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1
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 the expectation of crowding in effect of public investment on private investment
% 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
3.6
3.0-3.4
3.2
Total Investment
4.7
3.8
3.0-5.0
4.4
- Public investment
29.8
11.5
6.5-10.5
8.5
- Private investment
-2.0
1.3
1.8-2.7
2.3
Gov't Budget Deficit (% of GDP)
-2.9
-2.9
-3.0 to -2.5
-2.7
Exports (Customs Basis)
-5.8
-1.8
-2.0 to 2.3
0.8
Imports (Customs Basis)
-11.0
-6.6
0.2-4.5
2.0
Current Account (USD bn)
32.1
39.5
30.2 - 45.0
39.6
Headline Inflation
-0.9
0.3
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
Given the high base effect in 2016, the projected base case for GDP growth in 2017 is 3.3% (range 3.0-3.6%)
Risk Factors:
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 September 28, 2016)
** KBank Capital Markets Research (as of October 6, 2016)
2
Monthly Economic Conditions: September - October 2016Units: % over-year, otherwise indicated
2015
2016
1Q
2Q
3Q
Jul
Aug
Sep
Oct
YTD.
Private Consumption Index (PCI)
1.5
2.3
3.9
3.1
3.5
3.4
2.5
3.1
Non-durables Index
3.5
3.2
2.7
0.9
-0.1
2.0
0.9
2.3
Durables Index
-6.7
-8.5
4.3
5.6
3.8
6.5
6.4
0.2
Service Index
6.8
7.8
6.7
8.1
9.7
7.6
6.9
7.6
Passenger Car Sales
-19.1
-26.6
4.9
10.6
9.6
8.7
13.6
-4.9
Motorcycle Sales
-3.7
-9.0
6.4
17.8
12.2
24.2
16.6
3.9
Private Investment Index (PII)
0.8
1.1
0.6
-0.1
-0.2
-0.6
-0.1
0.5
Domestic Sales Volume of Cement
-0.8
0.9
-0.1
-2.5
-3.8
-0.5
-3.3
-0.5
Domestic Machinery Sales at constant prices
9.2
8.0
5.9
5.1
0.7
7.7
6.8
6.3
Imports of Capital Goods at constant prices
-0.8
1.3
-3.4
-2.2
-3.0
-1.4
-2.1
-1.5
Commercial Car Sales
-2.3
4.0
12.0
-3.4
-6.1
-0.9
-3.3
3.9
Manufacturing Production Index
0.3
-0.9
1.7
-0.5
-5.0
3.2
0.6
0.1
Capacity Utilization
65.8
68.8
64.6
64.0
62.4
64.4
65.2
65.8
Agriculture Production Index
-3.8
-7.4
-2.5
-0.5
1.6
-7.2
4.0
-3.9
Agriculture Price Index
-5.9
-5.4
4.9
13.1
16.1
15.1
8.0
4.1
No. of Tourists
20.4
15.5
8.2
12.8
10.8
11.0
17.7
12.3
Exports (Custom Bas
Imports (Custom Bas
is)
Price Volume
is)
Price Volume
-5.8
0.9
-4.1
1.2
-6.4
6.5
3.4
-0.7
-2.3
-2.4
-0.8
0.8
0.3
0.7
1.3
-0.8
-3.6
3.4
-3.3
0.4
-6.7
5.8
2.1
0.2
-11.0
-12.0
-8.4
-1.2
-7.2
-1.5
5.6
-7.3
-10.8
-7.7
-5.0
-1.0
-3.4
-0.6
1.2
-4.6
-0.2
-3.9
-0.9
4.3
-3.9
-0.9
4.3
-2.9
Trade Balance Custom Basis (USD millions)
11,699
8,189
4,224
5,516
843
2,128
2,546
17,930
Current Account (USD millions)
32,149
17,852
7,973
10,291
3,557
3,805
2,929
36,116
Headline CPI
-0.9
-0.5
0.3
0.3
0.10
0.29
0.38
0.34
0.05
Core CPI
1.1
0.67
0.78
0.76
0.76
0.79
0.75
0.74
0.74
Key figures in September suggest Thai economic growth was rather tepid
Private consumption grew at a slower rate, dragged down by a decline in non-durable items
Exports picked up for two consecutive months, due to a recovered demand in major markets
Current account surplus narrowed, due to repatriation of profits
October headline inflation edged lower due to easing energy and raw food 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)
3
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 35.5036.00
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 0.50-0.750.75-1.00 | ||||
3.25 2.75
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-
Dec-
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16F4Q17F
USD/THB
The Fed signals that there could be one rate hike in
16F
Fed Funds rate BOT's 1-Day Repurchase rate
Domestic growth has shown positive
17F
2016, followed by two hikes 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 36.00 by year-end 2016 and 2017
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
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)
4
Sep16 MPI and CapU reported positive growth due to a pick up in exports
Economic Condition Highlights: September - October 2016400%
Activity in the property market decline in 2Q16 in absence of government stimulus
5
75
0.6
%Capacity Utilization Rate
300%
0
65
%YoY of MPI
% YoY
200%
65.2
100%
-5
55
0%
-10
45
-100%
32%
-22%
-38%
1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16
MPI (lhs)
%Capacity Utilization (rhs)
-15
Jan-14
Sep-14
May-15
Jan-16
35
Sep-16
Construction areas permitted in municipal zone Condominium Registration Nationwide New Housing registered in BKK and Vicinity
