrafts Fishery Chemicals Electronics Metal -0.5 Electrical -0.8 Petro‐chemical -1.2 Furniture -3.8 Apparels -13.4 Optical instru -15.1 Footware -16.5 Other export -20.1 Agriculture -22.4 Other manufacturing -39.4 Source: Bank of Thailand; CTE analysis

Contributions to total export growth

0.5 77.7 39.5 35.4 19.3 17.9 14.0 10.7 10.5 7.5 6.6 5.6 4.8 4.8 0.2

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

0.5 2.0 1.7 1.3 0.5 0.3 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1 -0.2 -0.5 -0.7 -2.2 -2.4

31 www.ChartingThailandEconomy.com

Middle East, ASEAN and NAFTA are the best performing export markets so far this year Chart 5.07a – Export by country

Chart 5.07b – Change in Export

Percent of total export in Baht term

First 6 months of 2012 vs those of 2011

฿ 5.9

฿ 5.2

฿ 6.2

Middle East

5.4

5.7

4.9

4.5

13.2

11.9

11.2

10.6

Japan

11.3

10.3

10.4

10.5

NAFTA

12.2

11.6

10.9

12.7

Rest of the world

16.6

18.4

East Asia ex‐Japan

18.3

20.1

100% =

18.0

21.2

฿ 6.9 (Trillion) Middle East

10.9%

ASEAN

10.9%

NAFTA

16.9

22.9

Rest of the world

-1.3%

Japan

-1.7%

East Asia ex Japan

ASEAN

22.5

21.3

22.7

6.4%

-7.4%

23.7

EU -10.5% 08FY

09FY

10FY

11FY 32

Source: Bank of Thailand; CTE analysis

www.ChartingThailandEconomy.com

Capital goods has contributed most to import growth so far this year Chart 5.09a – YTD annual change in Import in Baht Chart 5.09b – Sectoral contributions First 6 months of 2012 vs 2011, percent

Total import

Contributions to total import growth

Total import

12.7

Others

25.9

Capital goods

23.3

Intermediate ‐ Fuel

21.0

Consumer goods

Intermediate ‐ Non fuel

16.8

-0.3

12.7

Capital goods

5.1

Intermediate ‐ Fuel

3.9

Others

2.6

Consumer goods

Intermediate ‐ Non fuel

1.2

-0.1

33 Source: Bank of Thailand; CTE analysis

www.ChartingThailandEconomy.com

Capital goods have gained its importance in overall import so far this year Chart 5.08 – Import by economic classification Percent of total import in Baht term ฿ 4.9

฿ 6.0

฿ 4.6

฿ 5.8

฿ 7.0

฿ 3.8

Others

6.7

8.0

7.8

10.2

12.4

11.1

Capital goods

20.4

19.3

22.3

20.9

21.3

23.8

100% =

Intermediate – Non‐Fuel

47.5

44.8

43.0

44.0

40.0

37.6

Intermediate ‐ Fuel

18.4

20.7

18.6

17.4

18.8

19.9

Consumer goods

7.0

7.1

8.3

7.5

7.6

07FY

08FY

09FY

10FY

11FY

12/6MO

(Trillion)

34 Source: Bank of Thailand; CTE analysis

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Policy rate was held at 3.0% in July

Chart 3.01a – BOT’s policy rate

Chart 3.01b – Inter bank overnight rate 3.6% 3.5% 3.4% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8% 2.7% Jul-12

Aug-11

Chart 3.01c – Saving deposit rate

Jul-11

Chart 3.01d – Commercial bank MLR 1.0%

Max

0.9% 0.8%

Min

7.5%

6.0%

0.5%

5.5%

0.4% 0.3% Jun-12

8.0%

Min 7.0% 6.5%

0.7% 0.6%

Jul-11

3.6% 3.5% 3.4% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8% 2.7% Jun-12

Jul-11

5.0% Jun-12

36 Source: Bank of Thailand

www.ChartingThailandEconomy.com

Bank’s loan continued to increase as well as the L/D ratio Chart 3.02a – Commercial Banks’ Loan THB billion 9,000 8,500

