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1
Thailand Economic Situation in 2002
Thailand Economic Situation in 2002
Arkhom TermpittayapaisithAssistant Secretary-General
National Economic and Social Development Board
28 August 2002
2
GDP in 1st quarter of 2002
GDP in 1st quarter of 2002
3
GDP Growth in 1Q 02
3.6
8.2
6.46.8
6
2.3
3.5
1.7 1.8 1.62.1
3.9
-0.2
3.8
1.71.6
0.10.4
1.3
0.4-0.1
1.70.7
0.1
1.8
-0.3-1
0
1
2
3
4
5
6
7
8
9
42/Q1 Q2 Q3 Q4 43/Q1 Q2 Q3 Q4 44/Q1 Q2 Q3 Q4 45/Q1
GDP GDP Seasonalized
4
2001 2002
Q1 Q2 Q3 Q4 Year Q1
Agriculture 0.9 1.4 -1.7 4.2 1.6 5.1
Non-Agriculture 1.8 1.9 1.9 1.8 1.8 3.8
• Manufacturing 1.2 1.5 0.8 1.4 1.2 4.1
• Electricity and Water Supply 6.1 5.9 8.9 3.9 6.2 5.2
• Construction -8.1-
12.9
3.0 7.3 -3.0 6.7
• Wholesale and Retail Trade 3.3 2.2 0.3 0.5 1.6 2.2
• Transportation 3.2 4.3 3.1 3.8 3.6 2.4
• Hotels 6.7 5.6 3.9 2.6 4.6 4.7
• Financial Intermediation 0.4 1.2 1.7 2.7 1.5 4.8
• Others 0.4 1.7 3.2 1.0 1.6 4.3
GDP 1.7 1.8 1.6 2.1 1.8 3.9
GDP Growth (Supply Side)
5
2001 2002
Q1 Q2 Q3 Q4 Year Q1
• Private Consumption 3.8 3.9 2.9 3.0 3.4 3.6
- excluding tourism
2.9 3.1 3.3 3.1 3.1 3.5
• Government Consumption 2.5 6.5 1.7 -4.2 1.6 8.0
• Investment -4.1 5.4 2.3 -0.2 0.8 3.5
- Private 10.8 5.3 0.0 4.5 5.1 7.8
- Public -24.1 5.9 5.3 -11.0 -6.6 -5.1
• Exports -2.0 -1.1 -8.7 -4.6 -4.2 5.2
- Goods -3.5 -1.6 -10.6 -5.5 -5.5 3.9
- Services 4.6 1.2 0.9 -0.9 1.4 10.3
• Imports -3.5 -7.1 -12.7 -9.4 -8.3 1.5
- Goods -6.0 -10.0 -14.4 -11.8 -10.6 -0.9
- Services 11.4 9.6 -3.6 3.1 4.6 14.1
GDP Growth (Demand Side)
6
2001 2002
Q1 Q2 Q3 Q4 Year Q1
Domestic Demand 1.4 3.8 2.3 1.2 2.1 3.3
• Private Consumption 2.0 2.2 1.6 1.6 1.8 1.9
• Government Consumption 0.2 0.6 0.2 -0.4 0.1 0.7
• Investment -0.8 1.1 0.5 0.0 0.2 0.7
- Private 1.3 0.7 0.0 0.6 0.6 1.0
- Public -2.1 0.4 0.5 -0.6 -0.5 -0.3
Net Exports 0.4 2.9 0.8 1.5 1.4 2.4
• Exports -1.2 -0.7 -6.1 -3.1 -2.8 3.0
• Imports -1.6 -3.6 -6.9 -4.6 -4.1 0.7
Inventories 1.6 -1.7 -0.4 0.2 0.0 -1.7
GDP 3.4 5.1 2.7 2.9 3.5 4.0
Source of Growth (Demand Side)
7
Key Economic IndicatorsKey Economic Indicators
8
Key Economic Indicators
2001 2002
Q1 Q2 Q3 Q4 Q1 Q2
Manufacturing Production Index (SA)
113.3 112.3 112.7 115.6 118.3 121.3
Industrial Capacity Utilization
55.4 51.7 52.2 55.1 58.2 57.8
Private Consumption Index
101.5 102.3 103.5 104.2 104.1 106.1
Private Investment Index
3
9.9
4
2 .8
3
9.7
4
4.1
4
5 .6
5
0 .6
Gov’t Cash Balance (Bil. Baht)
-35.4 6.3 -24.8 -69.0 -70.7 35.8
Exports (Bil. US $) 16.0 15.6 16.0 15.5 15.0 16.1
(% Change) (-1.2) (-0.7) (-11.0) (-13.4) (-6.3) (3.4)
Imports (Bil. US $) 15.9 15.2 15.0 14.5 14.3 15.5
