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InfoQuest

FPO: export, private consumption pickup enables Thai economic recovery

February 28, 2020


Abstract : The Fiscal Policy Office (FPO) revealed that Thai economy showed recovery in January 2020, thanks to improved export and private consumption, especially in durables: vehicle sales and the number of newly registered motorcycles rose; farm produce price rise boosted agricultural revenue.

Infoquest, (Feb. 27, 2020) -- The Fiscal Policy Office (FPO) revealed that Thai economy showed recovery in January 2020, thanks to improved export and private consumption, especially in durables: vehicle sales and the number of newly registered motorcycles rose; farm produce price rise boosted agricultural revenue. Private investment has shown signs of slowdown, caused by slowdown in industrial and agricultural production. Tourism has shown sustained growth. Yet a close eye should be kept on the developments of COVID-19, which has harmed Thai economic since the end of this month.

According to Mr. Wuttipong Chittangsakul, deputy spokesman and deputy director of the office of FPO and economic adviser to the Treasury, private consumption indicator as a whole has shown signs of rising, especially in durables: vehicle sales have posted positive growth for the first time over the past six months, with a year-on-year increase of 0.4 percent after eliminating seasonal factors and 37.1 percent growth than the previous month; the number of newly registered motorcycle grew by 2.0 percent year on year, compared with a year-on-year decline of 17.3 percent last month.

Levied based on actual domestic expenditures, VAT revenue increased by 0.4 percent, consumer confidence on Thai economy has dropped to 54.9, amid worries that COVID-19 spread may affect tourism; global economy slowdown will harm export.

Private investment indicators have shown signs of slowdown, mainly caused by declining investment in machinery, as shown in a 13.6 percent drop in commercial vehicle sales; investment in construction has decreased, as evidenced by a 5.0 percent drop in cement sales, and a 17.4 percent decline in real estate transaction tax income. The indicator of building material prices has dropped by 1.7 percent because of price drop of steel products.

Global trade sectors have posted growth: the export of products settled in U.S. dollars increased by 3.4 percent, which should be attributed to export growth of minerals, fuel products, electronic appliances, and processed farm produce. Yet the export of farm produce and electronic products has slowed down compared with the previous month. An analysis on the operation of Thailand's major export markets shows that the U.S. and Chinese markets are growing at 9.9 percent and 5.2 percent respectively; the export to five ASEAN countries grew by 3.8 percent; the export to Australia, Hong Kong and Africa continued to slow down. The import of U.S. dollar-settled products has shrunk by 7.9 percent; in January 2020, trade balance deficit stood at 1.6 billion U.S. dollars.

In terms of indicators in supply, tourism has maintained growth, yet agricultural and industrial sectors have shown signs of slowdown. In terms of tourism, Thailand has received 3.81 million foreign tourists, up 2.5 percent, partly thanks to the Lunar New Year that fell on January 2020, when more foreign tourists streamed in, especially those from Malaysia, Taiwan and Hong Kong. However, tourism has been harmed by COVID-19, with the number of Chinese tourists shrinking by 3.7 percent.

In terms of agricultural sector, agricultural production indicator has dropped by 2.2 percent, mainly caused by farm produce output decline. In terms of industrial sector, industrial production indicator has dropped by 4.6 percent, mainly caused by output decline of automobile and furniture. The output of air-conditioner and medical device has increased. Industrial confidence indicator has climbed to 92.2, mainly attributed to confidence indicator rise of rubber products, medical device, and medicine and chemical products used for cleaning and sterilizing.

In terms of stability, Thai economy is still in good shape, with an overall inflation rate of 1.1 percent, a core inflation rate of 0.5 percent. As of the end of December 2019, the proportion of public debts in GDP was 41.2 percent, still within the fiscal discipline framework stipulated by the State Fiscal and Financial Disciplines Act, B.E.2018. Thailand's external economic stability was still within controllable range as Thailand is able to hedge against risks brought about by global economic fluctuations. This can be reflected in Thailand's international reserves of 230.3 billion U.S. dollars at the end of January 2020.

Source: InfoQuest, by Khara/ Sasithorn, translated by Xinhua Silk Road

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Keyword: export consumption Thai economy

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