M‐o‐M 1.2%

8,000

Y‐o‐Y

7,500

14.6%

7,000 Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

89.5%

90.2%

Apr-12

May-12

91.7%

92.7%

Chart 3.02b – Commercial Banks’ Loan/Deposit* ratio Percent 100% 95% 90%

88.9%

89.6%

86.7%

87.5%

Jul-11

Aug-11 Sep-11

88.7%

89.3%

89.8%

89.5%

85% 80% 75% Jun-11

Oct-11 Nov-11 Dec-11 Jan-12

Feb-12 Mar-12

Apr-12 May-12

37 Source: Bank of Thailand

www.ChartingThailandEconomy.com

22% increase in fiscal expenditure in the first half of 2012 compared to the same period last year Chart – Monthly cumulative Fiscal expenditure Billion Baht 2500

2000

1500

2012

2011

1000

500

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

38 Source: Bank of Thailand; CTE analysis

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Drops in business confidences in June

Chart 1.21a – Business Sentiment Index* 100

Chart 1.21b – Thai Industries Sentiment Index** 200

Better

50.8 50

Better 52.7

55.5

53.8 47.7

51.5

99.6

102.1

104.0

106.0

102.7

100

Worse

100.9

Worse

0 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12

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

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12

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

40 Source: Bank of Thailand, The Federation of Thai Industries

www.ChartingThailandEconomy.com

Improving consumer confidence in June

Chart 1.20a – Consumer Confidence Index 200

Better On future income 100

On job Overall

Worse

0 Jul-11

Aug-11 Sep-11

Oct-11

Nov-11 Dec-11

Jan-12

Feb-12

Note: (*) The index ranges from 0 to 200 100 means consumer confidence is equal to those of the prior month Over 100 means consumer confidence is better than those of the prior month Under 100 means consumer confidence is worse than those of the prior month Source: The Center for Economic and Business Forecasting, UTCC

Mar-12

Apr-12 May-12 Jun-12

41 www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

No change in GDP growth projection consensus

Chart 1.03a – Real GDP growth projections

Chart 1.03b – Real GDP growth projections

For 2012, Annual percentage change

For 2013, Annual percentage change 7.00

NESDB

The Economist poll 6.00

7.00

BOT

6.00

BOT FPO

5.00

4.00

5.00

The Economist poll

3.00

2.00

1.00

0.00 Feb-12 Mar-12 Apr-12 May-12 Jun-12

4.00

Jul-12

Forecast as of, month ending

0.00 Feb-12 Mar-12 Apr-12 May-12 Jun-12

Jul-12

Forecast as of, month ending 43

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

www.ChartingThailandEconomy.com

Thailand’s growth for 2012 is expected to be behind only China and India Chart 1.04a – Real GDP growth projections

Chart 1.04b – Real GDP growth projections

2012, Annual % change, as of July 28th

2013, Annual % change, as of July 28th 2012

2012

China

8.2

India

6.6

Thailand

6.0

Indonesia

5.9

Malaysia

6.5 5.4 3.3

3.8

Australia

3.9

3.3

Singapore

3.1

South Korea

3.0

Taiwan

3.2 4.2 4.0

2.8

4.8

2.6

4.6

2.3

2.1

Brazil

2.0

Euro Area -0.4

4.7

4.2

Russia

Japan

7.4

4.4

Pakistan

Hong Kong

8.5

1.5 2.1 4.2 0.4 44

Source: The Economist

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Unemployment dropped slightly in May

Chart 2.7 – Unemployment rate Percent 2.4

2.2

2.1

1.8 1.5

1.4

1.5

1.4

1.0 0.7

02-Avg

03-Avg

04-Avg

0.68

05-Avg

06-Avg

0.82

0.75

09-Avg

0.81

0.56

0.52

Jul-11

08-Avg

0.66

10-Avg

11-Avg

0.97

0.92

Apr-12

May-12

0.73

0.43

0.42

Jun-11

07-Avg

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

46 Source: National Statistical Office, Bank of Thailand

www.ChartingThailandEconomy.com

Thailand’s unemployment rate is lowest comparing to other leading economies Chart 2.8 – Unemployment rate Latest, percent Thailand ‐ May Singapore ‐ Q1 Malaysia ‐ May

