- Production side:
- Agricultural sector expanded by 6.5 percent, notably picked up from 3.5 percent in the first quarter of 2008, and average expansion of 3.9 percent in 2007. Increased production of major agricultural products included rice, sugar cane, palm and rubber. As a result of rising price of rice since the beginning of the year, farmer expanded plantation area. Oil palm production increased as a result of good weather. Crop with increased price included rice, cassava, corn, and rubber. Due to decline in world rice production and tighter regulation on exporting country as well as concern of importing country on food security, demand on import continued to rise. As a result, Thai rice export accelerated to 61.43 percent growth in the second quarter, and 56.1 percent in the first half of 2008. Energy crop price also significantly increased spurred by greater demand for alternative energy. Sharp rise in agriculture prices associated with continued expansion of products, farm income rose impressively by 53.2 percent in the second quarter. All in all in the first half, agricultural production grew by 4.9 percent.
- Industrial sector expanded by 8.0 percent, decelerating from 9.9 percent in the first quarter of 2008 stemmed from a slowdown in domestic spending and main export-oriented industries such as electronics, electrical appliances and automobile and parts. Slumping industries included wood furniture for export to the US market, hampered by real estate crisis. In the second quarter of 2008, capacity utilization rate was at 72.3 percent, slightly lower than 73.5 percent in the same quarter of 2007. The first half of 2008, industry sector expanded by 9.0 percent.
- Construction sector in the second quarter of 2008 contracted by 3.9 percent, worsen further from the expansion of 1.1 percent in the first quarter of 2008. The declining was a result of a contraction in government construction. However, private investment in construction slightly expanded in housing and commerce building construction. Unfavourable factors for construction sector were mainly the sharp rises in prices of construction materials, especially steel prices which increased markedly by 61.5 percent. Rising wage also fuelled construction cost.
- Hotel and restaurant sector expanded by 5.0 percent in the second quarter of 2008, slowing down from 8.3 percent in the first quarter of 2008. Numbers of foreign tourists registered 15.0 percent growth, accelerating fairly from 13.3 percent in the first quarter. Nevertheless, occupancy rate was at 54.5 percent, the same rate as that in the same quarter of last year. This slowing trend of this sector was due to soaring oil price, traveling costs and higher inflation, which hampered spending of both foreign and Thai tourisms. Moreover, appreciation of the Thai baht stimulated overseas traveling of Thai tourists.
- Financial sector grew by 8.9 percent, thanks to credit expansion, especially for business sector. This reflected higher demand for working capital as raw materials and transportation cost increased, growing consumer loans mainly in housing and car leasing, which led to increase in net interest income, and returns on investment in debt securities market. However, the financial sector slowed down from 9.6 percent in the first quarter which expanded from very low base in the first quarter of 2007.
- The overall energy efficiency continued to improve with a more balance and flexible
energy structure.
- A continuous decline in the ratio of petroleum used to GDP indicated that overall energy efficiency had been improved. In the second quarter of 2008, the ratio stood at 0.9498, though slightly increased from 0.9196 in the previous quarter, but relatively lowers than that in the same period of last year. The improvement was also seen in a significant shift towards consumption of alternative energy
which is currently available at lower cost than traditional benzene and diesel. Effectively, GDP was generated at lower cost as the utilization of petroleum products became more efficient and more concentrated in cheaper fuel.
- Domestic consumption of petroleum products: Gasohol and bio-diesel consumption rose sharply. During the second quarter, consumption of gasohol increased by 94.7 percent with average daily usage of 8.4 million litre while bio-diesel consumption recorded its significant growth at 645 percent from the low base with average daily usage of 9.7 million litre. Consumption of LPG and NGV similarly expanded by 20.8 and 220.2 percent respectively. On the contrary, consumption of traditional benzene 95 and 91 and diesel continued to decline sharply by 70.3, 22.4 and 20.5 percent respectively. The figures showed a fuel shift of consumers towards the alternative energy of which prices are evidently lower than those of the traditional energy. Continued soaring prices of oil to new historical records have encouraged such significant change. Higher oil prices also favorably led to a more balance of energy structure used in production sector. For
example, diesel price was previously subsidized by the government as diesel was mainly used for commercial and transportation purpose. As a result, sales of pick-up truck had continually grown up during that period, however, the behavior has recently changed since the government decided to float the diesel price. In
particular, sale of pick-up truck has dropped dramatically during the last two quarters as diesel price continued its upward spiking. This indicates that consumption behavior has been shifted toward more appropriate and reasonable structure. However, the government is required to manage energy structure to reduce structural distortion and promote appropriate use of energy types among different user groups especially the use of LPG which is currently required a substantial import.
