Core Inflation continued to accelerate. In the second quarter, core inflation was 2.8 percent
continued to increase from 1.5 percent of the previous quarter. This was due to higher prices of various products such as processed food, construction materials, miscellaneous appliances, drug and medical care
commodities, personal care expenditures and education expenditures at university level. For the first half year, core inflation was averaged at 2.2 percent.(C)
Producer price index, in the second quarter, continued to rise by 15.6 percent increasing from 10.8 percent of the previous quarter. The price index went up in raw materials and final goods by 27.7 and 24.0 percent respectively. In additional, the price of final goods increased 9.2 percent similar to the previous quarter, this was mainly due to the up surge of food prices such as rice, starch and meat. For the first half year, producer price index increased 13.3 percent.(D)
- The average employment in the second quarter of 2008 was 36.80 million people, increased by 2.8 percent from the same period of last year. Agricultural sector employed 13.69 million people, increased by 2.7 percent while non-agricultural sectors employment were 23.12 million people, increased by 2.9 percent. Employment in the construction, trade and hotel and restaurant sector grew by 3.1, 3.5 and 1.7 percent respectively. Regarding manufacturing sector, employment dropped by 1.5 percent in response to production slowdown. The unemployment rate remained low at 1.4 percent. By the end of the second quarter, there were 381,828 establishments registered for social security. The insured persons increased by 1.0 percent from the same period last year to the total of 8.79 million people. Up until the end of second quarter of this year, Social Security Fund was accumulated to 569,113 million baht, and has provided services to 1.79 million members or around 20 percent of insured persons. Despite economic slowdown, working opportunity slightly improved, as job vacancy to applicants’ ratio rose to 0.84 times, compared to 0.76 times in the same quarter last year.
-------- Note (C) Core inflation was 3.7% in July and 2.4% for the first seven months.
(D) Producer price index increased 21.2 % in July and 14.4% for the first seven months.
- External stability remained in check: International reserve stood at 106.018 billion US dollars at the end of June (Net Forward Position, 18.264 billion US dollars) declined from 109.678 billion US dollars at the end of March 2008 , equivalent to 3.8-4.2 times of short-term foreign debts or 7.4 months of imports.
- Fiscal balance turned surplus for the first time in FY 2008. In the third quarter of fiscal year 2008 (April — June 2008), the total of government revenue was 515,122.75 million baht, increased by 12.6 percent from the same quarter of last year, whereas the government expenditure was 424,600.94 million baht, increased by 1.75 percent. This resulted in a surplus of 90,521.81 million baht, 50,502.06 million baht increase from the same period of last year. Including non-budgetary deficit of 22,538.15 million baht, the government cash balance gained a surplus of 67,983.66 million baht, compared to 268.32 million baht deficit in the same quarter of FY 2007.
During the first three quarters of the fiscal year 2008 (October 2007 — June 2008), government revenue was totaled at 1,149,865.85 million baht, grew by 7.5 percent from the same period of last fiscal year, owing to larger tax collection particularly corporate income tax, value added tax, petroleum income tax, and import duties. Regarding government expenditure, the total disbursement was 1,220,082.43 million baht, 5.7 percent increased from the same period of last fiscal year. As a result, budget balance registered a deficit of 70,216.58 million baht, declined by 17.1 percent from to the same period of last fiscal year. Together with nonbudgetary deficit of 35,587.94 million baht, budget cash balance before borrowing fell to a deficit of 105,804.52 million baht, lower than a deficit in the same period of FY 2007 by 44.2 percent. Government bond and T-bill in total of 151,891.33 million baht were issued to finance budget deficit.
- Public debt at the end of June stood at 3.4 trillion baht, a 2.4 percent increase from the
outstanding at the end of the year 2007, mainly due to increasing government domestic debt to balance budget deficit. However, pubic debt to GDP ratio slightly declined to 35.82 percent, compared with 37.97 percent at the end of the year 2007.
- Financial conditions: In the second quarter policy interest rates remained unchanged but
money market interest rate increased, from lower liquidity and higher demand for capital in private sector especially for working capital. Capital raised from capital market and bank credits still expanded. Household credit increased from the increase demand for consumption expenditure especially on housing and car leasing. Meanwhile bank deposit declined in response to negative real interest rate. On quarterly average, Thai baht appreciated in nominal terms, but depreciated in effective terms. SET index had declined
with greater volatility, while debt securities market had gained popularity from foreign investors.
