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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:
Domestic demand will continue to drive Thai economic growth in 2017, with supports from fiscal stimuli
% YoY
2015
2016F*
2017F*
Range
Base Case
GDP
2.8
3.3
3.0-3.6
3.3
Private Consumption
2.1
2.7
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
-0.5
-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
39.5
30.2 - 45.0
39.6
Headline Inflation
-0.9
0.2
1.3-2.3
1.8
Policy Interest Rate**
1.50
1.50
1.50
A rebound in commodity prices will positively contribute to exports amid global economic risks
The projected base case for GDP growth in 2017 is 3.3% (range 3.0-3.6%)
Risk Factors:
Trump's presidency
Chinese economic uncertainty
Volatile funds flows
Geopolitical tension
Spillovers from BREXIT
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
3230.15
30
31.54 30.6032.68
32.91
35.97 35.5036.50
4.00
% p.a.
2.00
0.00
2.00 0-0.250-0.25 | 2.25 2.00 1.50 1.50 1.50 | ||||||
0-0.25 | 0-0.25 | 0-0.25 | 0.25-0.50 0.50-0.750.75-1.0 | ||||
3.25 2.75
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-
0
Dec-
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16F4Q17F
USD/THB
16F
Fed Funds rate BOT's 1-Day Repurchase rate
17F
The Fed signals that there could be three rates hike in 2017
For 2017, there is a downside risk to the Fed's forecast, given the upcoming global uncertainty particularly 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 35.50 and 36.50 by year-end 2016 and 2017, respectively
Domestic growth has shown positive development in recent months, driven by good performance in the tourism sector and continued public spending and investment
Passing of the referendum to accept the new constitution should result in a general election in 2017. This supports policy continuity and reduces pressure for more easing by the BOT
The BOT is expected to keep the policy rate at 1.50% throughout 2016-2017. Fiscal policy should take the front seat in driving growth while the BOT focuses on maintaining financial stability
Note: F is estimated by KBank Capital Markets Research (as of October 6, 2016)
3
Monthly Economic Conditions: October - November 2016Units: % over-year, otherwise indicated
2015
2016
1Q
2Q
3Q
Aug
Sep
Oct
Nov
YTD.
Private Consumption Index (PCI)
1.5
2.3
3.9
3.5
3.3
3.9
2.1
3.1
Non-durables Index
3.5
3.2
2.7
0.9
2.0
1.0
-0.6
2.0
Durables Index
-6.7
-8.5
4.3
5.6
6.5
6.4
-2.6
-0.1
Service Index
6.8
7.9
6.8
9.0
7.8
9.4
5.0
7.6
Passenger Car Sales
-19.1
-26.6
4.9
10.6
8.7
13.6
-4.8
-4.9
Motorcycle Sales
-3.7
-9.0
6.4
17.8
24.2
16.6
6.5
4.2
Private Investment Index (PII)
0.9
1.1
0.6
-0.3
-0.6
-0.3
-1.5
0.0
Domestic Sales Volume of Cement
-0.8
0.9
-0.1
-2.6
-0.5
-3.4
-1.8
-0.6
Domestic Machinery Sales at constant prices
9.2
8.0
6.1
4.1
7.7
4.1
-0.7
5.4
Imports of Capital Goods at constant prices
-0.8
1.3
-3.4
-1.9
-1.4
-1.3
-7.3
-2.0
Commercial Car Sales
-2.3
4.0
12.0
-3.4
-0.9
-3.3
-14.0
1.9
Manufacturing Production Index
0.3
-0.9
1.7
-0.3
3.2
1.1
0.1
0.1
Capacity Utilization
65.8
68.8
64.6
64.1
64.4
65.5
65.4
65.8
Agriculture Production Index
-3.8
-7.4
-2.5
-0.5
-7.2
4.0
5.9
-2.7
Agriculture Price Index
-5.9
-5.4
4.9
13.1
15.1
8.0
-1.2
3.6
No. of Tourists
20.4
15.5
8.2
12.8
11.0
17.7
0.5
11.3
Exports (Custom Bas
Imports (Custom Bas