(% Change) (11.5) (2.9) (-9.1) (-13.9) (-10.2) (2.0)
Source: BOT
9
International Trade
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
-50
-40
-30
-20
-10
0
10
20
30
40
50
Current Account (Mil.US) Import Growth (%)
Export Growth (%) Trade Account (Mil.US$)
Source: BOT
10Growth of Exports Classified by Commodities
2001 2002
Q1 Q2 Q3 Q4 Q1 Q2
Total Exports -1.2 -0.7 -11.0 -13.4 -6.3 3.5
• Volume -3.5 -1.6 -10.5 -5.3 8.8 16.3
• Unit Value 2.3 1.0 -0.6 -8.6 -13.8 -11.1
Agriculture Products -3.3 -0.2 -2.4 -6.1 5.1 1.1
• Volume 11.1 20.1 14.7 5.9 14.5 -0.4
• Unit Value -13.1 -16.8 -15.1 -11.1 -8.3 1.4
Manufacturing Products -1.1 -0.2 -12.1 -13.3 -6.9 4.2
• Volume -4.6 -3.0 -13.4 -6.1 8.5 18.8
• Unit Value 3.8 3.0 1.3 -7.7 -14.1 -12.2Source: BOT
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-80%
-60%
-40%
-20%
0%
20%
40%
60%1997
1998
1999
2000
2001
2002
0
10
20
30
40
50
60
70
80
Private Investment Index(%)Private Investment (%)Business Expectations Index
Private Investment, Private Investment Index, and Business Expectations Index
12
1997 1998 1999 2000 2001 2002-15
-10
-5
0
5
10
15
Private Consumption Index
Private Consumption Expenditure
Growth of PCE and Private Consumption Index
13
40
45
50
55
60
65
70
1997 1998 1999 2000 2001 2002
-15
-10
-5
0
5
10
15
20
Industrial Capacity UtilizationMPI
Growth of MPI, and Industrial Capacity Utilization
14
Employment2001 2002
Mar Mar Apr May p
Labor Force (thousands)
328.7
33.12
33.89
33.96
Employed Persons (thousands)
303.9
31.45
31.94
31.97
Unemployed Persons (thousands)
133. 09.0
12.5
10.0
Unemployment Rate (%)
40. 27. 37. 29.
Insured Persons (millions)
5.80 5.98 6.30 65.9
Change (% yoy) 0.1 30. 85. 12.8
Growth Rate of Newly Employed
-17.1 -32.0
-19.8
-20.2
Growth Rate of Thai Traveling Abroad
-14.3 -13.9 -16.9 -18.7
Growth Rate of Persons Loosing Jobs
-13.5 16.1
-19.5
-35.0
Source: NSO, BOT, MOL
15
2001 2002
Q1 Q2 Q3 Q4 Q1 Q2
MLR 1/ 7.40 7.40 7.40 7.25 7.125 7.10
3-month Deposit Rate 1/
2.50 2.50 2.50 2.25 2.0 2.0
Real Lending Rate 2/,4/
4.86 4.90 5.10 5.49 5.06 -
Real Deposit Rate 3/ 2.72 2.44 2.38 2.36 2.17 -
Spread 2.14 2.46 2.71 3.14 2.89 -
Interest Rate Movement
Remarks: 1/ average interest rates of five biggest commercial banks at the end of period 2/ real lending rate = interest income from loan / average loan 3/ real deposit = interest expense for deposit / average deposit 4/ including those in commercial banks’ AMCs
16
Jan/9
7
May
Sept.
Jan/9
8
May
Sept.
Jan/9
9
May
Sept.
Jan/0
0
May
Sep.
Jan/0
1
May.
Sep.
Jan/0
2
May.
0
100
200
300
400
500
600
700
800
Stock Market : SET Index
July
17
Economic TrendEconomic Trend
18
Preliminary Estimated 2002
2000 2001 18 Mar. 17 Jun.