- Economic stability: Unemployment rate remains low but inflationary pressure mounted while
current account turned deficit in the second quarter.
- Inflationary pressure was fuelled by continued and sharp in crease in food and
fuel prices. In the second quarter, headline inflation was 7.5 percent higher than 5.0 percent in the first quarter, mainly due to rapid surge in prices of food as well as transportation and communication cost which increased at accelerating rates of 11.0 and 12.5 percent respectively. Substantial increases were seen in
food category such as cooking oil, rice, flour, meats, eggs and seasoning. In the category of transportation and communication, fuel prices were significantly lifted up by 33.6 percent. For the first half year, headline inflation was averaged at 6.3 percent.(B) The latest July figure exhibited a 9.2 inflation rate suggesting that concern over rising cost of living will not disappear for anytime soon.
-------- Note:(B) Headline inflation was 9.2 percent in July and 6.6 percent for the first seven months.
Petroleum Consumption
(% YoY) ---------------2007------------- ---------2008---------
Year H1 Q3 Q4 Q1 Q2 H1
Benzene 1.69 2.11 4.39 -1.71 -1.92 -5.22 -3.58
Octane(91 + 95) -6.10 -0.20 -4.70 -18.78 -26.42 -32.01 -29.17
Gasohol 37.79 12.91 46.23 77.03 111.95 94.07 102.15
Diesel 2.13 0.73 5.61 1.81 -0.37 -3.99 -2.15
HSD+LSD -1.22 -1.17 1.78 -4.15 -10.23 -20.44 -15.22
B5 1360.62 1081.61 1768.31 1391.93 787.29 645.00 693.64
LPG 14.30 12.59 13.59 18.15 17.59 20.82 19.24
NGV 117.61 102.92 113.29 139.80 190.52 220.18 206.97
Source : EPPO
(Continue to).../Core Inflation..
- Agricultural sector expanded by 6.5 percent, notably picked up from 3.5 percent in the first quarter of 2008, and average expansion of 3.9 percent in 2007. Increased production of major agricultural products included rice, sugar cane, palm and rubber. As a result of rising price of rice since the beginning of the year, farmer expanded plantation area. Oil palm production increased as a result of good weather. Crop with increased price included rice, cassava, corn, and rubber. Due to decline in world rice production and tighter regulation on exporting country as well as concern of importing country on food security, demand on import continued to rise. As a result, Thai rice export accelerated to 61.43 percent growth in the second quarter, and 56.1 percent in the first half of 2008. Energy crop price also significantly increased spurred by greater demand for alternative energy. Sharp rise in agriculture prices associated with continued expansion of products, farm income rose impressively by 53.2 percent in the second quarter. All in all in the first half, agricultural production grew by 4.9 percent.
- Industrial sector expanded by 8.0 percent, decelerating from 9.9 percent in the first quarter of 2008 stemmed from a slowdown in domestic spending and main export-oriented industries such as electronics, electrical appliances and automobile and parts. Slumping industries included wood furniture for export to the US market, hampered by real estate crisis. In the second quarter of 2008, capacity utilization rate was at 72.3 percent, slightly lower than 73.5 percent in the same quarter of 2007. The first half of 2008, industry sector expanded by 9.0 percent.
- Construction sector in the second quarter of 2008 contracted by 3.9 percent, worsen further from the expansion of 1.1 percent in the first quarter of 2008. The declining was a result of a contraction in government construction. However, private investment in construction slightly expanded in housing and commerce building construction. Unfavourable factors for construction sector were mainly the sharp rises in prices of construction materials, especially steel prices which increased markedly by 61.5 percent. Rising wage also fuelled construction cost.
- Hotel and restaurant sector expanded by 5.0 percent in the second quarter of 2008, slowing down from 8.3 percent in the first quarter of 2008. Numbers of foreign tourists registered 15.0 percent growth, accelerating fairly from 13.3 percent in the first quarter. Nevertheless, occupancy rate was at 54.5 percent, the same rate as that in the same quarter of last year. This slowing trend of this sector was due to soaring oil price, traveling costs and higher inflation, which hampered spending of both foreign and Thai tourisms. Moreover, appreciation of the Thai baht stimulated overseas traveling of Thai tourists.