is)
Price Volume
is)
Price Volume
-5.8
0.9
-4.1
1.2
6.5
3.4
-4.2
-1.0
-2.3
-2.4
-0.8
0.8
0.7
1.3
1.4
-0.6
-3.6
3.4
-3.3
0.4
5.8
2.1
-5.5
-0.4
-11.0
-12.0
-7.7
-4.7
-1.5
5.6
6.5
-5.9
-10.8
-8.4
-5.0
-3.7
-0.6
1.2
1.9
-3.9
-0.2
-1.2
-1.0
-0.2
-0.9
4.3
4.5
-2.1
Trade Balance Custom Basis (USD millions)
11,699
8,189
4,224
5,516
2,128
2,546
248
18,178
Current Account (USD millions)
32,149
17,852
7,973
10,291
3,805
2,929
2,875
38,991
Headline CPI
-0.9
-0.5
0.3
0.3
0.29
0.38
0.34
0.60
0.10
Core CPI
1.1
0.67
0.78
0.76
0.79
0.75
0.74
0.72
0.74
Key figures in October 2016 suggest Thai economic growth slowed further
Private consumption grew at a slower rate, dragged down by a cool-down in tourism activities
Exports declined due to lukewarm demand from oil-exporters
Current account surplus narrowed, due to a rise in fuel imports after the price had increased
November 2016 headline inflation inched higher due to a rise in fresh food and oil 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)
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Economic Condition Highlights: October - November 2016Oct16 MPI cooled on a contraction in automotive items, while CapU picked up due to a rise in demand for integrated circuits and semiconductors
Activity in the property market decline in 3Q16 in absence of government stimulus
400%
5
%YoY of MPI
0
-5
-10 MPI (lhs) %Capacity Utilization (rhs)
85
0.6
75
65
65.4
55
45
300%
% YoY
200%
100%
0%
-100%
%Capacity Utilization Rate
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16
5%
-13%
-40%
-15
Jan-14 Sep-14 May-15 Jan-16 Sep-16
Construction areas permitted in municipal zone Condominium Registration Nationwide
35 New Housing registered in BKK and Vicinity
Property prices picked up in 3Q16 as entrepreneur shelved some construction projects
Nov16 headline inflation inched higher due to a rise in fresh food and oil prices
1.5
1.0
0.5
0.0
-0.5
5
4
3
+0.72% YoY 2
+0.60% YoY 1
0
-1
-2
Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16
20.0
%MoM
%YoY
% YoY
15.0
10.0
5.0
Headline CPI (MoM-lhs) Core CPI (MoM-lhs)
Headline CPI (YoY-rhs) Core CPI (YoY-rhs)
0.0
-5.0
7.9
1.9
1.4
Single House (With Land) Townhouse (With Land) Land
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16
Sources: BOT, MOC, OIE, and REIC (Real Estate Information Center)
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Economic Condition Highlights: October - November 2016Oct16 BSI declined due to concern over economic prospects
Oct16 private consumption grew at a slower rate as consumers were cautious on their spending
49.2
73.1
85 60
55
80
CCI
BSI
50
75 45
40
70
35
%YoY
20%
0%
-20%
2.1%
-1.5%
-12.2%
-1.7%
-7.3%
-2.6%
65 30
Jan-14 May-14 Sep-14 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)
Oct16 foreign arrivals were rather flat due to a crackdown on "zero dollar" tour
2Q16 3Q16 Sep-16 Oct-16
Oct16 Exports declined due to lukewarm demand from oil-exporters
35.00
30.00
Million Person
25.00
26.5
20.00
17.2% 18.9% 18.7%
24.8
-6.7%
20.5%
27.1
11.2%
1.2%
25%
20%
15%
10%
Export Value (USD Million)
20,000
16,000
% YoY
15
10
5
3.8
15.00
10.00
5.00
0.00
2.3
2011 2012 2013 2014 2015 10M 2016 Oct-16
5%
0%
-5%
-10%
29.9
12,000
8,000
4,000
0
19.2
22.4
3.4
0
-5
-10
-15
No of Foreign Tourist Arrival % Tourist Arrival YoY (RHS)