0.9 2.1 3.0

South Korea ‐ Jun

3.2

Hong Kong ‐ Jun

3.2

China ‐ Q2 Taiwan ‐ Jun Japan ‐ May Australia ‐ Jun Russia ‐ Jun Brazil ‐ May Pakistan ‐ 2011 Indonesia ‐ Q1 US ‐ Jun India ‐ 2011 Euro Area ‐ May

4.1 4.2 4.4 5.2 5.4 5.8 6.0 6.3 8.2 9.8 11.1

47 Source: The Economist

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Slight improvement in Thailand’s income distribution since 2007

Chart 2.1 – Thailand’s GINI coefficient

0.520

1994

0.513

1996

0.507

1998

0.522

2000

0.507

0.493

2002

2004

0.515

2006

0.499

2007

0.485

2009

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

Source: National Statistics Office, NESDB

www.ChartingThailandEconomy.com

Not much has changed for income (in)equality in Thailand

Chart 2.2 – Quintile by income Percent of total income

Top 20% Bottom 20%

11.9

13.3

14.9

14.1

13.5

13.1

14.6

13.2

12.1

13.9

12.5

11.3

Top 20%

54.4

57.0

59.0

57.2

56.5

56.1

57.5

55.9

54.9

56.1

54.9

54.2

Second 20%

20.6

19.5

19.7

19.9

19.8

20.1

20.2

20.0

20.2

20.1

18.9

Third 20%

12.4

11.7

11.1

11.7

11.8

12.0

11.5

12.1

12.4

12.1

12.4

12.6

Forth 20%

8.1

7.5

7.4

7.6

7.8

8.0

7.7

8.0

8.4

4.6

4.3

4.1

4.2

4.3

7.3 4.0

7.7

Bottom 20%

7.1 4.0

4.2

4.5

4.0

4.4

4.8

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2007

2009 50

Source: National Statistics Office, NESDB

www.ChartingThailandEconomy.com

Data from World Bank suggests that income equality problem in Thailand is not as bad as in Malaysia or China Chart 2.3 – Income equality in the world Ratio of the share of national income going to the richest 20% to the share of the poorest 20% Latest, selected countries Honduras Bolivia Comoros South Africa Namibia Brazil Colombia Guatemala Seychelles Central African Republic Paraguay Panama Zambia Costa Rica El Salvador Swaziland Chile Peru Qatar Ecuador Nigeria Venezuela, RB Mexico Malaysia Dominican Republic

29.7 27.8 26.7 25.3 21.8 20.6 20.1 19.6 18.8 18.0 17.3 17.1 16.6 14.5 14.3 14.0 13.5 13.5 13.3 12.5 12.2 11.5 11.3 11.3 11.3

Source: The World Bank; CTE analysis

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

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

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Poverty reduction, according to figures from NESDB, seems to have been working over the past 7 years Chart 2.4a – Thailand Poverty Line

Chart 2.4b – Number of poor people

Baht/ month/ person

Million 1,678 1,579

1,386

1,586

6.10 5.40

5.80

5.30

5.08

2009

2010

8.1%

7.8%

2009

2010

1,443

2006

2007

2008

Chart 2.4c – Poor people Percentage of total population 9.6%

2006

2007

2008

2009

2010

2006

8.5%

9.0%

2007

2008

53 Source: NESDB

www.ChartingThailandEconomy.com

Many countries in Asia and especially ASEAN, still have majority of their populations earning less than $2.00 a day Chart 2.5 – Poverty in the world, selected countries Poverty headcount ratio at $2 a day (PPP) (% of population), Latest Congo, Dem. Rep.

95.2

Madagascar

92.6

Nigeria

84.5

Egypt, Arab Rep. Venezuela, RB

12.9

Peru

12.7

Ethiopia

77.6

Brazil

Bangladesh

76.5

Iran, Islamic Rep.

