On September 18th, 2000, Mr.Sansern Wongcha-um, Secretary-General of NESDB and NESDB's executives provided a press conference on Gross Domesti Product (GDP): Q2/2000 at the Dej Sanitwongse Conference Room, NESDB.
Mr. Sansern Wongcha-um stated that the Thai economy in the second quarter of 2000 measured by GDP still continued to expand at a rate of 6.6 percent which is slightly higher than 5.3 percent growth of the first quarter. Exports in assocition with filling up stocks were the main factors of the expansion of the economy. GDP value in this quarter was Bath 1,198 billion. The value of Gross National Product (GNP),GDP less net factor income, flowed out to the rest of the world valued at baht 22 billon, was Baht 1,176 billion and expanded by 8.0 percent in reas terms.
Secretary-General Further said that on the production side, it expanded at a higher rate than the same quarter of last year owning to an increase in both the agricultural especially crops and fisheries and the non-agricultural sectors. Theexpnsion came from the sectors of agriculture, manufacturing and services related to goods production. On the contrary, the construction in the government part and the financial intermediation sectors were on a decline.
On the expenditure side, it still rose even though there was just a slight increase in the household consupmtion expenditure. The government expenditure also increased at the similar rate as in the last quarter. The investment figures showed a strong decline, actually, this was a result of an importation was excluded the investment figures would show a positive outlook. The private gross fixed capital formation was still on an increasing trend. The export value in real terms continually increased at a higher arte than the increase in import. In addition, an increase in the change in inventories, especially of manufacturing goods, led to an increase in the production of the country.
Prodution
Expanding Sectors
Agriculture
After declining in the previous two consecutive quarters, the sector on the whole increased by 5.2 percent due to the expansion in nearly all sub-sectors; namely, crops, livestocks and fisheries.
Crops, livestocks and fisheries.
Crops: This sub-sector grew by 5.2 percent due to a jump in the production of paddy, rubber, cassava, maize, besns, vegetables and coffer beans.
Livestocks : The expansion was on the production of swines, hens ans hen's eggs.
Fisheries : The fisheries production jumped by 8.0 mpercent owing to a drastic increase in the production of black tiger prawn. The increase was stimulated by high export of prawns to the USA.
Manufacturing
The manufacturing sector expanded on a continual basis by 9.0 percent in this quarter. The expansion was on all manyfacturingt activities, except the manufacture of food and beverage, tobacco and petroleum. The petroleum fefinery reduced its production due to the fact that high prices of petroleum products led to a lower demand. The exporting industries were the main source of growth of the sector. These high growth industries were the manufacture of domestic appliances. office accounting and computing machinery, radio, television and commounication equipment and apparatus, motor vehicles and jewelry and ornament.
Other expanding production sector included wholesale and retail trade espanded by 5.1 percent due to an increase in the production of manufacturing goods, agricultural produce and imports. Transportation and communication were highly expanded at the rate of 7.8 percent in accordance with its related sectors. Furthermore, the dramatic increase in export was the main factor that led to an expansion in the sea and coastal transportation. The communication services still expanded, especially long distance call servies. Hotel and restaurant incresed by 3.8 percent increase in the hotel services for the expansion in the number of tourists.
Contracting sectors
Construction
This sector dropped by 2.8 percent due to the construction undertaken by the government sector, which and a higher share in the total value of construction. In this period, the government construction decreaed by 10.6 percent but the private construction continually incressed to the rate of 17.8 percent. The construction of residential and commercial buildings expanded in Bangkok, and both inside and outside municipal areas. In Bangkok alone, it was the first increase at the rate of 9.5 since the eruption of the economic crisis.
Financial inter-mediation : In this period, this sector started to move in the better direction. However, the rate of growth wtill dropped by 3.6 percent because the commercial banks were still cautious on lending policy. Moreover, low interest rates on deposits turned the depositors to invest in the stock market instead which could provide a higher return.
Domestic consumption expenditure
Household consumption expenditure
In this quarter, household consumption expenditure increased by 4.8 percent compared with the same period last year. Household condsumption had declined as result of large part of farmer who earn less in come due to declinning in agricultural product prices.
Govenment consumption expenditure
Govenment consumption expenditure (GCE) was recorded at Baht 134 billion in this quarter. IN real terms, GCI increased by 10.4 percent compared with the same period last year. This was a result of an increase in compensation of employee and purchase from enterprises and aboard by 6.9 and 17.2 percent, respectively. The increase mainly came from the budget deficit policy and the economic stimulus packge.
Gross Fixed Capital Formation (GFCF)
In this quarter, GFCF increased by 1.6 percent compared to the same period last year as a result expansion in private investment by 9.4 percent as a result of an increase by 7.4 percent in investment in machinery and the investment in private construction also moved upwark by 17.0 percent. The public investment dropped by 10.6 percent due to the public construction, which contributed 77.5 percent to the total, dropped by 10.3 percent.