Jan-14 Sep-14 May-15 Jan-16 Sep-16
Exports Exports excluding gold
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: October 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 5.3%
EU 10.2%
Middle East 9.5%
Others 19.7%
China 20.9%
Japan 15.7%
ASEAN 18.7%
Top 10 Exports by Product | Top 10 Imports by Product | ||||||
Custom Basis | Oct-16 | Custom Basis | Oct-16 | ||||
USD Millions | Weight | %YoY | USD Millions | Weight | %YoY | ||
Total | 17,783 | 100.0 | -4.2 | Total | 17,535 | 100.0 | 6.5 |
Motor cars, parts and accessories | 2,126 | 12.0 | -5.8 | Machinery and parts | 1,541 | 8.8 | -2.0 |
Automatic data processing machines | 1,472 | 8.3 | -9.3 | Electrical machinery and parts | 1,427 | 8.1 | -7.8 |
Precious stones and jewellery | 721 | 4.1 | -23.5 | Crude oil | 1,373 | 7.8 | 4.0 |
Machinery and parts thereof | 660 | 3.7 | 10.0 | Jewellery including silver bars and gold | 1,038 | 5.9 | 192.7 |
Electronic integrated circuits | 659 | 3.7 | -8.4 | Chemicals | 1,027 | 5.9 | 7.1 |
Polymers of ethylene, propylene, etc | 622 | 3.5 | -8.1 | Parts and accessories of vehicles | 969 | 5.5 | -2.2 |
Rubber products | 556 | 3.1 | 1.1 | Electronic integrated circuites | 906 | 5.2 | 5.8 |
Chemical products | 523 | 2.9 | 17.1 | Iron, steel and products | 846 | 4.8 | 5.9 |
Refine fuels | 519 | 2.9 | -27.6 | Other metal ores, metal waste scrap | 643 | 3.7 | 19.5 |
Iron and steel and their products | 421 | 2.4 | -10.0 | Electrical household appliances | 640 | 3.6 | -2.7 |
Source: Ministry of Commerce
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Exports and Imports: 10M16Exports by Country Imports byCountry
Others 23.6%
ASEAN 25.2%
USA 6.1%
Others 20.2%
Japan 16.1%
Middle East 4.3%
Hong Kong 5.4%
Japan
9.4% USA
11.4%
EU 10.3%
China 10.4%
EU 9.3%
Middle East 7.4%
China 21.8%
ASEAN 19.2%
Top 10 Exports by Product | Top 10 Imports by Product | ||||||
Custom Basis | 10M-2016 | Custom Basis | 10M-2016 | ||||
USD Millions | Weight | %YoY | USD Millions | Weight | %YoY | ||
Total | 178,251 | 100.0 | -1.0 | Total | 160,073 | 100.0 | -5.9 |
Motor cars, parts and accessories | 22,047 | 12.4 | 3.1 | Machinery and parts | 15,743 | 9.8 | -3.5 |
Automatic data processing machines | 13,864 | 7.8 | -5.4 | Electrical machinery and parts | 13,516 | 8.4 | 4.2 |
Precious stones and jewellery | 12,376 | 6.9 | 29.7 | Crude oil | 11,951 | 7.5 | -29.4 |
Electronic integrated circuits | 6,320 | 3.6 | -1.7 | Chemicals | 10,799 | 6.8 | -3.2 |
Polymers of ethylene, propylene, etc | 6,295 | 3.5 | -10.0 | Parts and accessories of vehicles | 8,755 | 5.5 | 5.5 |
Machinery and parts thereof | 5,721 | 3.2 | -1.1 | Iron, steel and products | 8,508 | 5.3 | -7.6 |
Rubber products | 5,433 | 3.1 | -6.6 | Electronic integrated circuites | 7,773 | 4.9 | -4.0 |
Chemical products | 5,030 | 2.8 | -6.7 | Jewellery including silver bars and gold | 5,840 | 3.7 | -13.0 |
Refine fuels | 4,338 | 2.4 | -37.4 | Other metal ores, metal waste scrap | 5,805 | 3.6 | -3.6 |
Iron and steel and their products | 4,333 | 2.4 | -2.2 | Computers, parts and accessories | 5,490 | 3.4 | -11.5 |
Source: Ministry of Commerce
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Distributed by Public, unedited and unaltered, on 23 December 2016 11:13:09 UTC.
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