- Policy rate was kept unchanged at 3.25 percent per year throughout second quarter
while the tendency to rise had increased. On the 16th of July the Monetary Policy Committee (MPC) decided to raise the policy rate to 3.50 percent per year in a bid to fight against upward inflationary pressure. The movement of policy rate was in concordant with regional trend. In the US the Federal Reserve Board put Fed
Fund Rate on hold at 2 percent per year in the second quarter, as the concern over economic growth had outweighed inflationary hike. Euro zone maintained policy rate at 4.0 percent throughout the second quarter before a 0.25 percent raise in July. Japan had kept policy rate unchanged at 0.5 percent per year.
- Commercial banks’ deposit and lending interest rates were adjusted upward. However, real interest rate declined due to inflation hike. Average 3-month and 12-month time deposit rates of five major commercial banks increased from 2.13 and 2.32 percent per year at the end of first quarter to 2.50 and
2.88 percent per year at the end of the second quarter respectively. The MLR lending rate accelerated from 6.99 percent per year to 7.38 percent per year in the second quarter. Adjusted by accelerated inflation rate at 8.9 percent in June, the real 12-month time deposit rate turned to negative of 6.03 percent per year
while the real lending rate declined to 1.50 percent per year.
In July, inflation rate edged higher to 9.2 percent, and the real 12-month time deposit rate and the real lending rate thus lowered to negative of 6.33 percent and 1.8 percent per year respectively.
- Commercial banks’ deposits decreased. Commercial banks’ deposits contracted by 1.0
percent at the end of the second quarter compared to that of 2.5 percent growth at the end of the first quarter, due to acceleration in inflation rate which in turn push down real interest rate further. Thus, total saving and time deposit account have declined in all sizes of accounts. While, alternative saving instruments such as bill of exchange (B/E) gained popularity over traditional form of saving, due to its higher rate of return.
Loan classified by sector
----------- 2007 ---------- --- 2008---
%YOY Q1 Q2 Q3 Q4 Q1 Q2
Production 1.8 -0.6 -1.7 1.6 2.6 7.4
Construction 16.8 15.6 9.5 -2.4 -3.6 -23.4
Commercial 1.5 -0.8 -0.3 4.0 6.0 11.5
Finance and Banking -9.8 1.2 15.6 9.0 93.2 65.0
Real Estate -8.3 -0.9 0.2 5.5 5.5 18.0
Personal Consumption 9.1 12.2 12.5 14.0 13.3 16.0
Residential Acquisition 14.5 10.6 8.9 13.2 12.0 13.7
Purchase & Car Leasing -6.3 22.7 21.6 24.4 25.1 29.8
Source: BOT
- Commercial banks’ credits accelerated from greater demand. Commercial banks’ credits
expanded by 12.1 percent from the same period of last year; increase from 11.1 percent expansion in the first quarter. Credit extended by depository corporations (E) expanded by 9.3 percent (compared with 6.0 percent at the end of the first quarter). of which loans to corporate sector expanded by 7.7 percent. Considering by sectors, loans to production, wholesale and retail and real estate sectors increased by 7-18
percent, whereas loans to agriculture and construction sector declined. Especially, loan to construction sector contracted greatly by 23.4 percent, as the sector continually slowed down since fourth quarter of 2007, hampered by higher cost of doing business. Furthermore, loans to financial intermediations slightly
decreased. Household credits expanded by 9.8 percent, resulted from housing credits and credit for purchasing or hire purchasing cars and motor-cycle. Credit card spending slightly decreased from the preceding quarter, from tighter credit situation. While credit card outstanding balance expanded by 6 percent.
- iquidity in banking system has decreased. Continued acceleration in commercial bank credit and a decline in banks’ deposit have shifted the credit to deposits ratio upward to 102.5 at the end of June 2008, which indicate tighter liquidity situation. While excess liquidity in banking system, estimated as disposable
liquidity, was approximately 911 billion baht at the end of June, lower than 1,035 billion at the end of March.
- NPLs ratio showed little movement compare to that in the last quarter. NPLs in financial
institutions (excluding BIBF and credit fanciers) at the end of the second quarter equaled 231.8 billion baht, which was equivalent to 3.77 percent of total credits.
-------- Note (E) Depository Corporations comprises of all depository corporations excluding the Bank of Thailand, namely, domestically-registered commercial banks, branches of foreign banks, international bank
facilities, finance companies, specialized banks, thrift and credit cooperatives, and money market mutual funds.