Export of goods and services
The export value of goods and services in real terms in this quarter increased from the same quarter of last year by 15.2 percent. The main export item was still the maunfacturing goods holding the 85.7 percentage share in the overall value of export goods. This item grew by 18.9 percent. However, it used imported raw materials and technology, for instance intergrated circuits, electrical appliances and motor vehicles. Wheresa, the export of agricultural produce rose 5.8 percent. The major export item for this quarter was rubber which had a share of 34.9 percent among the agricltual export and grew by 78.3 percent. The export value of services slightly increased by 0.3 percent. Even though there was an increase in the revenue received from the tourist, the revenue received from other services was on a declinel
Import of goods and services
The import value of goods and services in the real terms expanded by 16.0 percent. The main import item, a share of 48.4 percent, was capital goods with an increase of 26.5 percent measure at c.i.f. value. Similarly, the imports of raw materials, petroleum and petroleum preducts, and consumer goods expanded by 33.1,51.6 and 26.5 percent, respectively. However, the expenditure on imported services decreased by 4.9 percent due to a decline in the expenditure made by Thai tourists abroad in addition to a reduction in expenses on other services.
Current account
There was a surplus on the goods account by Baht 35,797 million less than a Baht 78,703 million surplus in the same quarter last year. As mentioned earlier that the export goods were high in imported contents. Turthermore, the import prices in this quarter increased at a higher rate than the export prices. These led to a smaller amount of sur;ous in this quarter. For the wervice account, there was a surplus of Baht 37,760 million. In effect, there was a surplus on the current account by Baht 76,657 million decreased from a surp;us of Baht 112,192 million in the same quarter last year.
GDP implicit deflators
The GDP im plicit deflators still moved up ward by 2.8 percent, similarly, the Consumer Price Index (CPI) and the Producer Price Index (PPI) rose by 1.6 and 3.7 percent, respectively.
Mr. Sansern Wongcha-um finally stated that for the economic forecast this year, it is expect that the soaring oil price, decreasing crop price, and inactive stock market are the main reasons for the short fall of the domestic consumption expenditure. However, the world economic outlook in the second half of the year has shown a good sign for export and private investment. In this context, the whole economy in the second half of the year will expand more than the same period of last year, but it will be solwer than the first half of this year. It is expected that the Thai economy will grow by 5.0 percent throughout the year.
This growth of the economy has been supported by both internal and external demandl In the meantiome, the production sector especially in industry and survices, will be expanded in the similar rate as in the previous year. It is anticipated that consumption expenditure will by increased by 5.4 percent. The private consumption will be 10.7 percent. The whole investment will increase by 3.3 percent. The private investment will grow by 10 percent while the public investment will decline by 5.0 percent. The volume of export throughout the year is estimated at $ US billion 64.8, increasing 14.3 percent from 1999. The volume of import is expected to be $ US billion 58.8, incereasing 23.0 percent from last year.
Outcome of PDPC Meeting No. 2/2000
On August 21 st ,2000, Prime Minitster Chuan Leekpai was the chairman of the Prosperity Decentratization Policy Committee (PDPC) Meeting No. 2/2000 at the Government House. The meeting outcomes can be summarized as follows :
- To support the Local Administration Agenies in terms of transferring of public services from the central Administration. In FY 2001, the budget of Baht 32,332 million will be allocated in support for the development of basic infrastructure and the promotion of quality of life and the environment. The meeting agreed to facilitate such transfers. The Bureau of the Budget has been assigned as the focal point to cooperate with the Ministry of Interior and the Ministry of Finance in coordinating with the local agencies concerned so as to formulate the practical gukdelines ofr management and disbursement as well as providing technical support to the Tambon Adminstrative Organization. Meanwhile, relevant agencies will function to organize training program and launching public relations campaign to create better understanding on duties and responsibilities for those concerned to achieve the benefits of the local people.
- To readijust the regional and local development daministration system to be the main machanism in support for the Ninth plan, especially regional and rural development policy, to tack the implementation of rural development problems. The PDPC policy should be readjusted to be more treamlined and practical, especially in the matters of poverty alleviation as well as the strengthening of community's participation. The budget should also be re-allocated in line with the strategic policy associated with the Ninth Plan, focustin on performance budget approach based on monitoring and evaluation system.
Moreover, the meeting acknowledget the progress of the implementation in line with the PDPC's resolution as follows:
- The progress of the establishment of the Community Agency Development Institute which was approved by the Royal decree on July 27 th, 2000. The institute will by the core agency on financial aspect of rthe community. It is combined from Urban Community Development Office, National Housing Authority and Rural Development Fund. The Supplementary budget of Baht 500 million is allocated in addition to the existingfund of Baht 2,500 million.
- The budget of Baht 172,518.34 million is allocated in FY 2001 for decentralizing the prosperity to the regional and local areas. Of this amount, the budget of Baht 96,194.4 million is allocated to 8 major ministries and 2 additional agencies under the PDPC system. Moreover, the budget of Baht 73,286.3 and 3,037.64 million are allocated to the Local Administration Office in support for the strengthening of rural and community development.
- The Ninth Plan development guideline and vision framework, approved by the cabinet on August 1st, 2000, emphasizes sufficiency economy to achieve the strong and balanced society. It is now in the process of formulatintg the detailed strategies on sustainable rural and urban development restructuring. In so doing, the area management in the new dimension will be readjusted with an aim of the participation of every sector to reduce the wider gap getween urban and rural sectors.
Development News Bulletin, National Economic and Social Development Board, Volume 15, No. 9 : September 2000 End.
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