Monthly Economic Information By KASIKORN RESEARCH CENTER
April 2016
For further information, please contact Investor Relations Unit or visit our website at www.kasikornbankgroup.com or www.kasikornbank.com
1
Operating Environment: Economic Outlook for 2016Key GDP Forecasts and Assumptions
Key Points:
% YoY
6.0
3.0
0.0
0.9
2.82.5-3.5
Slower-than-expected recovery likely for Thai economy in 1H16, due to weakness in both exports and domestic purchasing power
However, given government stimulus efforts, especially the supplementary budget, as well as visible progress
Notes:
% YoY | 2014 | 2015 | 2016F* (Previous) | 2016F* (New) | |
Base Case | Range | Base Case | |||
GDP | 0.9 | 2.8 | 3.0 | 2.5-3.5 | 3.0 |
Private Consumption | 0.6 | 2.1 | 2.1 | 1.5-2.3 | 1.9 |
Total Investment | -2.6 | 4.7 | 4.6 | 3.5-5.1 | 4.3 |
Gov't Budget Deficit (% of GDP) | -2.9 | -3.0 | -2.9 | -3.2 to -2.6 | -2.9 |
Exports (Customs Basis) | -0.4 | -5.8 | 2.0 | -2.0 to +2.0 | 0.0 |
Imports (Customs Basis) | -9.0 | -11.0 | 5.5 | -6.5 to -2.5 | -4.5 |
Current Account (USD bn) | 15.4 | 31.6 | 23.0 | 42.8-45.0 | 43.9 |
Headline Inflation | 1.9 | -0.9 | 1.2 | 0.0-0.8 | 0.4 |
Policy Interest Rate** | 2.00 | 1.50 | 1.50 | 1.25 |
2014 2015 2016F
The current MPC's policy rate is at 1.50%
on some large investment projects, 2H16 GDP should rebound to 3.3% (vs the 2.8% forecasted for 1H16)
Thai economy is expected to grow at 3.0%
(Base Case), with upward adjustments in government consumption and investment and tourism revenue, to offset impacts from depressed exports, private consumption, as well as effects of the drought
Risk Factors:
Chinese economic uncertainty
Slow recovery in commodity prices
Volatile fund flows
Drought
Source: * KResearch (as of April 7, 2016 vs forecast in December 2015)
** KBank Capital Markets Research (as of April 27, 2016)
Geopolitical tension
2
Currency and Interest Rate Outlook USD/THB: End Period Interest Rate TrendBt
38
36 32.6832.91
35.97 37.00
4.00
% p.a.
3.00
2.00
2.00
3.25 2.75
2.25
2.00 1.501.25
34
3230.15
30
31.54 30.60
1.00
0.00
0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0.25-0.500.75-1.00
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16F
USD/THB
Global market volatility and economic weakness around the world has led the Fed to be more dovish in terms of policy rate normalization
The Fed has trimmed its view after the March meeting to indicate only a 50bps hike this year, from the 100bps hike indicated in December 2015
Moderate growth and robust job market should allow the Fed to raise rate as projected in the new view
Narrowing interest rate differentials between U.S. and Thai interest rates likely to be reflected in THB weakness in the long-term. USD/THB is expected to slowly rise towards 37.00 by year-end 2016
Note: F is estimated by KBank Capital Markets Research (as of May 12, 2016)
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16F
Fed Funds rate BOT's 1-Day Repurchase rate
The MPC kept policy rate unchanged at 1.50% after May meeting. However, it continued to indicate the downside risk to domestic growth while reiterating how THB strength has not been conducive to growth
Given the possibility of renewed foreign capital inflows as the Fed remains cautious about policy rate normalization, the risk for easing in Thailand is still present
MPC is expected to cut rate in 2Q16 to a record low level of 1.25% to counter speculative capital inflows, deter the pace of appreciating THB, and support the economic amidst the ongoing drought crisis
3
Monthly Economic Conditions: March - April 2016Units: % over-year, otherwise indicated
2014
2015
2015
2016
2Q
3Q
4Q
Jan
Feb
Mar
Apr
YTD.