(Continue to).../- Listed companies..
continued to increase from 1.5 percent of the previous quarter. This was due to higher prices of various products such as processed food, construction materials, miscellaneous appliances, drug and medical care
commodities, personal care expenditures and education expenditures at university level. For the first half year, core inflation was averaged at 2.2 percent.(C)
Producer price index, in the second quarter, continued to rise by 15.6 percent increasing from 10.8 percent of the previous quarter. The price index went up in raw materials and final goods by 27.7 and 24.0 percent respectively. In additional, the price of final goods increased 9.2 percent similar to the previous quarter, this was mainly due to the up surge of food prices such as rice, starch and meat. For the first half year, producer price index increased 13.3 percent.(D)
- The average employment in the second quarter of 2008 was 36.80 million people, increased by 2.8 percent from the same period of last year. Agricultural sector employed 13.69 million people, increased by 2.7 percent while non-agricultural sectors employment were 23.12 million people, increased by 2.9 percent. Employment in the construction, trade and hotel and restaurant sector grew by 3.1, 3.5 and 1.7 percent respectively. Regarding manufacturing sector, employment dropped by 1.5 percent in response to production slowdown. The unemployment rate remained low at 1.4 percent. By the end of the second quarter, there were 381,828 establishments registered for social security. The insured persons increased by 1.0 percent from the same period last year to the total of 8.79 million people. Up until the end of second quarter of this year, Social Security Fund was accumulated to 569,113 million baht, and has provided services to 1.79 million members or around 20 percent of insured persons. Despite economic slowdown, working opportunity slightly improved, as job vacancy to applicants’ ratio rose to 0.84 times, compared to 0.76 times in the same quarter last year.
-------- Note (C) Core inflation was 3.7% in July and 2.4% for the first seven months.
(D) Producer price index increased 21.2 % in July and 14.4% for the first seven months.
- External stability remained in check: International reserve stood at 106.018 billion US dollars at the end of June (Net Forward Position, 18.264 billion US dollars) declined from 109.678 billion US dollars at the end of March 2008 , equivalent to 3.8-4.2 times of short-term foreign debts or 7.4 months of imports.
- Fiscal balance turned surplus for the first time in FY 2008. In the third quarter of fiscal year 2008 (April — June 2008), the total of government revenue was 515,122.75 million baht, increased by 12.6 percent from the same quarter of last year, whereas the government expenditure was 424,600.94 million baht, increased by 1.75 percent. This resulted in a surplus of 90,521.81 million baht, 50,502.06 million baht increase from the same period of last year. Including non-budgetary deficit of 22,538.15 million baht, the government cash balance gained a surplus of 67,983.66 million baht, compared to 268.32 million baht deficit in the same quarter of FY 2007.
During the first three quarters of the fiscal year 2008 (October 2007 — June 2008), government revenue was totaled at 1,149,865.85 million baht, grew by 7.5 percent from the same period of last fiscal year, owing to larger tax collection particularly corporate income tax, value added tax, petroleum income tax, and import duties. Regarding government expenditure, the total disbursement was 1,220,082.43 million baht, 5.7 percent increased from the same period of last fiscal year. As a result, budget balance registered a deficit of 70,216.58 million baht, declined by 17.1 percent from to the same period of last fiscal year. Together with nonbudgetary deficit of 35,587.94 million baht, budget cash balance before borrowing fell to a deficit of 105,804.52 million baht, lower than a deficit in the same period of FY 2007 by 44.2 percent. Government bond and T-bill in total of 151,891.33 million baht were issued to finance budget deficit.
- Public debt at the end of June stood at 3.4 trillion baht, a 2.4 percent increase from the
outstanding at the end of the year 2007, mainly due to increasing government domestic debt to balance budget deficit. However, pubic debt to GDP ratio slightly declined to 35.82 percent, compared with 37.97 percent at the end of the year 2007.
- Financial conditions: In the second quarter policy interest rates remained unchanged but
money market interest rate increased, from lower liquidity and higher demand for capital in private sector especially for working capital. Capital raised from capital market and bank credits still expanded. Household credit increased from the increase demand for consumption expenditure especially on housing and car leasing. Meanwhile bank deposit declined in response to negative real interest rate. On quarterly average, Thai baht appreciated in nominal terms, but depreciated in effective terms. SET index had declined
with greater volatility, while debt securities market had gained popularity from foreign investors.