Timor‐Leste

72.8

India

68.7

Lao PDR

66.0

Pakistan

60.2

Nepal

57.3

Cambodia

53.3

Indonesia

46.1

Vietnam

43.4

Philippines

41.5

South Africa

31.3

15.4

10.8 8.0

Mexico Thailand Turkey

5.2 4.6 4.2

Chile

2.7

Malaysia

2.3

Argentina

1.9

Romania

1.7

Bulgaria

0.4

Hungary

0.4

Montenegro

0.3

China

29.8

Poland

0.2

Bhutan

29.8

Slovak Republic

0.1

Sri Lanka

29.1

Slovenia

0.1

Croatia

0.1

Russian Federation

0.1

Iraq Colombia

21.4 15.8

Source: The World Bank

www.ChartingThailandEconomy.com

An average Thai is slightly poorer than an average Chinese but more than three times richer than an average Indian Chart 2.6 – GNI per capita, selected countries 2011, Atlas method (current US$) Norway Qatar Luxembourg Switzerland Denmark Sweden Netherlands United States Finland Austria Belgium Canada Japan Germany Singapore France United Arab Emirates Ireland United Kingdom Italy Hong Kong SAR, China Iceland Spain Israel Greece Source: The World Bank

Rank

Rank (from 166)

88,890 1 80,440 2 78,130 3 76,380 4 5 60,390 6 53,230 7 49,730 8 48,450 9 48,420 48,300 10 46,160 11 12 45,560 13 45,180 14 43,980 15 42,930 16 42,420 17 40,760 18 38,580 19 37,780 20 35,330 21 35,160 22 35,020 23 30,990 24 28,930 25 25,030

Czech Republic Hungary Brazil Turkey Argentina Mexico Malaysia South Africa Colombia China Thailand Ecuador Ukraine Indonesia Iraq Egypt, Arab Rep. Sri Lanka Philippines Bhutan India Nigeria Vietnam Lao PDR Cambodia Bangladesh

18,520 12,730 10,720 10,410 9,740 9,240 8,420 6,960 6,110 4,930 4,420 4,140 3,120 2,940 2,640 2,600 2,580 2,210 2,070 1,410 1,200 1,260 1,130 830 770

29 36 46 47 49 51 53 65 69 78 83 85 100 103 108 109 110 113 115 122 124 127 130 139 142

www.ChartingThailandEconomy.com

Increasing trend in household income, expenditure and debt, but debt service year has reduced from the recent peak in 2004 Chart 2.9a – Monthly income per household

Chart 2.9c – Debt per household

Average, Baht

Average, Baht 23,544 17,787

18,660

2006

2007

20,903

104,571

116,585

116,681

2006

2007

134,699

136,562

2009

2011

14,963

2004

2009

2011

Chart 2.9b – Monthly expenditure per household

2004

Chart 2.9d – Debt service year*

Average, Baht

14,311

14,500

16,205

17,861

3.3 2.8 2.3

12,297

2004

2.4 2.0

2006

2007

2009

2011

2004

2006

2007

2009

2011

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

Source: National Statistic Office survey; CTE analysis

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Core inflation is low and decreasing while headline inflation increased slightly driven mainly by Eggs & Milk Chart 3.07a – Y‐o‐Y change in CPI

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

Percent

July 2012, percent Eggs & milk

4.00% 3.50% 3.00%

3.4%

2.8%

3.4%

Head line

2.8%

2.8% 2.5%

2.5%

2.1% 1.9%

1.9%

1.8%

Core*

1.50% 1.00% 0.50% 0.00% Feb-12 Mar-12

HH consumer food

5.8

Seasoning

4.7

Non HH consumer food

3.5

Non alcoholic beverage

2.9

Clothing

2.5

Rice

2.3

Tobacco & alcohol

1.1

Housing & furnishing

1.1

Recreation & Education

0.6

Veg & fruit

0.6

Transport & Commu

0.5

2.6%

2.50% 2.00%

21.5

Apr-12 May-12 Jun-12

Jul-12

Note: (*) exclude raw food and energy Source: Bureau of Trade and Economic Indices; CTE analysis

Medical care

-0.1

Meat

-1.4

58 www.ChartingThailandEconomy.com

Thailand’s inflation is rather on the lower side, compared to other countries Chart 3.08 – Consumer Price Index Annual percentage change

