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Operating Environment: Economic Outlook for 2017Key GDP Forecasts and Assumptions
% YoY
6.0
3.0
0.0
2.8 3.3 3.0-3.6
2015 2016F 2017F
Key Points:
The projected base case for 2017 GDP growth is 3.3% (range 3.0-3.6%)
% YoY
2015
2016F*
2017F*
Range
Base Case
GDP
2.8
3.3
3.0-3.6
3.3
Private Consumption
2.1
3.1
2.0-2.4
2.2
Government Consumption
2.2
1.0
3.0-3.4
3.2
Total Investment
4.7
3.0
3.0-5.0
4.4
- Public investment
29.8
10.3
6.5-10.5
8.5
- Private investment
-2.0
0.5
2.4-3.2
2.8
Gov't Budget Deficit (% of GDP)
-2.9
-2.9
-3.0 to -2.5
-2.7
Exports (Customs Basis)
-5.8
0.1
-0.5 to 2.5
0.8
Imports (Customs Basis)
-11.0
-4.6
0.2-4.5
2.0
Current Account (USD bn)
32.1
44.2
38.0 - 48.0
43.0
Headline Inflation
-0.9
0.2
1.3-2.3
1.8
Policy Interest Rate**
1.50
1.50
1.50
Public spending and tourism sector remain key growth drivers of the Thai economy, although at a slower pace due to last year's high base of comparison
Export growth will turn slightly positive, attributable to a recovery in global commodity prices
Risk Factors:
Trade protectionism of the US and other countries
BREXIT implementation and fragility in Europe
Volatile funds flows due to Fed Funds rate hike
Chinese economic uncertainty
Notes: The current MPC's policy rate is at 1.50% Source: * KResearch (as of December 21, 2016)
** KBank Capital Markets Research (as of December 6, 2016)
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Currency and Interest Rate OutlookUSD/THB: End Period Interest Rate Trend
Bt
38
36
34 31.54 30.60 32.68
32.91
35.97 35.8436.50
4.00
% p.a.
3.00
2.00
2.00
3.25
2.75 2.25
2.00 1.50 1.50 1.50
3230.15
30
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17F
1.00
0.00
0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0.25-0.50 0.50-0.75
0.75-1.00
USD/THB
The Fed signals that there could be three rates hike in 2017
For 2017, however, there is a downside risk to the Fed's forecast, given the upcoming global uncertainties particularly those related to BREXIT negotiations
We expect the Fed might opt to do only one hike later in 2017, bringing the Fed funds rate to 0.75-1.00%
A more gradual rate hike suggests the dollar's strength might be less than expected. USD/THB is expected to hover around 36.50 by 2017 year-end
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17F
Fed Funds rate BOT's 1-Day Repurchase rate
Domestic growth has shown positive development in recent months, driven by good performance in the tourism sector, plus continued public spending and investment
The BOT is expected to keep the policy rate at 1.50% throughout 2017. Fiscal policy should take the front seat in driving growth while the BOT focuses on maintaining financial stability. At the same time, gradual Fed hike should give the MPC flexibility to remain on hold to support the domestic economy
Note: F is estimated by KBank Capital Markets Research (as of January 13, 2017)
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Monthly Economic Conditions: November - December 2016Units: % over-year, otherwise indicated
2015
2016
1Q
2Q
3Q
Sep
Oct
Nov
Dec
YTD.
Private Consumption Index (PCI)
1.5
2.2
3.9
3.4
3.4
2.7
1.6
3.0
Non-durables Index
3.5
3.2
2.7
0.9
0.9
-0.7
-2.0
1.7
Durables Index
-6.7
-8.5
4.3
5.6
6.4
-2.6
-3.9
-0.5
Service Index
6.8
7.8
6.8
8.7
8.6
5.7
3.7
7.2
Passenger Car Sales
-19.1
-26.6
4.9
10.6
13.6
-4.8
-9.4
-5.3
Motorcycle Sales
-3.7
-9.0
6.4
17.8
16.6
6.5
12.9
4.9
Private Investment Index (PII)
0.9
1.1
0.7
-0.3
-0.3
-0.9
-1.3
0.1
Domestic Sales Volume of Cement
-0.8
0.9
-0.1
-2.6
-3.4
-4.3
-0.5
-0.8
Domestic Machinery Sales at constant prices
9.2
7.1
4.9
3.3
2.7
4.9
7.1
5.3
Imports of Capital Goods at constant prices
-0.8
1.3
-3.4
-1.9
-1.3
-7.3
-5.7
-2.4
