Economic growth moderates in February

Nevertheless, tourism thrived while overall economic stability was well maintained, with low unemployment, easing inflation and a surplus in the balance of payments.

Thailand welcomed 2.34 million tourists in February, up 26.2 per cent from the same period last year. Hotels showed a high occupancy rate of 74.2 per cent. In comparison, tourist arrivals in 2011 and 2012 were 19.23 million and 22.3 million respectively, while hotel occupancy was 57.5 per cent and 60.9 per cent, respectively. 

Domestic spending, exports and manufacturing production moderated from the previous month after having expanded strongly. The private consumption index dropped 0.5 per cent year on year, along with a decline in the import of consumer goods, both durable and non-durable, and the associated drop in import-based VAT collection. 

Overall VAT collection, however, expanded, and automobile purchases remained at an exceptionally high level. Passenger car sales increased by 92.1 per cent compared to the same period in 2012. In February last year, the flood-affected Ayutthaya plant of Honda Automobile (Thailand), the biggest passenger carmaker, was being rehabilitated. Value-added tax also increased by 3.3 per cent year on year, indicating an increase in overall consumption. 

The Private Investment Index, meanwhile, declined by 2.4 per cent month on month due to lower capital imports and permitted commercial construction areas. However, investment in domestic machinery and commercial cars continued to grow. Private investment rose 9.5 per cent year on year. 

Export value in February dropped by 3.4 per cent month on month to US$17.77 billion. Agricultural exports suffered from supply constraints, in particular the prawn disease, while electronics exports continued to be affected by weak global demand, and automobile exports moderated as automakers gave priority to the domestic market. Nevertheless, exports of electrical appliances, particularly air-conditioners, rose as a result of stronger demand from Asean countries and the Middle East.

The Manufacturing Production Index (MPI) dropped by 1.4 per cent month on month. Food and beverage production contracted due to raw material constraints, especially sugarcane and prawn. Despite utilisation of full capacity, automobile production dropped in February due to fewer working days, while production of integrated circuits and parts continued to be subdued as global demand remained weak. 

Merchandise import value for this month totalled $17.19 billion, declining by 8.9 per cent month on month in all product categories, in particular in fuels and capital goods. Even though private spending moderated, household income remained strong, thanks in part to expanding employment. Furthermore, farm income stayed at a high level despite some decline from the previous month as a result of lower prices, particularly of rubber which was affected by easing demand from China after having already built up inventory in the period leading up to the Chinese new year. 

Agricultural production rose from the previous month, however, on the back of increased rubber production following an expansion in planting area over the past few years.

Unemployment was low, and headline inflation moderated from the previous month to 3.23 per cent year on year, thanks to a decline in energy prices as well as fresh food prices as a result of increased supply of vegetables and fruits. The balance of payments was in surplus from net capital inflows, mainly as a result of short-term loans by financial institutions for foreign exchange swap transactions, together with a current account surplus.