Private Consumption Index (PCI)
1.1
1.4
0.1
0.7
3.0
1.2
2.6
2.1
2.0
Non-durables Index
0.8
3.7
3.5
3.3
3.9
3.1
5.0
1.3
3.1
Durables Index
-19.2
-6.7
-11.3
-10.4
-2.0
-6.3
-11.5
-7.7
-8.5
Service Index
3.0
6.5
7.3
7.8
4.1
6.0
8.3
8.1
7.4
Passenger Car Sales
-41.4
-19.1
-27.3
-24.9
-11.7
-30.0
-29.9
-21.2
-26.6
Motorcycle Sales
-15.1
-3.7
-5.0
-16.4
-3.7
8.2
-17.2
-15.7
-9.0
Private Investment Index (PII)
-1.5
1.0
0.1
1.2
2.1
2.4
1.1
1.6
1.6
Domestic Sales Volume of Cement
-0.7
-0.8
0.5
-2.8
-0.8
-0.8
4.7
-0.9
0.9
Imports of Capital Goods at constant prices
-2.0
-0.8
-5.3
-0.3
3.2
1.4
-6.6
9.3
1.3
Commercial Car Sales
-26.8
-2.3
-16.1
-0.3
17.2
-2.4
1.9
11.2
4.0
Domestic Machinery Sales at constant prices
6.3
9.9
13.5
10.6
5.6
9.2
11.7
4.2
8.2
Manufacturing Production Index
-5.2
0.3
-0.3
0.9
0.3
-3.5
-1.7
1.8
-1.1
Capacity Utilization
65.1
64.7
62.2
64.3
63.4
63.8
65.6
72.5
67.3
Agriculture Production Index
0.4
-4.6
-10.7
-12.0
-1.0
-0.8
-1.4
-3.5
-1.9
Agriculture Price Index
-6.1
-6.1
-6.0
-4.9
-6.0
-6.3
-7.5
-1.7
-5.2
No. of Tourists
-6.5
20.4
36.9
24.9
3.7
15.0
16.0
15.4
15.5
Exports (In terms of
Imports (In terms of
US Dollars)
Unit Value Volume
US Dollars)
Unit Value Volume
-0.3
-5.6
-5.5
-4.7
-7.9
-9.3
6.2
-1.0
-1.4
-1.0
-2.3
-1.8
-2.9
-2.7
-2.8
-2.6
-2.0
-2.4
0.7
-3.4
-3.8
-1.8
-5.4
-6.7
9.0
1.0
1.1
-8.5
-11.3
-10.2
-14.5
-13.2
-17.8
-16.3
-9.1
-14.4
-1.8
-10.8
-9.7
-11.7
-11.0
-8.3
-8.4
-6.5
-7.7
-6.8
-0.6
-0.5
-3.2
-2.4
-10.4
-8.6
-2.8
-7.3
Trade Balance (USD millions)
24,583
34,593
7,860
9,616
9,637
2,636
5,978
4,687
13,301
Current Account (USD millions)
15,418
31,608
6,119
6,866
10,182
4,066
7,401
4,952
16,420
Headline CPI
1.9
-0.9
-1.1
-1.1
-0.9
-0.53
-0.50
-0.46
0.07
-0.36
Core CPI
1.6
1.1
0.97
0.93
0.8
0.59
0.68
0.75
0.78
0.70
Key economic figures in March 2016 suggested the Thai economy was marginally improving
Private consumption was rather mixed. Service sector remained good, but durable consumption experienced a contraction
Exports were in contraction again, after receiving a boost from extraordinary items last month
Current accounts reported a surplus, due to a sharp drop in oil imports
Apr16 headline CPI turned to positive side for the first time in 15 months due to a rise on food and beverage prices
Sources: Bank of Thailand (BOT), Ministry of Commerce (MOC), University of the Thai Chamber of Commerce (UTCC), Office of Industrial Economics (OIE), and Office of Agricultural Economics (OAE)
4
Economic Condition Highlights: March - April 2016Apr16 CCI and BSI slipped further amid rising concern over economic prospects
Mar16 Private consumption and investment remained weak due to economic uncertainties
49.8
72.7
85
80
75
70
65
60
55
50
45
40
35
30
20%
CCI
BSI
%YoY
0%
-20%
2.1% 1.6% 3.4%
-0.9%
9.3%
-7.7%
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16
Consumer Confidence Index (CCI) Business Sentiment Index (BSI)
PCI PII Car Sales Construction Materials
Imports of Capital Goods
Consumer's Durable
4Q15 1Q16 Feb-16 Mar-16
Mar16 Foreign arrivals maintained a 15% YoY growth
Mar16 Exports improved due to a rise in machinery export