GDP Growth(%) 4.6 1.8 2.0 - 3.0 3.5-4.0
Investment (%) 5.5 0.8 4.3 4.5• Private investment
17.2 5.1 5.0 5.8
• Public investment
-9.9 -6.6 3.0 2.0
Consumption (%) 4.6 3.1 4.2 4.2
• Private consumption
4.9 3.4 3.6 3.5
• Public consumption
2.6 1.6 8.0 8.0
Exports (% yoy) 19.5 -6.9 2.3 1.7
Imports (% yoy) 31.4 -2.8 4.6 4.5
Current account balance (% GDP)
7.6 5.3 4.2 3.6
CPI (%) 1.5 1.6 1.6 1.3
Economic Forecast
19
Projection
2 002
2 003
NESDB 3.5-4.0
-
BOT 3.-0
4 .0
2 .-54.0
MOF 3.6 -Consensus 3.5-
4.0-
Comparing to Other Agencies
20
• Low interest rate environment.
• Subdued inflation.
• Rising licensed construction areas.
Outlook for Latter Half of this Year
• The recovery of the US economy remains fragile.
• Low export prices (first 6-month export value growth contracted by 1.8% yoy despite 6% yoy increase in June).
• Contracting Japanese Economy.
• Unsolved NPLs.
Supporting Factors Risk Factors
21
Macroeconomic Policy Management
Macroeconomic Policy Management
22
Accelerate Restructuring of NPLs
Closely Monitor Consumer Credit
Solve Low Export Price Problem
Prepare to Support the Operation of the Local Administrations
Macroeconomic Policy Management in Short Term
Macroeconomic Policy Management in Medium Term
Moving toward High Performance Economy
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National Destiny• Increase Thailand’s market share to 1.1% of total world exports in 2006• 8-10 global niches
World’s top-10 tourist countries Asia’s top-5 traders ASEAN’s No 1 attractive country to invest Leader of Bio-Technology One of the few countries to maintain national heritage and cultural identity
• Enhance productivity in production and services sectors
Moving Towards High Performance Economy
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Determination ofStrategic Thrust
Determination ofStrategic Thrust
Determination ofThailand’s Global Niche
Determination ofThailand’s Global Niche
Thailand’s Competitive Strategy
Public Sector Reform toFacilitate Business Sector
Public Sector Reform toFacilitate Business Sector
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Level of Customization
Level of
Sop
his
ticati
on
Hig
h T
ech
Low
Tech
Low Touch
High Touch
Software
Foods
Tourism
Auto industry Fashion
Example
Tourism
Tourism
Foods
Foods
Fashion
Fashion
AutoAuto
SoftwareSoftware
Asia TourismCapital
Asia TourismCapital
Kitchen of the World
Kitchen of the World
World Tropical Fashion
World Tropical Fashion
Detroit of Asia
Detroit of Asia
World Graphic Design
Center
World Graphic Design
Center
Strategy : Selective Global NichesGlobal NicheGlobal Niche
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Old Paradigm New paradigm
Production & Services Strategy
AgricultureAgriculture
ManufactureManufacture
ServicesServices
• Intensive-farming• Supply-driven• Low Cost• Mass Production
• Productive-farming • Market-driven• Value Added Creation• Product Differentiation
• Demand-driven• Cost Leadership• Mass Production• Competing
• Demand-driving• Product Differentiation• Customization / Market Niche• Co-opetition (Cluster Approach)
• More for Less• Marketing
• More for More• Market Positioning
Strategic ThrustStrategic Thrust
27
Business CostBusiness CostReductionReduction
Business CostBusiness CostReductionReduction
• Create foreseeable environment • Relax rules and regulation & resolve business obstacles • Improve supply chain• Privatization
Public Sector ReformPublic Sector Reform
BusinessBusinessOpportunitiesOpportunities
BusinessBusinessOpportunitiesOpportunities
• Reduce business risks• Increase critical mass• Fair competition• Support value added creation • Create public/ corporate good governance
Business CapacityBusiness CapacityEnhancementEnhancement
Business CapacityBusiness CapacityEnhancementEnhancement
• Clear guideline of privatization • Support market responses • Support innovation• Total productivity improvement
Strategy :Facilitation Role to Business Sector
28
CompetitivenCompetitivenessess
Macroeconomic• Fiscal & Monetary Policies• Trade and Investment Policies• Foreign Policy
Macroeconomic• Fiscal & Monetary Policies• Trade and Investment Policies• Foreign Policy
Fundamentals• Human Capital• Sciences & Technology• Management• Infrastructure
Fundamentals• Human Capital• Sciences & Technology• Management• Infrastructure
AgricultureAgriculture ManufactureManufacture ServicesServices
Public Sector ReformPublic Sector Reform
29Competitiveness : Four National Reforms
High Performance
Economy(HPE)
Economic Reform Education Reform
Bureaucracy Reform
Corporate Reform
• Economy of Speed• Good Governance (Public and Private)• Efficient Infrastructure (Hardware and Software)
HPE• Sound Economic Management• High Quality of Social Capital
