- Thai economy in the fourth quarter of 2010 grew by 3.8 percent. Such expansion was driven by global economic recovery that resulted in higher export, expansion in the tourism sector and greater farm income. Unemployment rate remained low. After seasonal adjustment, the Thai economy expanded by 1.2 percent.
- Thai economy expanded by 7.8 percent in 2010. The supporting factors were the global economic recovery and strong domestic demand. Private investment and consumption grew by 13.8 and 4.8 percent respectively. Moreover, export value in US dollar term considerably expanded by 28.5 percent.
- Thai economy is expected to grow in the range of 3.5 - 4.5 percent, a slower growth in comparison to last year. Export is projected to expand by 12.5 percent, while private investment and consumption are anticipated to increase by 8.5 and 4.0 percent respectively. Headline inflation is in the range of 2.8-3.8 percent, with unemployment rate at 0.9 percent. Current account surplus is expected to be equivalent to 3.5 percent of GDP.
- The economic management for 2011 should emphasize the following issues: (i) manage the problem of rising commodity prices since there is a tendency of higher costs of production due to an increase in prices of oil and agricultural products. Monitoring system of production trend and stock management of key products must be employed consistently; (ii) implementation of balanced monetary and exchange rate policy that accommodate both economic growth and stability. This would prepare the economy for the uncertainty in global economic, financial market and capital flow; (iii) accelerate budget disbursement and major public infrastructure investment in order to improve long run economic potential; (iv) improve the water management for both irrigation and consumption to alleviate the impact of climate change; (v) urgently tackle labor shortage in production sector, which could affect the foreign investors’ decisions; and (vi) creating harmony and solidarity among Thai people and resolve border political conflicts in order to restore the country’s image and confidence of foreign tourists and investors.
Economic projection Year 2011
(% YOY) 2009 2010 2011F
Year Q3 Q4 Year
GDP(at 1988 price) -2.3 6.6 3.8 7.8 3.5-4.5
Total Investment (at 1988 price) -9.2 7.9 6.4 9.4 7.3
Private -13.1 14.6 9.2 13.8 8.5
Public 2.7 -5.4 -3.1 -2.2 3.5
Total Consumption(at 1988 price) 0.1 4.8 3.5 5.0 3.9
Private -1.1 5.0 3.8 4.8 4.0
Public 7.5 3.7 1.8 6.0 3.2
Export of Goods(US$) -14.0 22.2 21.1 28.5 12.5
Volume -13.6 13.1 12.2 17.3 6.8
Import of Goods(US$) -25.2 30.7 18.8 36.8 14.6
Volume -23.1 24.9 12.0 26.5 8.1
Current Account to GDP (%) 8.3 2.5 6.4 4.6 3.5
Inflation -0.8 3.3 2.8 3.3 2.8-3.8
Unemployment rate 1.5 0.9 0.9 1.0 0.9
Thai Economic Performance in Q4/2010 and outlook for 2011
In the fourth quarter of 2010, Thai economy grew by 3.8 percent which is supported by a strong recovery in global economy as well as investor confidence. This reflected in an expansion of export, investment and private consumption, compared to the third quarter 2010. The seasonally adjusted GDP increased by 1.2 percent from the previous quarter while the GDP in 2010 recorded a solid growth of 7.8 percent.
Positive signs in Q4/2010
(1) Export value in terms of US dollar in the fourth quarter of 2010 recorded at 51,850 million US dollars or expanded by 21.2 percent compared to the same period of last year. The key drivers were export of vehicle and part, electrical appliances, rubber, rubber products and jewelry, which grew by 23.8 17.3 49.0 27.6 and 77.5 percent respectively. The major export markets included US, EU (15) and Japan continued to grow by 12.0 14.6 and 24.4 percent respectively. In 2010, export value was 193,663 million us dollar or expanded by 28.5 percent
(2) Tourism sector. The number of inbound tourists in this quarter stood at 4.6 million persons, accelerated from the previous quarter by 7 .8 percent, compared to 2 .9 and 3 .7 million persons recorded in the second and third quarter. This significant improvement was due to an increased in number of tourists from South Korea, China and India by 41.1 26.6 and 46.2 percent respectively. As the result, the GDP of hotel and restaurants sector expanded by 7.9 percent. In 2010, the numbers of tourists registered at 15.8 million persons increased by 12.0 percent compared to 2009.
(3) Household consumption increased by 3.8 percent, supported by a rise in farm income due to higher prices of major agriculture products such as rubber, cassava, oil palm and maize which increased by 5 4 .0 7 1 .9 5 9 .0 and 3 1 .7 percent respectively. Moreover, an employment condition remained favorable, especially employment in agricultural sector that recorded an increase of 3 .9 percent. Unemployment rate remained low at 0 .9 percent. However, consumer confidence declined over the concern of flood’s impact on future economic situation and employment condition. Furthermore, consumer concerned over higher oil price and cost of living has increased. In 2010, household consumption grew by 4.8 percent.
