Pinched farm incomes hit purchasing power

Economy December 30, 2017 01:00


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CONSUMER purchasing power remains weak despite the country’s economic expansion being sustained in November, the Bank of Thailand said yesterday.

A decline in farm incomes held back consumer purchasing power last month, the central bank said.

Farmers experienced declines in both agricultural production and product prices. Prices of rubber sheet and palm oil dropped in November, while past severe flooding in the Northeast cut rice production significantly, said the central bank’s monthly economic report released,

Farmers’ nominal income dropped 5.5 per cent year on year. The averages income of workers in the non-farm sector remained flat, said the central bank. 

Consumers were still spending on durable goods such as cars as they have slightly more confidence in future income growth. Rising consumption led to increasing production in food and automotive vehicles. The available of new models also contributed to the rising car sales.

High export growth and an increasing number of tourists also contributed to economic expansion in November. Exports rose 12.3 per cent and exports excluding gold products grew 14.4 per cent. Export growth covered almost all products including rice, rubber products, fruit, electronics parts, automotive vehicle and parts. The number of foreign tourists increased 23.2 per cent year on year, with rises in almost every source tourism market

 Imports rose 11.9 per cent, covering almost all sector, especially for raw materials and semi-finished products which were in line with rising exports. Imports of consumption goods also increased. And import of car and automotive parts also went up in line with rising car sale in domestic market. 

Private investment increased in November from the month before, indicated by rising imports of capital goods for the telecommunications and energy sectors. Investment in the construction sector also went up, especially for residential work in the central and northern parts of the country and for commercial buildings in the South. Government spending also contributed to economic activity as current spending and capital spending also increased. 

Headline inflation increased 0.99 per cent compared with 0.86 per cent in October due largely to rising retail prices for oil caused by increasing world crude oil prices. However, fresh food price dropped due to the large volume available in the market. 

Thailand has a current account surplus of US$5.3 billion. However, the country experienced a capital and financial account deficit of US$1.5 billion due to capital outflows as result of portfolio investment and direct investment. The overall balance was positive due largely to continual current account and trade surpluses.