Latest

2012*

Pakistan ‐ Jun

11.3

India ‐ Jun

10.0

Singapore ‐ Jun

8.4

5.3

Brazil ‐ Jun

4.4

4.9

Indonesia ‐ Jun

5.2

4.5

Russia ‐ Jun

4.4

4.3

Hong Kong ‐ Jun

5.0

3.7

Thailand ‐ Jul

4.2

2.8

Euro Area ‐ Jun

3.0

2.4

China ‐ Jun

2.2

South Korea ‐ Jun

2.2

2.4 3.6 2.8

Taiwan ‐ Jun

1.8

2.0

US ‐ Jun

1.7

2.1

Malaysia ‐ Jun

1.6

1.9

Australia ‐ Q2 Japan ‐ May

1.2 0.2

Note: (*) The Economist Poll Source: The Economist

2.1 0.2

59 www.ChartingThailandEconomy.com

Stable prices in Producer level

Chart 3.09a – Y‐o‐Y change in PPI

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

Percent

July 2012, percent

3.0% 2.5% 2.0%

1.8%

1.5%

1.2%

1.0%

0.8%

0.7%

0.5% 0.0% -0.4% -0.5% -1.0% Feb-12

Mar-12

Apr-12 May-12 Jun-12

Jul-12

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

8.2 6.9 4.4 2.8 2.4 1.5 1.1 1.0 0.6 0.5 -0.2 -0.4 -0.6 -1.0 -1.8 -1.9 -2.0 -5.6 -9.6 -14.1

60 Source: Bureau of Trade and Economic Indices; CTE analysis

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Banks’ capital ratio dropped in May

Chart 3.04 – Capital ratio of all commercial banks % of risk assets 20.0% 15.0%

13.7%

14.0%

2002

2003

13.0%

14.2%

14.5%

15.4%

2005

2006

2007

16.1%

16.2%

2009

2010

14.1%

15.1%

10.0% 5.0% 0.0%

16.0%

15.8%

15.8% 15.6%

2004

15.4%

2008

2011

15.7%

15.4% 15.3%

15.4%

15.3% 15.1%

15.2%

15.3% 15.1%

15.0% 14.8% 14.6% Jun-11

Jul-11

Aug-11 Sep-11

Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12

62 Source: Bank of Thailand

www.ChartingThailandEconomy.com

Gross NPL decreased in 2Q12

Chart 3.03a – Total Financial Institutions’ Gross NPLs Outstanding Billion Baht 592 477

445

458

401

380 317

04YE

05YE

06YE

07YE

08YE

09YE

10YE

269

11YE

274

266

2012/Q1 2012/Q2 2012/Q3

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

10.73% 8.16%

7.47%

7.31% 5.29%

04YE

05YE

06YE

07YE

08YE

4.85%

09YE

3.60%

10YE

2.74%

11YE

2.68%

2.55%

2012/Q1 2012/Q2 2012/Q3 63

Source: Bank of Thailand

www.ChartingThailandEconomy.com

Another profitable month for the Thai stock market Chart 3.06a – Monthly performance of SET index

Chart 3.06b – Change since Dec 31st 2011

Percent change from prior month, at month end

Percent, as of July 25th 2012 Pakistan (KSE)

28.3%

Thailand (SET)

7.1%

15.9%

Singapore (STI)

13.0%

US (NAScomp)

9.9%

India (BSE)

9.0%

Germany (DAX) 3.1%

2.7%

2.3%

8.3%

Malaysia (KLSE)

6.8%

US (S&P 500)

6.4%

Indonesia (JSX)

4.7%

US (DJIA)

3.3%

China (SSEB, $ terms)

2.7%

HK (Hang Seng)

2.4%

Australia (All Ord.)

-7.1%

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

1.0%

Japan (Nikkei 225)

-1.1%

Taiwan (TWI)

-1.3%

UK (FTSE 100)

-1.3%

France (CAC 40)

-2.5%

China (SSEA)

-2.9%

S Korea (KOSPI)

-3.1%

Euro Area (FTSE Euro 100) -4.5%

64 Source: SET, The Economist; CTE analysis

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Improvement in budget deficit in June, but still 174 billion worse off than the same period last year Chart 4.2 – Government budget balance Billion Baht Monthly cumulative Budget balance 1,902

100.0

1,751

Revenue 877

1,390 1,013

1,109

1,455

1,498

50.0

1,484

1,241

2011

0.0 -50.0

Budget balance

-79

110 -36

-174

-75

-100

-28

-100.0

-364 -150.0

-956

-996

-200.0

-1,109 -1,277 -1,280

Expenditure

-250.0

-1,629 -1,598 -1,849 -1,825

-300.0

-1,930

2012 -350.0 -400.0

02FY 03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY Source: Bank of Thailand; CTE analysis

