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Tourism drives economy in November: BOT

The tourism sector continued to expand in November despite China's new tourism law and Thailand's political protests, said the Bank of Thailand.

In the release on the monthly economic and monetary conditions, the central bank revealed that the tourism sector expanded this month with 2.4 million foreign tourist arrivals, up 11.9 per cent on year. The number of tourists from all regions rose despite Thailand's political protests and the implementation of China's new tourism law since October 2013.

In the month, headline inflation edged up to 1.92 per cent following increases in fresh food and energy prices. Core inflation increased slightly to 0.85 per cent on the back of increased pass-through of higher costs to prepared food prices. The current account posted a surplus thanks to a positive trade balance, an increase in tourist receipts, and a fall in repatriation of profits and dividends. The capital account recorded a deficit mainly because of outflows of foreign portfolio investment. Overall, the balance of payments posted a deficit.

The overall economic activities in November 2013 softened from the previous month owing to contraction in private consumption and investment. Production in export-oriented industries, however, expanded from the preceding month thanks to a gradual improvement in merchandise exports.

On the stability front, inflation rose on the back of increased pass-through of higher costs to prepared food prices. The current account registered a surplus thanks to an improvement in the trade balance as well as the services, income, and transfers balance. The capital account registered a deficit owing mainly to outflows of foreign portfolio investment.

In the month, Private Consumption Index (PCI) fell by 2.4 per cent on year, due chiefly to a contraction in purchases of durable goods - particularly automobiles. Imports of consumer goods, especially durable items, also fell. Meanwhile, spending on non-durable goods, such as imported food and beverages and fuel, only rose at a slower pace.

The Private Investment Index (PII) dropped by 7.8 per cent on year, due to a decline in commercial car sales as well as machinery and equipment imports. Some businesses continued to postpone their investment awaiting clearer signs of a recovery in the economic outlook. Meanwhile, construction investment grew at a moderate pace.

The overall export value in the month fell to US$18.57 billion, down 4 per cent on year. Exports of agriculture and manufactured products - in particular, processed agricultural products, electrical appliances, and petrochemical products - advanced gradually along with improving global demand. However, some merchandise exports continued to face supply-side constraints, particularly fishery products following the shrimp disease outbreak. Meanwhile, exports of electronics and parts increased only slightly due to limited production capability to take full advantage of the increasing global demand for high-technology equipment. In addition, steel and metal exports continued to fall from a high base last year.

Meanwhile, the monthly imports dropped by 9.3 per cent on year to $17 billion. Imports dropped in all categories except fuel.

The Manufacturing Production Index (MPI) dropped by 10.6 per cent on year, due to high growth pace last year and continued drop in automobile production despite a rise in foreign orders. Also, the disease outbreak also hurt frozen shrimp production. The production of hard disk drives also dropped as a result of changes in consumer preferences and also on account of last year's elevated level due to improved foreign orders.

In the month, despite the shrimp disease, farm income rose by 5.8 per cent on year thanks primarily to an increase in agricultural output—in particular, rice and rubber production respectively on the back of favorable weather conditions and the previous expansion of planting area.

A drop in fiscal spending also resulted in fiscal cash deficit of Bt118 billion.


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