(4) Private investment expanded by 9.2 percent, contributed by spending on machinery and construction. This expansion was reflected in import of capital goods and commercial car sale, which grew by 15.3 and 31.6 percent respectively. Furthermore, the investment in factory construction also increased which reflected future expansion of production. Business Sentiment Index (BSI) remained strong at 51.4, increased from 50.4 in the previous quarter. In 2010, private investment grew by 13.8 percent.
Thai Economy in 2010
Thai Economy in 2 0 1 0 expanded by 7 .8 percent resulted from an expansion in private investment, household consumption and the export of goods and service by 13.8 4.8 and 14.7 percent respectively. Likewise, manufacturing sector significantly improved by 13.9 percent and tourism activities (hotels and restaurants sector) also grew by 8 .4 percent. Nevertheless, agricultural sector contracted by 2.2 percent, as a result of an impact of draught in the first half and flood in the second half of 2010.
Thai Economic Outlook for 2011
The NESDB forecast that Thai economy in 2011will expand in the range of 3.5-4.5 percent, slowdown from 7 .8 percent in 2 0 1 0 . The supporting factors are includes (i) strong global economic rebound, and (ii) increase of income in many sectors such as government, private sector and farm income. However, there are risks and uncertainties especially the heightening of inflationary pressure from high oil price, labor shortage in various industries, and volatility in capital flow that would have a vast impact on Thai baht, stock market and real estate sector. Other economic projections in 2011 are: (i) headline inflation is expected to be in the range of 2 .8 -3 .8 percent, (ii) private consumption projected to expanded by 4 .0 percent, (iii) private investment forecasted to grew by 8.5 percent, (iv) export value in us dollar term is projected to expanded by 12.5 percent, and (v) current account surplus of 3.5 percent of GDP, down from 4.6 percent of GDP in 2010.
1. Economic Performance in Q4/2010
-Expenditure Side
Private consumption expenditure: expanded with a decelerated rate of 3.8 percent in the fourth quarter, after an expansion of 5.0 percent in the third quarter. This coincided with the decline in value added tax (VAT) and import value of consumer goods. In the fourth quarter of 2 0 1 0 , VAT and import value of consumer goods at constant prices increased by 8.3 and 13.7 percent. The supporting factors included: (i) low unemployment rate; (ii) an increase in farm income following an improvement in price of agricultural products, due to flood’s impact while global demand remain high and; (iii) low interest rate. Consumption on durable goods continued to expand at a decelerated rate of 16.6 percent. In addition, consumer confidence index on economic situation in the fourth quarter was at 71.3, declined from 72.6 in the previous quarter due to concern over flood’s impact over economic situation and employment condition. Furthermore, consumer concern over higher oil price and cost of living has increased.
For 2 0 1 0 , private consumption increased by 4 .8 percent. This was resulted from an increase of 25.1 percent in durable goods, 6.7 percent in semi-durable goods, 1.7 percent in non-durable goods, and 1.4 percent in services.
Private Investment increased at a slower pace. In the fourth quarter of 2 0 1 0 , private investment increased by 9.2 percent slowed down from 14.6 percent in the previous quarter. Investment in equipment increased by 9.2 percent. The import of capital goods increased at a slower pace of 15.3 percent following a slow down in import of machinery particularly for the export-oriented industry such as electronics, electrical appliances, and automobiles. Nevertheless, domestic commercial car sales continued to expand by 31.6 percent owing to credit easing by commercial banks, increase in farm income, and strong consumer and investor confidence. In addition, investment in construction increased by 9.4 percent, mainly resulted from the increase of factory construction, whereas other categories slowed down.
Business Sentiment Index (BSI) remained strong at 51.4, increased from 50.4 in the previous quarter. On the other hand, the expected BSI index for the next 3 months stood at 5 5 .5 , declined from 5 6 .1 in the previous quarter. This reflected an uncertainty on economic and political condition. Moreover, an increase in cost of production and restriction on product price adjustment remained the risk factors for investment in the next phase.
For 2 0 1 0 , private investment increased by 1 3 .8 percent as a result of the 1 4 .7 percent increase in equipment investment and 10.6 percent increase in construction investment.
Exports value in the last quarter of 2010 recorded the value of 51,850 million US dollars. However, the export value grew at a slower pace with the rate of 21.1 percent, compared to the second and the third quarter which increased by 4 1 .8 and 2 2 .2 percent respectively. Export volume and price rose by 12.2 and 7.3 percent respectively. Excluding unwrought gold, export value only expanded by 18.3 percent. The deceleration of export growth was due to a high base effect. Nonetheless, in term of value, export remained sound as a result of a continual improvement of global economy and a depreciation of Thai baht during December.