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

66 www.ChartingThailandEconomy.com

Apart from 2010, there were not much differences between budget and cash balance Chart 4.3 – Government cash balance Billion Baht Budget cash balance Overall Cash balance (including non-budgetary deficit/ surplus)

110 16 24

8 -36 -45

-28

-79 -77

-75

-100 -96

-96

-144

-148

-174

-179

-266

-364 -401

02FY

03FY

04FY

05FY

06FY

07FY

08FY

09FY

10FY

11FY

'12/6mo 67

Source: Bank of Thailand; CTE analysis

www.ChartingThailandEconomy.com

With a few exceptions, most governments in the world will register huge budget deficit in 2012 Chart 4.4 – Government Budget balance as percentage of GDP 2012*, percent South Korea

1.9

Hong Kong

1.0

Singapore

0.1

Australia

-0.7

Russia

-0.8

Indonesia

-2.2

China

-2.3

Thailand

-2.3

Brazil

-2.8

Taiwan

-3.4

Euro Area

-3.5

Malaysia

-5.2

India

-5.5

Pakistan

-6.1

US Japan Note: (*) The Economist Poll Source: The Economist

-7.6 -9.3

68 www.ChartingThailandEconomy.com

Public debt increased in absolute and relative to GDP this year, due mainly to direct government debt Chart 4.5a – Composition of Public debt

Chart 4.5b – Composition of Public debt

THB Trillion

As percentage of nominal GDP

5.0

50%

4.5

45%

4.0

40%

Public debt from State Enterprises

3.5

Public debt from State Enterprises

35%

3.0 2.5 2.0

30%

Bond to Compensate FIDF's Loss & Prefunding debt

25%

Bond to Compensate FIDF's Loss & Prefunding debt

20%

1.5

15%

1.0

10%

0.5

Direct Government debt

0.0

2008

2009

2010

2011

12%

10%

Source: Public Debt Management Office

May-12 7%

2008

External debt as percent of total

2009

2010

2011

May-12

69 www.ChartingThailandEconomy.com

Thailand’s public debt is not high compared to international standard Chart 4.6 – Public debt in the world

Int’l rule of thumb <60% of GDP

Percentage of GDP, 2011 or latest 1 Zimbabwe 2 Japan 4 Greece 5 Lebanon 6 Iceland 9 Italy 10 Singapore 11 Ireland 13 Portugal 15 Belgium 17 Egypt 18 France 20 Canada 21 Hungary 22 Germany 23 UK 24 Bhutan 28 Bahrain 29 Israel 30 Austria 32 United States 33 Spain 38 Netherlands 40 Jordan 42 Pakistan Source: CIA fact book

231 208 165 137 130 120 118 107 103 100 86 86 84 83 82 80 79 75 74 72 69 68 64 61 60

44 Vietnam 47 Brazil 48 Malaysia 49 Switzerland 51 India 53 Philippines 56 Norway 67 UAE 69 China 72 Argentina 73 Turkey 78 Thailand 82 Mexico 86 Sweden 87 Bangladesh 91 South Africa 93 Taiwan 95 New Zealand 96 Korea, South 100 Australia 108 Indonesia 121 Iran 122 Hong Kong 123 Saudi Arabia 126 Russia

57 54 54 52 52 49 48 44 44 43 42 41 38 37 37 36 35 34 33 30 25 12 10 9 9

www.ChartingThailandEconomy.com

Executive summary

Growth

Income distribution

Stability

Balance of Payment deficit so far in 2012 due largely to deteriorating Trade Balance Trade Balance (F.O.B) 1,120

Chart 5.01 – Balance of Payment decomposition

917

Billion Baht

1,015 714

576 84 07FY

08FY

09FY

10FY

11FY

12/6mo

-351

-142

11FY

12/6mo

987 812

Net service income & transfer

825

586

-508

+ 35

07FY

-19 07FY

-366

-377

08FY

09FY

10FY

11FY

08FY

-587

09FY

10FY

Net Capital Movement + errors and omissions 744

12/6mo

559 70

-328 07FY

08FY

09FY

10FY

11FY

12/6mo

72 Source: Bank of Thailand; CTE analysis

www.ChartingThailandEconomy.com

Strong Asian export engines reflecting in huge current account surplus Chart 5.02 – Current Account balance As % of 2012 GDP* Singapore ‐ Q1

