- Demand for petroleum products shifted further towards alternative energy such as Gasohol, Bio-diesel and LPG. The petroleum consumption accelerated from 1.5 percent increase in the third quarter to 4.2 percent in the fourth quarter, after its contraction in the first half of the year. Diesel consumption grew by 1.8 percent. However, the High Speed Diesel (HSD) and Low Speed Diesel (LSD) consumption dropped by 4.0 percent as demand shifted toward Bio-diesel. Bio diesel consumption increased by 1,391.9 percent from a
very low base of consumption. Total gasoline consumption decreased by 1.7 percent, with substantial decline by 18.8 percent of both Benzene 95 and 91.
Gasohol consumption significantly increased by 77 percent in the fourth quarter reflecting the shift in the structure of energy demand towards cheaper alternative energy in response to the increase in petroleum prices and campaigns implemented by the government to promote energy-saving and alternative
energy such as the introduction of E20 car and tax incentives for energy-saving passenger car. Meanwhile, LPG and NGV consumption expanded by 18.1 and 139.8 percent respectively.
For the year 2007, consumption of petroleum products fell by 0.2 percent. High Speed Diesel (HSD) and Low Speed Diesel (LSD) consumption declined by 1.1 percent while Bio-diesel (B5) consumption increased by 1,360.6 percent from a small base of consumption. Consumption of Benzene 95 and 91 dropped by 6.1 while gasohol consumption increased rapidly by 37.80 percent. LPG and NGV consumption increase by 14.30 and 117.6 percent respectively.
- Economic stability remained in check : unemployment remained low with the favourable external stability but inflationary pressure increased.
- Inflationary pressure increased. In the fourth quarter, the headline inflation was at 2.9 percent, up from 2.4, 1.9 and 1.6 percent in the first three quarters respectively.
Employment growth (%YOY)
2006 2007
Avg. Avg. Q1 Q2 Q3 Q4
Employment 1.2 1.6 1.8 0.7 2.1 1.7
Agriculture 4.1 1.0 2.8 -0.5 1.2 0.6
Non-Agriculture -0.6 2.0 1.2 1.5 2.9 2.5
Manufacturing -1.5 2.1 0.2 1.3 5.4 1.7
Construction 1.0 -0.1 1.6 1.5 -4.9 1.0
Hotel and
restaurant -3.1 3.0 4.3 2.0 4.0 1.8
Unemployment rate 1.5 1.4 1.6 1.6 1.2 1.1
Source: The National Statistic Office
The upsurge in inflation was mainly attributable to the rise in energy cost that resulting in the uplift of transportation costs since October 15. In Bangkok metropolitan area, buses fares were lifted up by 0.50 baht and air-conditioned bus was lift up by 1 baht. For other provinces, fares were raised by 0.03 baht/kilometer for air-conditioned bus fare. The increases in transportation cost were also observed in
airfares. With the approval of Energy Policy Committee on December 1, 2007, LPG prices were also lifted up. However, low inflation in the first quarter resulted in an average headline inflation rate of 2.3 percent in 2007.
Core inflation remained low at 1.1 percent in the fourth quarter but increased slightly from 0.9 and 0.8 percent in the second and the third quarters respectively. Average core inflation rate in 2007 was at 1.1 percent.
Producer price index accelerated to 7.0 percent increase in the fourth quarter, noticeably up from 2.6, 1.8 and 1.5 percent in the first three respective quarters. This indicated that the upward inflationary pressure will continue in 2008 when the up surge in production cost are passed on to consumers, particularly under the condition of the rebound in demand for goods and services. The strong price increases were seen in petroleum products, rubber and plastic products, food and beverage and tobacco. Overall, in 2007, production price index increased by 3.3 percent.
- Employment The number of employed person in the fourth quarter was at 36.87 million people, increased by 1.7 percent from the same period last year. In addition, number of employment in agriculture sector were 15.35 million people, rose by 0.6 percent. Non-agricultural sector employed 21.00 million people, expanded by 2.5 percent while employment in manufacturing sector rose by 1.7 percent. Employment in hotel and restaurant sector increased by 1.8 percent, in accordance with the recovery in tourism sector. Employment in real estate sector increased by 1.0 percent, improved from 4.9 percent
contraction in the third quarter. At the end of the fourth quarter, unemployment rate was remain as low as 1.1 percent and social security scheme had covered 8.78 million employees, increased by 1.5 percent from the same period last year.
However, some indicators pointed out that the recovery in economic condition has not yet fully
reflected in labor market. This was because the businesses that revealed better performances are mostly capital incentive industry. Therefore the ratio of job vacancy to the number of registered applicants declined from 1.53 in the fourth quarter last year to 0.98.
- External stability was favorable. International reserves stood at 87.455 billion US dollar 3 at the end of December 2007 (with additional net forward position of 19.086 billion US dollar), higher than
80.687 billion US dollar at the end of September 2007 (with 12.854 billion US dollar of net forward
position). At the end of 2007, foreign reserve was 3.9 times of short-term foreign debts, and equivalent to 6.7 months of imports
- Fiscal balance recorded a deficit In the first quarter of fiscal year 2008 (October — December
2007), the total of government revenue was 329,266 millions baht, increased by 8.0 percent from the first quarter in 2007, whereas the government expenditure was 393,274 millions baht, increased by 31.0 percent. Thus, budget balance recorded a deficit of 64,008 millions baht, increased by 68,639 millions baht. Off-budget balance also recorded a deficit of 51,638 millions baht because bill of exchange of around 33,000 millions baht, was on dued date. In addition, value-added tax was allocated to local administration for 10,060 millions baht. Therefore, cash balance recorded a deficit in 115,646 millions baht, increased by 52,748 millions baht percent form the first quarter of 2007. The deficit was financed by issuance of government bond of 42,500 million baht and the withdrawal of treasury reserves of 73.146 million baht.
Public Debt At the end of December 2007, public debt stood at 3.17 billions baht, or around 37.9 percent of GDP, increased from 37.84 percent of GDP at the end of September 2007. However, public debt in this quarter was decreased from 40.48 percent of GDP at the end of December 2006.
(Continue to).../Financial conditions:..