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Macroeconomic Conditions For the First 6 Months of 2003

Macroeconomic Conditions For the First 6 Months of 2003. by M.R. Pridiyathorn Devakula Governor of the Bank of Thailand 19 August 2003. Gross Domestic Product (1988 prices). %. 1999 = 4.4. 2000 = 4.6. 2001= 1.9. 2002 = 5.3. 6.7. 6.2. 5.8. 5.1. 3.9. 2.1. 1.5. Source : NESDB.

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Macroeconomic Conditions For the First 6 Months of 2003

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  1. Macroeconomic ConditionsFor the First 6 Months of 2003 by M.R. Pridiyathorn Devakula Governor of the Bank of Thailand 19 August 2003

  2. Gross Domestic Product (1988 prices) % 1999 = 4.4 2000 = 4.6 2001= 1.9 2002 = 5.3 6.7 6.2 5.8 5.1 3.9 2.1 1.5 Source : NESDB Macroeconomics Team tel. 0-2283-5651 16/06/03

  3. Contributions to GDP Growth (%y-o-y) % Private consumption Government consumption Private Investment Government Investment Net Exports G&S GDP Source: NESDB, additional calculations done by Macroeconomics Team Note: Change in inventories and statistical discrepancies, which could be significant, are not included and hence account for the difference between GDP and the sum of shown components

  4. Q2 Assessment from BOT Indicators

  5. Demand Side

  6. Private Consumption Index Private consumption continued to expand despite some deceleration in Q2 due to SARS and a more moderate growth of passenger car sales. %DY-o-Y Economic Indicators Team Tel. 0-2283-5648 31 Jul 2003

  7. Investor and consumer confidence proved resilient. Business Sentiment Index >50 improving Jun 03 = 49.5 BSI Source: BOT survey Consumer Confidence Index > 100 improving Jun 03 = 95.9 Source: The University of the Thai Chamber of Commerce

  8. Investment activities recently picked up as uncertainties from the Iraqi war and SARS faded away… 1995 = 100 Equipment (3-m ma) PII (3-m ma) Construction (3-m ma) Source: Bank of Thailand Economic Indicators Team 28 July 2003

  9. Private Investment Index But the year-on-year growth rate of PII slowed down, partly due to base effect. %DY-o-Y Economic Indicators Team Tel. 0-2283-5648 31 Jul 2003

  10. Net Profit (Loss) of Non-bank Listed Companies Bn baht Annual Bn baht Quarterly 7 Aug 2003 Source: Stock Exchange of Thailand

  11. Government Position % D y-o-y Billion baht 32.9 Expenditure (LHS) Revenue (LHS) 13.2 8.8 Cash balance (RHS) Source: Comptroller General Department Public Finance Team Tel. 283-5628 25 Mar. 03

  12. Budgetary balance and Non-budgetary balance Billion baht Cash balance Non-budgetary balance 32.9 Budgetary balance Source: Comptroller General Department Public Finance Team Tel. 283-5628 08 Aug 03

  13. Export Growth (US$ term) Export expanded favourably both in value and quantity terms. May 2003 = $6.5 Bn (13.5%) Jun 2003 = $6.5 Bn (15.0%) BOP Analysis Team 29 Jul 03 (0-2283-5625) Source: Constructed from data of Customs Department

  14. Export Growth (%YoY) Nevertheless, the growth of export value decelerated slightly from May 2003 onwards due to base effect. BOP Analysis Team 29 Mar 03 (0-2283-5625)

  15. Thailand continued to benefit from a diversified export structure… Source : Customs Department The Balance of Payments Team, 4 Aug 03

  16. …and expanding regional markets. Source: Customs Department * = Custom basis BOP Analysis Team 30 Jul 03 Tel. 283 - 5625

  17. Current Account Despite an overall deficit in the service account due to the impact of SARS, the current account remained in surplus on the back of a strong trade surplus. Nevertheless, signs of recovery in the tourism industry and hence the service account already emerged. Mil. US$ Jun 03 = 797 BOP Analysis Team 1 Aug 03 (0-2283-5625)

  18. Number of tourists and occupancy rate have recovered. Thousand Persons % y-o-y 11- Sep % y-o-y (LHS) SARS No.of tourists (RHS) Source : Tourism Authority of Thailand Sectoral Studies 2 Team Tel. 283-5643 25/06/03

  19. Services Income & Transfers 2003 Millions of US$ 2002 Jun/p Q1 Q2 May H1 18,673 3,432 Receipts 1,232 4,778 8,209 1,118 7,903 1,001 - Tourism (in) 3,091 404 2,090 267 1,974 469 - Invest’Income 874 159 405 187 392 120 - Private 89 209 25 43 316 1,582 349 - Public 665 134 143 1,192 1,358 15,079 3,837 Payments 3,543 7,380 3,303 650 - Tourism (out) 700 1,350 250 194 4,695 1,524 - Invest’ Income 946 2,470 440 573 1,343 - Private Interest 312 294 606 137 63 2,199 1,001 - Private Profit & Dividend 401 1,402 233 439 1,047 190 - Public 200 390 47 65 617 199 Transfers 197 396 61 54 TOTAL 4,211 1,431 -206 1,225 -185 101 Source : BOT and constructed from data of Tourism Authority of Thailand BOP Analysis Team Tel. 0-2283-6882 ,0-2283-5625 Last update :23 Jul 03