35.00
30.00
Million Person
25.00
20.00
15.00
10.00
5.00
0.00
29.9
17.2% 18.9% 18.7%
19.2
22.4
26.5
24.8
-6.7%
20.5%
25%
15.2% 15.1% 20%
15%
10%
9.0
5%
3.0
0%
-5%
-10%
Export Value (USD Million)
25,000
20,000
15,000
10,000
5,000
0
-1.0%
-3.4%
Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16
10%
% YoY
0%
-10%
-20%
2011 2012 2013 2014 2015 3M 2016 Mar-16
No of Foreign Tourist Arrival % Tourist Arrival YoY (RHS)
Exports Exports (excluding gold)
% YoY for Exports % YoY for Exports exc Gold
Sources: Bank of Thailand (BOT), Ministry of Commerce (MOC), University of the Thai Chamber of Commerce (UTCC), and Office of Industrial Economics (OIE)
5
Activity in the property market was slow, in line with economic activity in 4Q15
Economic Condition Highlights: March - April 2016%Capacity Utilization Rate
Mar16 MPI and CapU advanced thanks to a pick up in demand of items such as electrical appliances
4
%YoY of MPI
2
0
-2
-4
-6
-8
-10
-12
75
72.5
65
55
1.8
45
35
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 MPI (lhs) %Capacity Utilization (rhs)
350%
300%
250%
% YoY
200%
150%
100%
50%
0%
-50%
-100%
Construction areas permitted in municipal zone Condominium Registration Nationwide
New Housing registered in BKK and Vicinity
-17%
-22%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
-23%
Apr16 Headline inflation edged higher due to an increase in food and beverage prices
Property prices rose at a slower pace in 1Q16; Land price declined slightly in tandem with a slow property investment
1.5
1.0
5
4
3
20.0
15.0
+0.78% YoY
2
1
0
0.07% YoY-1
-2
Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 Mar-18
%MoM
%YoY
% YoY
10.0
0.5
0.0
-0.5
5.0
0.0
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
-5.0
12.7
3.1
-0.1
Headline CPI (MoM-lhs) Core CPI (MoM-lhs)
Headline CPI (YoY-rhs) Core CPI (YoY-rhs)
Single House (With Land) Townhouse (With Land) Land
Sources: BOT, MOC, OIE, and REIC (Real Estate Information Center)
6
Exports and Imports: March 2016 Exports by Country Imports by CountryOthers 24.1%
ASEAN 26.7%
USA 6.5%
Others 22.4%
Japan 15.6%
Middle East 5.1%
Hong Kong 4.7%
Japan 8.9%
USA 10.7%
China 9.7%
EU 10.0%
EU 9.7%
Middle East 6.7%
China 20.7%
ASEAN 18.4%
Top 10 Exports by Product (BOP Basis) Top 10 Imports by Product (BOP Basis)
Total Exports (BOP Basis)
March 2016
USD Millions
Weight
%YoY
Exports, f.o.b. (BOP basis)
18,577
100.0%
-1.0%
Automotive
3,096
16.7%
-1.8%
Electronics
2,525
13.6%
-3.6%
Agro-manufacturing Products
2,383
12.8%
2.3%
Machinery & Equipment
1,798
9.7%
6.3%
Electrical Appliances
1,152
6.2%
-0.3%
Petro-chemical Products
984
5.3%
-2.8%
Metal & Steel
750
4.0%
-12.6%
Other Manufacturing products
733
3.9%
-0.2%
Jewellery
637
3.4%
-8.2%
Apparels and Textile Materials
583
3.1%
-3.7%
Total Imports (BOP Basis)
March 2016
USD Millions
Weight
%YoY
Imports, f.o.b. (BOP basis)
13,890
100.0%
-9.1%
Machinery, equipment, and supplies
3,746
27.0%
11.2%
Electronics parts and electrical appliances
1,984
14.3%
-4.0%
Fuel
1,712
12.3%
-36.0%
Materials of base metal
1,381
9.9%
-5.5%
Non-durables Consumer goods
