Thai economy stays on downtrend in November

The value of merchandise exports continued to contract, mainly due to the economic slowdown of trading partners, consistent with deterioration in merchandise imports, manufacturing production and private investment indicators.
Public spending also contracted from both current and capital expenditures as private consumption indicators edged up amid the government’s economic stimulus measures.
However, the tourism sector continued its expansion during the month.
On the stability front, headline inflation edged up from the previous month on the back of higher core inflation and lower contraction in energy prices.
The seasonally adjusted unemployment rate slightly increased while the number of employed persons was unchanged. The current account remained in surplus while the capital and financial accounts posted a deficit from the asset position.

Details of economic conditions in November:

The value of merchandise exports, excluding gold, contracted by 7.7 per cent from the same period last year.
The contraction of exports in almost all categories was due to 1) the economic slowdown of trading partners; 2) the non-obvious recovery in electronic cycle; and 3) the contraction of global crude oil prices, coupled with the temporary maintenance shutdown of some oil refineries, leading to the contraction of petroleum-related products exports, both in terms of prices and quantity.
Additionally, structural changes in production and global trade as a result of trade tensions caused some Thai export items being replaced by Chinese products in the Asean market.
However, exports of agro-manufacturing products continued to expand. As a consequence of the merchandise exports contraction, manufacturing production continued to decline.
The value of merchandise imports contracted by 13.9 per cent from the same period last year, excluding gold while imports value contracted by 15.4 per cent.
The contraction of imports in almost all categories, consistent with softening economic activities, was attributable to 1) imports of raw materials and intermediate goods especially in crude oil, partly due to the maintenance shutdown of some oil refineries; 2) imports of capital goods mainly from turbo-jets and telecommunication equipment; and 3) imports of consumer goods particularly in fishery products due to the high base effect last year.
Private investment indicators continued to deteriorate from the same period last year as a result of weak domestic and external demands and the low rate of capacity utilisation in the manufacturing sector, causing businesses to delay investment.
Consequently, investment in machinery and equipment continued to contract from imports of capital goods, domestic machinery sales, and the number of newly-registered motor vehicles.
Meanwhile, investment in construction declined from permitted construction area for residential purposes, consistent with subdued activities in the real estate sector. However, the permitted construction area for manufacturing purposes continued to grow while the permitted construction area for commercial and other purposes expanded in November.
Public spending, excluding transfers, contracted from both current and capital expenditures. Current expenditures contracted due to purchases of goods and services from disbursement of some national security authorities.
Meanwhile, central government’s capital expenditures continued to contract as the FY2020 budget has yet to be enforced. State enterprises' capital expenditures contracted slightly, mainly among energy-related agencies.
Private consumption indicators expanded at a slightly higher pace from the same period last year but continued to be on a decelerating trend relative to the first half of the year, in line with softening non-farm income and consumer confidence, together with financial institutions’ tightening of credit standards for auto-leasing loans after a deterioration in credit quality. Meanwhile, the government’s economic stimulus measures continued to support households' purchasing power to a certain extent.
In November, spending on non-durable goods and services decelerated, after accelerating in the previous month due to the government’s economic stimulus measures. Nevertheless, spending on semi-durable and durable goods continued to contract, especially in vehicle sales.
The number of foreign tourist arrivals continued to expand at 5.9 per cent compared with the same period last year from 1) the exemption of the visa on arrival fee, encouraging more visitors from China, India, and Taiwan; 2) the recovery of the Russian economy and an increase in airline route from Russia to Thailand, supporting more Russian tourists; and 3) the continued expansion of other Asian tourists from Laos and Japan etc.
The number of foreign tourist grew at a slower pace from the previous month while the low base effect from the tour boat incident in Phuket last year fades out.
On the stability front, headline inflation stood at 0.21 per cent, accelerating from last month on the back of lower contraction in energy prices due to higher domestic retail petroleum prices from the previous month, and a slightly increase in core inflation.
The seasonally-adjusted unemployment rate slightly increased while the number of employed persons was unchanged. The current account remained in surplus. The overall capital and financial accounts registered a deficit from the asset position as a result of Thai Direct Investment (TDI) especially in equity, and portfolio investment in debt securities of Thai investors.