Commercial Car Sales
-2.3
4.0
12.0
-3.4
-3.3
-14.0
-18.2
-0.5
Manufacturing Production Index
0.3
-0.9
1.7
-0.3
1.1
0.0
3.8
0.4
Capacity Utilization
65.8
68.8
64.6
64.1
65.5
65.4
66.7
65.9
Agriculture Production Index
-3.5
-8.4
-3.1
-1.2
8.0
21.0
-3.3
-2.4
Agriculture Price Index
-5.9
-5.4
4.8
13.0
7.9
-1.3
3.0
3.5
No. of Tourists
20.4
15.5
8.2
12.8
17.7
1.2
-3.7
9.9
Exports (Custom Bas
Imports (Custom Bas
is)
Price Volume
is)
Price Volume
-5.8
0.9
-4.1
1.2
3.4
-4.2
10.2
0.0
-2.3
-2.4
-0.8
0.8
1.3
1.4
1.7
-0.4
-3.6
3.4
-3.3
0.4
2.1
-5.5
8.4
0.4
-11.0
-12.0
-8.4
-1.2
5.6
6.5
3.0
-5.1
-10.8
-7.7
-5.0
-1.0
1.2
1.9
2.7
-3.4
-0.2
-4.7
-3.7
-0.2
4.3
4.5
0.3
-1.9
Trade Balance Custom Basis (USD millions)
11,699
8,189
4,224
5,516
2,546
248
1,543
19,721
Current Account (USD millions)
32,149
17,852
8,391
10,380
2,958
2,875
3,195
42,693
Headline CPI
-0.9
-0.5
0.3
0.3
0.38
0.34
0.60
1.13
0.19
Core CPI
1.1
0.67
0.78
0.76
0.75
0.74
0.72
0.74
0.74
Key figures in November 2016 suggest Thai economic growth still lukewarm
Private consumption and investment slowed further amid cautious views on economic outlook
Exports registered a positive number supported by a rise in export demand during year-end festival
Current account surplus widened, due to an increase in trade balance
December headline inflation accelerated to 25-month high due to a rise in energy and food items
Sources: Bank of Thailand (BOT), Ministry of Commerce (MOC), Office of Industrial Economics (OIE), and Office of Agricultural Economics (OAE)
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Economic Condition Highlights: November - December 2016Nov16 MPI picked up along with a recovery in export demand, especially in electronics and electric appliances
Activity in the property market decline in 3Q16 in absence of government stimulus
6 75
67.7%
%YoY of MPI
4
65
400%
300%
% YoY
200%
2 3.8%
0 55
-2
45
-4
100%
0%
-100%
5%
-13%
-40%
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16
-6
Jan-15 Jul-15 Jan-16 Jul-16
%Capacity Utilization Rate
Construction areas permitted in municipal zone Condominium Registration Nationwide
35 New Housing registered in BKK and Vicinity
MPI (lhs) %Capacity Utilization SA (rhs)
Property prices picked up in 3Q16 as entrepreneur shelved some construction projects
Dec16 headline inflation accelerated due to a rise in energy and food items
1.5
%MoM
1.0
0.5
0.0
-0.5
5
+1.13% Y4oY
+0.74% Y3oY
%YoY
2
1
0
-1
-2
Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16
20.0
% YoY
15.0
10.0
5.0
0.0
1.4
7.9%
1.9%
Headline CPI (MoM-lhs) Core CPI (MoM-lhs)
Headline CPI (YoY-rhs) Core CPI (YoY-rhs)
Sources: BOT, MOC, OIE, and REIC (Real Estate Information Center)
-5.0
Single House (With Land) Townhouse (With Land) Land
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16
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Economic Condition Highlights: November - December 2016Dec16 BSI and CCI picked up as government unveiled a fresh stimuli
50.3
73.7
85 60
55
80
CCI
BSI
50
75 45
Nov16 private consumption slowed further as investor shrugged off from consumption during morning period
20%
%YoY
1.6%
0%
40
70
35 -20%
-1.3%
-16.6%
-1.9%
-5.7%-3.9%
65 30
Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16
PCI PII Car Sales Construction Materials
Imports of Capital Goods
Consumer's Durable
Consumer Confidence Index (CCI) Business Sentiment Index (BSI)
Nov16 foreign declined slightly due to a crackdown on "zero dollar" tour
20.5%
Export Value (USD Million)
Nov16 exports surged amid a recovery in demand from major markets
2Q16 3Q16 Oct-16 Nov-17
% YoY
15
Million Person
35.00
30.00
17.2% 18.9% 18.7%
25%
20%
20,000
24.8
25.00 | 9.9% | 15% | 5 | |
20.00 | -6.7% | 10% | 12,000 | 0 |
16,000
10.2%
10
9.2%
15.00
10.00
5.00
0.00
19.2
22.4
26.5
