Exports, tourism shine as farm incomes take a hit 

Economy September 01, 2017 01:00


IN JULY, the Thai economy continued to expand. The main growth drivers were continued expansions in merchandise exports and the tourism sector, consistent with the steady improvement in external demand, the Bank of Thailand reported yesterday. 

According to the report, private investment and public spending expanded moderately. Manufacturing production increased from the same period last year in both production for exports and to serve the domestic market. Private consumption expanded at a slower pace stemming from the deceleration in spending in the services sector.

On the stability front, headline inflation accelerated to 0.17 per cent from -0.05 per cent in the previous month. This was attributed to an increase in the retail petroleum price following the increase in the global crude oil price. Fresh food prices dropped at a slower pace compared to the previous month. Core inflation slightly increased from last month to reach 0.48 per cent. The seasonally adjusted unemployment rate remained unchanged from last month. The current account posted a smaller surplus due to a lower trade surplus. 

The value of merchandise exports continued to expand in most product categories, with growth of 8.0 per cent compared to the same period last year. Excluding gold, the value of merchandise exports expanded by 12.2 per cent. 

Moreover, manufacturing production for the domestic market also expanded, particularly in the production of food due to the increased supply of raw material, and in the production of automobiles due to higher domestic demand.

 In addition, the low base effect of the manufacturing production index from the previous year contributed to the improvement in overall manufacturing production.

The number of foreign tourists posted 4.8 per cent annual growth thanks to growth in the number of tourists of almost all nationalities. The number of Chinese and Asean tourists, especially CLMV (Cambodia, Laos, Myanmar and Vietnam), continued to expand. Nevertheless, after seasonal adjustments, the number of foreign tourists decreased by 2.2 per cent from the previous month, mainly from a decline of Malaysian and Indonesian tourists after the previous month’s increase during the Hari Raya Aidilfitri holiday.

Private consumption indicators grew at a slower pace, owing partly to the contraction in farm income, mainly from plunged agricultural prices which contracted for the first time this year. Spending on durable goods continued to expand, especially on motorcycles, due to the low base effect. Passenger car sales continued to expand. 

Spending on services grew at a slower pace, in line with the moderate growth in the number of tourists. However, fundamental factors supporting household purchasing power were not yet robust.

Farm income declined due to a decreased agricultural price outlook despite high agricultural production. In addition, non-farm income levelled off, consistent with the decrease in overall consumer confidence due to concern about purchasing power and the agricultural price outlook.