- Policy rate was kept unchanged at 3.25 percent per year throughout second quarter
while the tendency to rise had increased. On the 16th of July the Monetary Policy Committee (MPC) decided to raise the policy rate to 3.50 percent per year in a bid to fight against upward inflationary pressure. The movement of policy rate was in concordant with regional trend. In the US the Federal Reserve Board put Fed
Fund Rate on hold at 2 percent per year in the second quarter, as the concern over economic growth had outweighed inflationary hike. Euro zone maintained policy rate at 4.0 percent throughout the second quarter before a 0.25 percent raise in July. Japan had kept policy rate unchanged at 0.5 percent per year.
- Commercial banks’ deposit and lending interest rates were adjusted upward. However, real interest rate declined due to inflation hike. Average 3-month and 12-month time deposit rates of five major commercial banks increased from 2.13 and 2.32 percent per year at the end of first quarter to 2.50 and
2.88 percent per year at the end of the second quarter respectively. The MLR lending rate accelerated from 6.99 percent per year to 7.38 percent per year in the second quarter. Adjusted by accelerated inflation rate at 8.9 percent in June, the real 12-month time deposit rate turned to negative of 6.03 percent per year
while the real lending rate declined to 1.50 percent per year.
In July, inflation rate edged higher to 9.2 percent, and the real 12-month time deposit rate and the real lending rate thus lowered to negative of 6.33 percent and 1.8 percent per year respectively.
- Commercial banks’ deposits decreased. Commercial banks’ deposits contracted by 1.0
percent at the end of the second quarter compared to that of 2.5 percent growth at the end of the first quarter, due to acceleration in inflation rate which in turn push down real interest rate further. Thus, total saving and time deposit account have declined in all sizes of accounts. While, alternative saving instruments such as bill of exchange (B/E) gained popularity over traditional form of saving, due to its higher rate of return.
Loan classified by sector
----------- 2007 ---------- --- 2008---
%YOY Q1 Q2 Q3 Q4 Q1 Q2
Production 1.8 -0.6 -1.7 1.6 2.6 7.4
Construction 16.8 15.6 9.5 -2.4 -3.6 -23.4
Commercial 1.5 -0.8 -0.3 4.0 6.0 11.5
Finance and Banking -9.8 1.2 15.6 9.0 93.2 65.0
Real Estate -8.3 -0.9 0.2 5.5 5.5 18.0
Personal Consumption 9.1 12.2 12.5 14.0 13.3 16.0
Residential Acquisition 14.5 10.6 8.9 13.2 12.0 13.7
Purchase & Car Leasing -6.3 22.7 21.6 24.4 25.1 29.8
Source: BOT
- Commercial banks’ credits accelerated from greater demand. Commercial banks’ credits
expanded by 12.1 percent from the same period of last year; increase from 11.1 percent expansion in the first quarter. Credit extended by depository corporations (E) expanded by 9.3 percent (compared with 6.0 percent at the end of the first quarter). of which loans to corporate sector expanded by 7.7 percent. Considering by sectors, loans to production, wholesale and retail and real estate sectors increased by 7-18
percent, whereas loans to agriculture and construction sector declined. Especially, loan to construction sector contracted greatly by 23.4 percent, as the sector continually slowed down since fourth quarter of 2007, hampered by higher cost of doing business. Furthermore, loans to financial intermediations slightly
decreased. Household credits expanded by 9.8 percent, resulted from housing credits and credit for purchasing or hire purchasing cars and motor-cycle. Credit card spending slightly decreased from the preceding quarter, from tighter credit situation. While credit card outstanding balance expanded by 6 percent.
- iquidity in banking system has decreased. Continued acceleration in commercial bank credit and a decline in banks’ deposit have shifted the credit to deposits ratio upward to 102.5 at the end of June 2008, which indicate tighter liquidity situation. While excess liquidity in banking system, estimated as disposable
liquidity, was approximately 911 billion baht at the end of June, lower than 1,035 billion at the end of March.
- NPLs ratio showed little movement compare to that in the last quarter. NPLs in financial
institutions (excluding BIBF and credit fanciers) at the end of the second quarter equaled 231.8 billion baht, which was equivalent to 3.77 percent of total credits.
-------- Note (E) Depository Corporations comprises of all depository corporations excluding the Bank of Thailand, namely, domestically-registered commercial banks, branches of foreign banks, international bank
facilities, finance companies, specialized banks, thrift and credit cooperatives, and money market mutual funds.
(Continue to).../- Listed companies..