The export of agricultural commodities improved from the previous quarter due to a decline in supply of major agricultural commodities in the world market affected by natural disaster. Agricultural export price grew by 29.7 percent, while export volume dropped by 0.5 percent. As a result, export value of agricultural commodities expanded by 2 9 .0 percent. On the other hand, both volume and value of manufacturing products started to slow down. The volume and value increased by 14.5 and 20.1 percent, slowed down from an expansion of 17.0 and 21.9 percent in the third quarter. The price of manufacturing product slightly grew by 4.9 percent. Major exported products include computer and computer parts and electrical appliances of which export value rose by 1.2 and 17.3 percent respectively. However, when classified by product group, export value of a high-technology products and resource-based products experienced an increase of 17.2 and 9.3 percent respectively. Nevertheless, export value of labor-intensive products considerably grew by 49.2 percent, compared to an increase of 0.2 percent in the third quarter as a result of acceleration in export of unwrought gold.
In 2010, export value and volume in terms of us dollar expanded by 28.5 and 17.3 percent, significantly improved from a contraction of 14.0 and 14.2 percent in 2009 respectively. Export price continued to rise by 9.1 percent from a growth of 0.3 percent in 2009.
Export market slowed down in both major markets and other markets as a result of a high base effect from last year. Export value to ASEAN (9) rose by 17.6 percent, decelerated from a growth of 27.5 percent in the previous quarter. Similarly, export to China, US, Japan and EU (15) expanded by 19.2, 12.0, 24.4 and 14.6 percent respectively. Regarding other markets, export to some countries registered a positive growth; for example, Hong Kong and
South Korea expanded by 54.0 and 20.1 percent respectively. Conversely, export to Australia contracted by 11.1 percent. The contraction was due to a high base effect in 2009, particularly the export of motor cars, parts and accessories, air conditioning machine and parts thereof, machinery and parts thereof as well as export of iron and steel and their products for construct of gas separation plant in Australia.
Imports: Value and volume slowed down, while price continued to expand from the previous quarter. In the fourth quarter, import value in US dollar terms grew by 18.8 percent, slowed down from 44.8 and 30.7 percent in the second and third quarter respectively. Import volume rose by 12.0 percent, slowed down when compared to 24.9 percent in the previous quarter. Import price accelerated from the previous quarter with a growth rate of 6.5 percent mainly due to an increase in oil price. All imported categories experienced a downturn as a result of high base effect from the second half of 2 0 0 9 except fuel and lubricant which experienced an increase in volume, value and price as a result of domestic consumption and a rising of world oil price due to high demand during the winter.
After seasonally adjustment, the slowdown in import value and volume was recorded in all commodities except fuel and lubricant, which increased in value, volume and price. Import value of capital goods increased by 18.1 percent, down from 27.9 percent in the previous quarter. This was due to steady growth of domestic investment while capital utilization only grew slightly. Similarly, import value of raw material and semi-finished goods grew by 2 1 .2 percent, down from 3 1 .9 percent in the previous quarter which was in line with the decelerated growth of export and production. Import goods that recorded an increase in value were parts and electrical appliances, chemical products, and plastic products. Import value of consumer goods expanded at a slower pace of 16.6 percent, compared to 19.8 percent in the previous quarter, in accordance with slowdown in private consumption. Fuel and lubricant increased in value, volume and price, import value expanded by 21.5 percent, accelerated from 1 .5 percent in the third quarter (volume and price grew by 1 1 .5 and 1 0 .0 percent respectively), following an increase in domestic demand, and a rising of world crude oil price due to high demand during the winter.
In 2010, imported value, volume and price increased by 36.8, 26.4 and 8.1 percent, compared to 25.2 23.3 and 2.6 in 2009 respectively.
Term of trade slowed down from the previous quarter. Export price grew by 7.3 percent, while import price increased 6.5 percent. Hence, term of trade in the last quarter of 2010 expanded by 0 .7 percent, which was beneficial to exporters. However, term of trade in this quarter is lower than the expansion of 1.3 percent in the previous quarter.
In 2010, term of trade expanded by 1.0 percent, soften down from 3.0 percent in 2009. Export price increased by 9.1 percent, while import price grew by 8.1 percent.
Trade balance registered a slowdown on surplus. In the fourth quarter of 2 0 1 0 , trade balance recorded a surplus of 4,072 million US dollars (or equivalent to 122,001 million baht), compared to a surplus of 3 ,303 million US dollars in the previous quarter (or equivalent to 101,291 million baht).
In 2010, trade balance recorded a surplus but slowed down from 2009. In 2010, trade balance recorded a surplus of 14,031 million US dollars (or equivalent to 439,600 million baht) compared to a surplus of 19,388 million US dollars (or equivalent to 669,119 million baht) in 2009. As a result, trade balance in 2010 declined by 27.6 percent.