1,185
8.5%
3.4%
Chemicals
930
6.7%
-7.4%
Automotive
843
6.1%
0.5%
Agricultural and agro-manufacturing products
792
5.7%
5.9%
Plastics
630
4.5%
-3.5%
Non-monetary gold
505
3.6%
-59.1%
Source: Bank of Thailand (BOT), BOP Basis = Balance of Payment Basis
7
Exports and Imports: 1Q16 Exports by Country Imports by CountryMiddle East 4.8%
Hong Kong 5.5%
Others 23.0%
Japan 10.1%
USA 10.5%
ASEAN 26.1%
EU 10.3%
China 9.7%
USA 6.6%
EU 9.0%
Middle East 6.2%
Others 20.5%
China 21.5%
Japan 17.0%
ASEAN 19.2%
Top 10 Exports by Product (BOP Basis) Top 10 Imports by Product (BOP Basis)
Total Exports (BOP Basis)
1Q16
USD Millions
Weight
%YoY
Exports, f.o.b. (BOP basis)
52,257
100.0%
-1.4%
Automotive
8,331
15.9%
-1.5%
Electronics
7,375
14.1%
-5.5%
Agro-manufacturing Products
6,244
11.9%
0.9%
Machinery & Equipment
4,737
9.1%
-0.4%
Electrical Appliances
3,132
6.0%
-2.7%
Petro-chemical Products
2,742
5.2%
-5.8%
Other Manufacturing products
2,283
4.4%
7.7%
Metal & Steel
2,109
4.0%
-10.8%
Jewellery
1,964
3.8%
3.7%
Apparels and Textile Materials
1,616
3.1%
-6.6%
Total Imports (BOP Basis)
1Q16
USD Millions
Weight
%YoY
Imports, f.o.b. (BOP basis)
38,956
100.0%
-14.4%
Machinery, equipment, and supplies
10,458
26.8%
1.1%
Electronics parts and electrical appliances
5,904
15.2%
-11.2%
Fuel
4,686
12.0%
-38.2%
Materials of base metal
3,631
9.3%
-19.6%
Non-durables Consumer goods
3,206
8.2%
-2.2%
Chemicals
2,520
6.5%
-14.0%
Automotive
2,475
6.4%
-1.7%
Agricultural and agro-manufacturing products
2,212
5.7%
-4.7%
Plastics
1,726
4.4%
-8.4%
Non-monetary gold
1,083
2.8%
-51.3%
Source: Bank of Thailand (BOT), BOP Basis = Balance of Payment Basis
8
Public Debt to GDP and Fiscal BudgetPublic Debt
Budget Disbursement Rate
100
6,500
Public Debt % to GDP
48
44.13 46
% Cumulative Budget Disbursement Rate (%)
FY 2016 FY 2015
90 FY 2014
80
70
64.7
72.0
80.0
92.4
85.4
Billion Baht
% to GDP
6,000
60
50 43.6
51.9
51.4
58.4
44 40
29.7
38.6
37.4
42.6
30
42 20
13.2
20.9
20.4
29.8
5,500
1013.4
0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Sep
40
FY16 target
6M FY16
actual
Unused FY16 Budget
Total Budget Bt2.72trn
Bt2.61trn (96%)
Bt1.41trn (52%)
Bt1.31trn (48%)
- General Budget Bt2.18trn
Bt2.13trn (98%)
Bt1.25trn (57%)
Bt0.93trn (43%)
- Investment Budget Bt0.54trn
Bt0.47trn (87%)
Bt0.16trn (30%)
Bt0.38rn (70%)
5,000 38
Sep-13 Mar-14 Sep-14 Mar-15 Sep-15
Public debt to GDP ratio was 44.13% as of February 2016, still under the 60% limit set under the fiscal sustainability framework
Thai government is committed to keeping the ratio of public debt to GDP under 50%
Note : Debt to GDP has declined since January 2015, due to a change in GDP computation
Government budget disbursement rate for 6MFY2016 is 51.9%, above the 51.4% in 6MFY2015
FY2016 budget disbursement target is 96%, unchanged from FY2015
Source: Ministry of Finance (MOF), Fiscal Policy Office (FPO), and Public Debt Management Office (PDMO)
10
9
Kasikornbank pcl published this content on 13 May 2016 and is solely responsible for the information contained herein.
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