- Financial sector grew by 8.9 percent, thanks to credit expansion, especially for business sector. This reflected higher demand for working capital as raw materials and transportation cost increased, growing consumer loans mainly in housing and car leasing, which led to increase in net interest income, and returns on investment in debt securities market. However, the financial sector slowed down from 9.6 percent in the first quarter which expanded from very low base in the first quarter of 2007.
- The overall energy efficiency continued to improve with a more balance and flexible
energy structure.
- A continuous decline in the ratio of petroleum used to GDP indicated that overall energy efficiency had been improved. In the second quarter of 2008, the ratio stood at 0.9498, though slightly increased from 0.9196 in the previous quarter, but relatively lowers than that in the same period of last year. The improvement was also seen in a significant shift towards consumption of alternative energy
which is currently available at lower cost than traditional benzene and diesel. Effectively, GDP was generated at lower cost as the utilization of petroleum products became more efficient and more concentrated in cheaper fuel.
- Domestic consumption of petroleum products: Gasohol and bio-diesel consumption rose sharply. During the second quarter, consumption of gasohol increased by 94.7 percent with average daily usage of 8.4 million litre while bio-diesel consumption recorded its significant growth at 645 percent from the low base with average daily usage of 9.7 million litre. Consumption of LPG and NGV similarly expanded by 20.8 and 220.2 percent respectively. On the contrary, consumption of traditional benzene 95 and 91 and diesel continued to decline sharply by 70.3, 22.4 and 20.5 percent respectively. The figures showed a fuel shift of consumers towards the alternative energy of which prices are evidently lower than those of the traditional energy. Continued soaring prices of oil to new historical records have encouraged such significant change. Higher oil prices also favorably led to a more balance of energy structure used in production sector. For
example, diesel price was previously subsidized by the government as diesel was mainly used for commercial and transportation purpose. As a result, sales of pick-up truck had continually grown up during that period, however, the behavior has recently changed since the government decided to float the diesel price. In
particular, sale of pick-up truck has dropped dramatically during the last two quarters as diesel price continued its upward spiking. This indicates that consumption behavior has been shifted toward more appropriate and reasonable structure. However, the government is required to manage energy structure to reduce structural distortion and promote appropriate use of energy types among different user groups especially the use of LPG which is currently required a substantial import.
- Economic stability: Unemployment rate remains low but inflationary pressure mounted while
current account turned deficit in the second quarter.
- Inflationary pressure was fuelled by continued and sharp in crease in food and
fuel prices. In the second quarter, headline inflation was 7.5 percent higher than 5.0 percent in the first quarter, mainly due to rapid surge in prices of food as well as transportation and communication cost which increased at accelerating rates of 11.0 and 12.5 percent respectively. Substantial increases were seen in
food category such as cooking oil, rice, flour, meats, eggs and seasoning. In the category of transportation and communication, fuel prices were significantly lifted up by 33.6 percent. For the first half year, headline inflation was averaged at 6.3 percent.(B) The latest July figure exhibited a 9.2 inflation rate suggesting that concern over rising cost of living will not disappear for anytime soon.
-------- Note:(B) Headline inflation was 9.2 percent in July and 6.6 percent for the first seven months.
Petroleum Consumption
(% YoY) ---------------2007------------- ---------2008---------
Year H1 Q3 Q4 Q1 Q2 H1
Benzene 1.69 2.11 4.39 -1.71 -1.92 -5.22 -3.58
Octane(91 + 95) -6.10 -0.20 -4.70 -18.78 -26.42 -32.01 -29.17
Gasohol 37.79 12.91 46.23 77.03 111.95 94.07 102.15
Diesel 2.13 0.73 5.61 1.81 -0.37 -3.99 -2.15
HSD+LSD -1.22 -1.17 1.78 -4.15 -10.23 -20.44 -15.22
B5 1360.62 1081.61 1768.31 1391.93 787.29 645.00 693.64
LPG 14.30 12.59 13.59 18.15 17.59 20.82 19.24
NGV 117.61 102.92 113.29 139.80 190.52 220.18 206.97
Source : EPPO
(Continue to).../Core Inflation..