Fiscal Policy Office Weekly Economic Report as of November 19, 2021

Nov 20, 2021 | view 2,093

The Fiscal Policy Office (FPO) reports the economic situation for the week ending November 19, 2021, as follows:
1. The Thai economy contracted by -0.3% year-on-year in Q3 2021, slowing down from a growth of 7.6% year-on-year in the previous quarter.
2. Domestic cement sales in October 2021 grew by 2.4% compared to the same period last year.
3. Passenger car sales in October 2021 decreased by -11.2% compared to the same period last year.
4. Commercial vehicle sales in October 2021 decreased by -13.8% compared to the same period last year.
5. Japan's GDP in Q3 2021 (preliminary) grew by 1.4% year-on-year.

Indicators of the Thai Economy
The Thai economy in Q3 2021 decreased by -0.3% year-on-year, slowing down from a growth of 7.6% year-on-year in the previous quarter. After seasonal adjustments, the Thai economy in Q3 2021 decreased by -1.1% from Q2 2021, resulting in a growth of 1.3% year-on-year in the first nine months of 2021.

Specifically, the Thai economy in Q3 slowed down due to a -3.2% decrease in private consumption as a result of the severe and ongoing COVID-19 outbreak from the previous quarter. The government's preventive measures directly impacted overall economic activities. However, this quarter also saw supportive factors from government policies aimed at boosting purchasing power and alleviating the cost of living for citizens, such as the co-payment scheme, measures to enhance purchasing power for welfare cardholders, and assistance programs for insured persons under sections 33, 39, and 40, as well as measures to ease educational expenses and utility costs. Additionally, the relaxation of COVID-19 preventive measures towards the end of the quarter, along with continuous growth in exports and private investment, contributed positively, particularly in agricultural and industrial exports driven by demand from China and ASEAN.

In the manufacturing sector, industrial production decreased by -1.4%, with declines in light industries and raw materials. Meanwhile, capital goods and technology industries slowed down. The main factor was a reduction in domestic demand. Agricultural production grew by 4.3%, with increases in crops, livestock, and fisheries. The service sector grew by 0.2%, with growth in wholesale and retail trade, financial and insurance activities, and information and communication sectors, while accommodation and food services, as well as transportation and storage sectors, saw declines.

Source: NESDC.

Domestic cement sales in October 2021 grew by 2.4% compared to the same period last year, and after seasonal adjustments, it grew by 1.0% compared to the previous month.

In October 2021, construction activities that had previously been affected by site closure measures resumed more significantly, along with a reduction in continuous rainfall, particularly in the central, northern, and northeastern regions, as the harvest season approached. This led to increased income for citizens, resulting in higher demand for cement. In the near future, the announcement of reopening the country and the relaxation of the Loan-to-Value (LTV) ratio by the Bank of Thailand are expected to further stimulate the economy through the real estate and construction sectors.

Source: 3 private companies calculated by the FPO.

Passenger car sales in October 2021 totaled 19,950 units, decreasing by -11.2% compared to the same period last year, and after seasonal adjustments, decreased by -7.0% compared to the previous month.

The automotive market trend is beginning to improve as the Center for COVID-19 Situation Administration (CCSA) relaxes measures to control the outbreak, allowing most businesses to return to normal operations. Additionally, government measures to stimulate spending, the opening of tourism under various projects, and the easing of flooding conditions are factors supporting a recovery in consumer purchasing power.

Commercial vehicle sales in October 2021 totaled 44,512 units, decreasing by -13.8% compared to the same period last year, but grew by 9.0% compared to the previous month after seasonal adjustments, driven by a 10.9% increase in one-ton pickup truck sales compared to the previous month after seasonal adjustments.
Although commercial vehicle sales still contracted year-on-year, there is a noticeable upward trend compared to the previous month after seasonal adjustments, with sales expanding for the second consecutive month (+37.2% and +9.0% in September and October 2021, respectively). This improvement is primarily due to the gradual easing of COVID-19 control measures since September 1, 2021, and consumer support measures, including income guarantees for agricultural products, which have increased consumer confidence in spending. Furthermore, promotional activities during the Motor Expo at the end of the year are expected to further boost commercial vehicle sales.

Source: Toyota Motor Thailand Co., Ltd. and the Federation of Thai Industries (FTI).