Oct16 Headline inflation edged lower due to a decline in energy prices
Property prices picked up in 3Q16 as entrepreneur shelved some construction projects
1.5
1.0
0.5
0.0
-0.5
5
4
3
+0.74% YoY 2
1
0
20.0
%MoM
%YoY
% YoY
15.0
10.0
0.34% YoY
-1
-2
5.0
Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16
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)
5
Economic Condition Highlights: September - October 2016Oct16 BSI declined due to concern over economic prospects
Sep16 Private consumption grew at a slower rate
49.2
73.1
85
80
75
70
65
60
55
50
45
40
35
30
%YoY
20%
CCI
BSI
0%
2.5%
-0.1% -0.4%
-3.3%-2.1%
6.4%
-20%
PCI PII Car Sales Construction Materials
Imports of Capital Goods
Consumer's Durable
Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16
Consumer Confidence Index (CCI) Business Sentiment Index (BSI)
Sep16 Foreign arrivals grew higher due to low base effect
2Q16 3Q16 Aug-16 Sep-16
Sep16 Exports rose for the second straight month
35.00
30.00
Million Person
25.00
20.00
17.2% 18.9% 18.7%
24.8
-6.7%
20.5%
12.3%
17.7% 25%
20%
15%
10%
Export Value (USD Million)
20,000
24.8
16,000
% YoY
15
10
5
3.8
29.9
15.00
10.00
5.00
0.00
2.4
2011 2012 2013 2014 2015 9M 2016 Sep-16
5%
0%
-5%
-10%
12,000
8,000
4,000
0
19.2
3.4
22.4
26.5
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
Sources: Bank of Thailand (BOT), Ministry of Commerce (MOC), University of the Thai Chamber of Commerce (UTCC),
and Office of Industrial Economics (OIE)
6
Exports and Imports: September 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 | |||
Custom Basis | Sep-16 | ||
USD Millions | Weight | %YoY | |
Total | 19,460 | 100.0 | 3.4 |
Motor cars, parts and accessories | 2,476 | 12.7 | -1.4 |
Automatic data processing machines | 1,558 | 8.0 | 4.6 |
Precious stones and jewellery | 1,285 | 6.6 | -3.2 |
Electronic integrated circuits | 769 | 4.0 | -2.8 |
Polymers of ethylene, propylene, etc | 665 | 3.4 | -8.3 |
Machinery and parts thereof | 614 | 3.2 | 11.8 |
Rubber products | 583 | 3.0 | 8.3 |
Chemical products | 536 | 2.8 | 14.8 |
Refine fuels | 490 | 2.5 | -21.8 |
Iron and steel and their products | 462 | 2.4 | 7.9 |
Top 10 Imports by Product
USD Millions | Weight | %YoY | |
Total | 16,914 | 100.0 | 5.6 |
Crude oil | 1,664 | 9.8 | 12.7 |
Machinery and parts | 1,616 | 9.6 | 4.2 |
Electrical machinery and parts | 1,478 | 8.7 | 14.0 |
Chemicals | 1,083 | 6.4 | 4.0 |
Parts and accessories of vehicles | 988 | 5.8 | 0.5 |
Electronic integrated circuites | 843 | 5.0 | 6.2 |
Iron, steel and products | 777 | 4.6 | -10.0 |
Jewellery including silver bars and gold | 623 | 3.7 | 38.5 |
Other metal ores, metal waste scrap | 593 | 3.5 | 9.3 |
Vegetables and vegetable products | 583 | 3.4 | 16.9 |
7 |
Custom Basis Sep-16
Source: Ministry of Commerce
Exports and Imports: 9M16Exports 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 | |||
Custom Basis | 9M-2016 | ||
USD Millions | Weight | %YoY | |
Total | 160,468 | 100.0 | -0.7 |
Motor cars, parts and accessories | 19,921 | 12.4 | 4.1 |
Automatic data processing machines | 12,392 | 7.7 | -4.9 |
Precious stones and jewellery | 11,656 | 7.3 | 35.5 |
Polymers of ethylene, propylene, etc | 5,673 | 3.5 | -10.2 |
Electronic integrated circuits | 5,661 | 3.5 | -0.9 |
Machinery and parts thereof | 5,061 | 3.2 | -2.4 |
Rubber products | 4,878 | 3.0 | -7.4 |
Chemical products | 4,507 | 2.8 | -8.8 |
Iron and steel and their products | 3,912 | 2.4 | -1.2 |
Air conditioning machine and parts | 3,890 | 2.4 | 7.1 |
Top 10 Imports by Product
USD Millions | Weight | %YoY | |
Total | 142,538 | 100.0 | -7.3 |
Machinery and parts | 14,202 | 10.0 | -3.7 |
Electrical machinery and parts | 12,088 | 8.5 | 5.9 |
Crude oil | 10,578 | 7.4 | -32.2 |
Chemicals | 9,772 | 6.9 | -4.1 |
Parts and accessories of vehicles | 7,786 | 5.5 | 6.6 |
Iron, steel and products | 7,663 | 5.4 | -8.9 |
Electronic integrated circuites | 6,867 | 4.8 | -5.1 |
Other metal ores, metal waste scrap | 5,162 | 3.6 | -5.9 |
Computers, parts and accessories | 4,863 | 3.4 | -12.7 |
Electrical household appliances | 4,834 | 3.4 | -1.4 |
8 |
Custom Basis 9M-2016
Source: Ministry of Commerce
Kasikornbank pcl published this content on 14 November 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 22 November 2016 10:13:04 UTC.
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