Microsoft PowerPoint - Monthly Econ Info_Apr 16 - Final.ppt [Compatibility Mode] KASIKORNBANK Investor Presentation

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 2016

Key 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 Trend

    Bt

    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 2016

        Units: % 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 2016

      Apr16 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 Country

      Others 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 Country

      Middle 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 Budget

      Public 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

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