  20. Net Capital Flow Balance of Payments Analysis Team Tel. 0-2283-6726 Source : Data constructed from F.T. forms

  21. Balance of Payments Note: Including BOT BOP Analysis Team 29 Jul 03 (0-2283-5625) Source: Compiled by Bank of Thailand

  22. Supply Side

  23. Farm income continued to rise strongly and was a support factor toprivate consumption, particularly motorcycle and commercial car sales. Farm Income Sectoral Analysis Team 2 Tel. 283-5643 29/07/03

  24. Manufacturing production continued to expand buoyantly. Manufacturing Production Index (%YoY) Sectoral Studies 1 Tel.0-2283-5646 1/8/03

  25. Capacity Utilization Capacity utilization trended upward except in June when there were temporary factory shutdowns for maintenance in the tobacco, wire rod and upstream petrochemical industries. Cap U (sa, 3-m ma) Jun 67.1 Jun 64.8 Cap U Note : Cap U is constructed from survey data of 36 industrial categories which altogether represent 44.5% of the valued added in the manufacturing sector. Sectoral Studies 1 Team Tel. 0-2283-5646 1/8/03 Source: BOT Survey

  26. Capacity Utilization UNIT : % Note : P = Preliminary Source : Constructed from BOT survey Sectoral Studies 1 Team Tel.0-2283-5646 29/7/03

  27. Going forward, industries with high capacity utilization rates are likely to expand investment ... Top-10 Capacity Utilization Rates in Jun 2003 UNIT : % 1/8/03 Sectoral Studies 1 Team Tel.0-2283-5646 Source : Constructed from BOT survey

  28. Capacity Utilization and Private Investment Index … as Private Investment Index (PII) and capacity utilization have always been highly correlated. Index Per cent Cap U excluding liquor (SA) PII (LHS) Correlation = 0.96 Note : Cap U is constructed from survey data of 36 industrial categories which altogether represent 44.5% of the valued added in the manufacturing sector. Source: BOT Survey

  29. Economic Stability

  30. 2001 2002 Internal Stability Inflation % Jul 03 Headline : 1.8 % Core : 0.1 % Unemployment Thousand persons Rate (%) 2001 2002 2003 2003

  31. Public Debt % GDP 57.6 56.6 53.5 54.2 54.2 54.2 50.5 Source: Public Debt Management Office Public Finance Team Tel. 283-5628 08 Aug 03

  32. External Stability Current Account Million USD B/$ Exchange Rate Jun = 797 31 July 03 41.98 (SA) 25 bsp R/P cut(21 Jan) 25 bsp R/P cut(19 Nov) 50 bsp R/P cut(27 Jun) Reserves / Short-term Debt Billion USD External Debt 3.3 55.3 0.7 May

  33. Monetary Sector

  34. Movements of Major Currencies (Jul. 2000– Jul. 2003) USD/EURO July 118.66 JPY/USD 1.14 BAHT/ USD 41.78 Source : The Bank of Thailand Monetary Policy Analysis and Strategy Division Tel. 0-2283-5621

  35. INTEREST RATES % p.a. MLR 5.7 • Nominal 12-m Time Deposit 1.25 14-day R/P 1.06 Last Update : 13 Aug 2003 Source : The Bank of Thailand Monetary Policy Analysis and Strategy Division Tel. 0-2283-5621

  36. GROWTH RATE OF BANKS’ DEPOSITS AND CLAIMS ON PRIVATE SECTOR % yoy Credits extended by commercial banks, finance companies, and credit foncier companies Deposits 7.3 3.3 1.2 Jun 03 p/ Claims on private sector(adding back debt write-off and transferred loan) * claims (adding back debt write-off and transferred loan) Sources: BOT reports and surveys, Financial Institution Policy Group Note: Including Thanachart Bank Last Update: 29 Jul 2003 Monetary Policy Analysis and Strategy Division Tel. 0-2283-5621

  37. Credits of Commercial Bank Classified by Sectors(change from the same period last year) May May

  38. Total NPL (Commercial banks+Finance companies) Bn bath Source: Corporate Debt Restructuring Group 18 Aug 2003

  39. Total NPL classified by debtors Bn bath Dec 2002 Mar 2003 Source: Corporate Debt Restructuring Group 7 Aug 2003

  40. Economic Outlook

  41. Economic Outlook for the Rest of the Year • Support factors • Gradual increase in capacity utilization is likely to raise investment activities going forward • Continued expansion in employment • Sound internal and external stabilities • Low interest rates and improvement in commercial bank lending • Rising farm income • Government measures, e.g., SME measures, housing projects for low income people, etc. • Risk factors • Regional terrorist threats may delay the full recovery of tourism • Weak US dollar affects the competitiveness of Thai exports • Fragile recovery of G3 • Rising oil prices

  42. Forecast Summary ( ) April 2003 Inflation Report

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