29.9
29.5
2011 2012 2013 2014 2015 11M
2016
2.5
-3.7%
Oct-16
5%
0%
-5%
-10%
8,000
4,000
0
Jan-14 Sep-14 May-15 Jan-16 Sep-16 Exports Exports excluding gold
-5
-10
-15
No of Foreign Tourist Arrival % Tourist Arrival YoY (RHS)
Exports % YoY Exports excluding gold % YoY
Sources: Bank of Thailand (BOT), Ministry of Commerce (MOC), University of the Thai Chamber of Commerce (UTCC), and Office of Industrial Economics (OIE)
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Exports and Imports: November 2016Exports by Country Imports byCountry
Middle East 3.8%
Hong Kong 7.1%
Others 22.5%
Japan
9.0% USA
11.5%
ASEAN 24.6%
EU 10.0%
China 11.5%
USA 6.3%
EU 9.3%
Middle East 7.9%
Others 21.5%
China 22.3%
Japan 15.0%
ASEAN 17.7%
Top 10 Exports by Product | Top 10 Imports by Product | ||||||
Custom Basis | Nov-16 | Custom Basis | Nov-16 | ||||
USD Millions | Weight | %YoY | USD Millions | Weight | %YoY | ||
Total | 18,911 | 100.0 | 10.2 | Total | 17,368 | 100.0 | 3.0 |
Motor cars, parts and accessories | 2,282 | 12.1 | 2.1 | Machinery and parts | 1,651 | 9.5 | -0.7 |
Automatic data processing machines | 1,485 | 7.9 | 2.0 | Electrical machinery and parts | 1,530 | 8.8 | 2.2 |
Precious stones and jewellery | 1,021 | 5.4 | 13.7 | Crude oil | 1,521 | 8.8 | 26.6 |
Polymers of ethylene, propylene, etc | 704 | 3.7 | 10.9 | Chemicals | 1,123 | 6.5 | 10.7 |
Machinery and parts thereof | 696 | 3.7 | 31.3 | Parts and accessories of vehicles | 958 | 5.5 | 1.1 |
Electronic integrated circuits | 688 | 3.6 | 6.6 | Iron, steel and products | 949 | 5.5 | 44.4 |
Refine fuels | 610 | 3.2 | 4.1 | Jewellery including silver bars and gold | 881 | 5.1 | -41.3 |
Rubber products | 575 | 3.0 | 12.5 | Electronic integrated circuites | 876 | 5.0 | 21.3 |
Chemical products | 523 | 2.8 | 9.6 | Electrical household appliances | 658 | 3.8 | -14.6 |
Other electrical equipment and parts | 467 | 2.5 | 34.8 | Other metal ores, metal waste scrap | 592 | 3.4 | 11.2 |
Source: Ministry of Commerce
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Exports and Imports: 11M16Exports by Country Imports byCountry
Middle East 3.9%
Hong Kong 5.2%
Japan 10.6%
Others 21.3%
USA 11.2%
ASEAN 24.8%
EU 10.0%
China 12.8%
USA 6.1%
EU 9.3%
Middle East 7.6%
Others 20.6%
China 21.7%
Japan 15.9%
ASEAN 18.9%
Top 10 Exports by Product | Top 10 Imports by Product | ||||||
Custom Basis | 11M-2016 | Custom Basis | 11M-2016 | ||||
USD Millions | Weight | %YoY | USD Millions | Weight | %YoY | ||
Total | 197,162 | 100.0 | 0.0 | Total | 177,441 | 100.0 | -5.1 |
Motor cars, parts and accessories | 24,329 | 12.3 | 3.0 | Machinery and parts | 17,394 | 9.8 | -3.3 |
Automatic data processing machines | 15,349 | 7.8 | -4.7 | Electrical machinery and parts | 15,046 | 8.5 | 4.0 |
Precious stones and jewellery | 13,397 | 6.8 | 28.3 | Crude oil | 13,472 | 7.6 | -25.6 |
Electronic integrated circuits | 7,008 | 3.6 | -1.0 | Chemicals | 11,922 | 6.7 | -2.0 |
Polymers of ethylene, propylene, etc | 6,999 | 3.6 | -8.3 | Parts and accessories of vehicles | 9,713 | 5.5 | 5.1 |
Machinery and parts thereof | 6,417 | 3.3 | 1.6 | Iron, steel and products | 9,458 | 5.3 | -4.2 |
Rubber products | 6,009 | 3.1 | -5.0 | Electronic integrated circuites | 8,649 | 4.9 | -1.9 |
Chemical products | 5,554 | 2.8 | -5.4 | Jewellery including silver bars and gold | 6,721 | 3.8 | -18.2 |
Refine fuels | 4,948 | 2.5 | -34.1 | Other metal ores, metal waste scrap | 6,397 | 3.6 | -2.4 |
Iron and steel and their products | 4,767 | 2.4 | -1.2 | Electrical household appliances | 6,132 | 3.5 | -3.2 |
Source: Ministry of Commerce
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Distributed by Public, unedited and unaltered, on 25 January 2017 10:26:01 UTC.
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