17.9%

Malaysia ‐ Q1

53.2

9.4%

Taiwan ‐ Q1

29.7

7.3%

Hong Kong ‐ Q1

41.9

7.0%

Russia ‐ Q2

8.3

4.5%

China ‐ Q1

2.3%

South Korea ‐ May

1.7%

Japan ‐ May

1.5%

Euro Area ‐ May

0.0%

Thailand ‐ Q1

-0.5%

Indonesia ‐ Q1

-1.4%

Brazil ‐ Jun

-2.8%

US ‐ Q1

-3.2%

Pakistan ‐ Q2

-3.2%

Australia ‐ Q1

-3.5%

India ‐ Q1

-3.7%

Note: (*) The Economist Poll Source: The Economist

Last 12 months, USD Billion

104.6 196.4 28.3 90.7 41.8 6.5 -3.8 -51.8 -483.2 -4.5 -38.9 -78.2

73 www.ChartingThailandEconomy.com

External debt level increased in both absolute and relative to GDP terms Chart 5.10a – External Debt Level Billion USD 160 120 80 40 0 03YE

04YE

05YE

06YE

07YE

08YE

09YE

10YE

11YE

12/1Q

Chart 5.10b – External Debt as % of GDP

40.3%

03YE

40.9%

04YE

37.0%

05YE

38.5%

06YE

35.4%

07YE

31.4%

28.8%

08YE

09YE

35.2%

34.2%

10YE

11YE

37.4%

12/1Q

74 Source: Bank of Thailand

www.ChartingThailandEconomy.com

More public debt and more short‐term debt in external debt composition so far in 2012 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

96%

08YE

92%

09YE

13%

87%

10YE

15%

85%

11YE

Long term Short term

17% 44%

44%

56%

08YE

09YE

50%

46%

50%

54%

50%

11YE

12/1Q

83%

12/1Q

50%

10YE

75 Source: Bank of Thailand

www.ChartingThailandEconomy.com

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

Chart 5.12b – Debt service ratio*

As % of ST external debt

Percent

418% 10.3% 360% 340%

330%

300%

7.7%

257%

07YE

08YE

09YE

10YE

11YE

12/1Q

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

Source: Bank of Thailand; CTE analysis

07FY

08FY

7.3%

09FY

3.7%

3.9%

10FY

11FY

12/1Q

76 www.ChartingThailandEconomy.com

International reserves decreased slightly this year but the current level is still considered excessive Chart 5.13a – International reserves level Billion USD 172.1

175.1

174.7

10YE

11YE

Jun-12

9.2

8.7

11YE

Jun-12

138.4 111.0 87.5 42.1

49.8

52.1

03YE

04YE

05YE

67.0

06YE

07YE

08YE

09YE

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

12.4

6.7

03YE

6.4

04YE

5.3

05YE

6.2

06YE

7.5

7.4

07YE

08YE

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

Source: Bank of Thailand; CTE analysis

09YE

11.3

10YE

77 www.ChartingThailandEconomy.com

Slight depreciation of THB in July

Chart 5.17a – Nominal Effective Exchange Rate

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

2007=100

Percentage change, as of July 31st 2012 103.0 102.5

PHP ‐ 0.766

7.1

USD ‐ 31.7196

101.5

JPY ‐ 40.7956

101.0

SGD ‐ 25.594

2.6

100.5

GBP ‐ 49.9919

2.0

TWD ‐ 1.0568

1.9

99.0

AUD ‐ 33.4926

1.6

98.5

VND ‐ 0.0015

0.0

98.0 Jul-12

MYR ‐ 10.1984

-0.2

KRW ‐ 0.0279

-1.8

IDR ‐ 3.6599

-3.4

99.5

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

Source: Bank of Thailand; CTE analysis

7.1

102.0

100.0

Aug-11

CNY ‐ 5.0388

6.1 5.5

MXN ‐ 2.3908

-6.3

EUR ‐ 39.0415 INR ‐ 0.6034

-9.0 -16.8

Baht appreciates

Baht depreciates 78

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