International Economic Indicators
United States

Retail sales in October 2021 grew by 14.7% year-on-year, accelerating from 14.6% in the previous month.
Industrial production in October 2021 grew by 5.0% year-on-year, up from 4.4% in the previous month.
New housing starts in October 2021 decreased by -0.7% from the previous month (seasonally adjusted), slowing from -2.7% in the previous month.
New building permits in October 2021 grew by 4.0% from the previous month (seasonally adjusted), recovering from a -7.8% decline in September.
The number of first-time unemployment claims for the week of November 7-13, 2021, was 268,000, continuing to decline for the seventh consecutive week and reaching the lowest level since the pandemic began in March 2020, reflecting the ongoing recovery of the U.S. labor market.

China

Industrial production in October 2021 grew by 3.5% year-on-year, accelerating from 3.1% in the previous month, amid ongoing COVID-19 control measures and production shortages, supported by increased output in communication, electricity, thermal energy, and chemicals.
Retail sales in October 2021 grew by 4.9% year-on-year, up from 4.4% in the previous month, marking the highest level in three months as consumption increased following the easing of COVID-19 outbreaks in some regions, resulting in a 14.9% year-on-year growth in retail sales for the first ten months of 2021.
The unemployment rate in October 2021 remained stable at 4.9% of the total labor force, the lowest level since December 2019.

Eurozone

The inflation rate in October 2021 was 4.1% year-on-year, up from 3.4% in September, driven by rising energy prices.

Japan

Japan's GDP in Q3 2021 (preliminary) grew by 1.4% year-on-year, slowing from 7.6% in the previous quarter, reflecting a -3.0% contraction when calculated on an annualized basis and a -0.8% contraction from the previous quarter (seasonally adjusted), due to impacts on private consumption and automotive production from COVID-19 control measures.
Export value in October 2021 grew by 9.4% year-on-year, slowing from 13% in the previous month.
Import value in October 2021 grew by 26.7% year-on-year, slowing from 38.6% in the previous month.
Trade balance in October 2021 recorded a deficit of 67.4 billion yen, down from a deficit of 622.8 billion yen in the previous month.
Industrial production in September 2021 contracted by -2.3% year-on-year, marking the first contraction in seven months after an 8.8% growth in August.
The inflation rate in October 2021 grew by 0.15% year-on-year, down from 0.2% in the previous month.

Hong Kong

The unemployment rate in October 2021 was 4.3% of the total labor force, down from 4.5% in the previous month, marking the eighth consecutive month of decline and the lowest rate since March 2020.

Indonesia

Export value in October 2021 grew by 53.4% year-on-year, improving from 47.6% in the previous month.
Import value in October 2021 grew by 51.1% year-on-year, accelerating from 40.3% in the previous month.
Trade balance in October 2021 recorded a surplus of 5.7 billion USD, up from a surplus of 4.4 billion USD in the previous month. The Bank of Indonesia announced to maintain the policy interest rate at 3.5% per annum to support economic growth and stabilize the exchange rate.

Philippines

The Central Bank of the Philippines announced to maintain the policy interest rate at 2% per annum to support the recovery of the domestic economy.

Singapore

Export value in October 2021 grew by 22.7% year-on-year, improving from 18.6% in the previous month.
Import value in October 2021 grew by 25.6% year-on-year, accelerating from 18.7% in the previous month.
Trade balance in October 2021 recorded a surplus of 5.9 billion SGD, up from a surplus of 4.9 billion SGD in the previous month.

United Kingdom

The unemployment rate in September 2021 was 4.3% of the total labor force, down from 4.5% in August, and lower than the market expectation of 4.4%.
The inflation rate in October 2021 grew by 4.2% year-on-year, up from 3.1% in September, due to increases in housing and energy prices.

Money Market and Exchange Rate Indicators

The SET Index slightly increased from the previous week, in line with other regional stock markets that also rose, such as STI (Singapore), PSEi (Philippines), and DJIA (USA). On November 18, 2021, the index closed at 1,651.02 points with an average trading value between November 15-18, 2021, of 78,961.39 million THB per day. Foreign investors, domestic institutional investors, and securities company accounts were net buyers, while general domestic investors were net sellers. During November 15-18, 2021, foreigners net bought securities worth 1,269.33 million THB.

The yield on government bonds overall increased by 1 to 14 basis points. This week, investors participated in the auction of 22-year government bonds, which attracted 0.98 times the bidding amount. During November 15-18, 2021, foreign capital inflows in the bond market totaled 11,873.81 million THB, and since the beginning of the year until November 18, 2021, foreign capital inflows in the bond market totaled 138,382.15 million THB.

The Thai Baht appreciated against the previous week. As of November 18, 2021, the Baht closed at 32.61 THB per USD, appreciating by 0.82% from the previous week, in line with the appreciation of the Yuan against the USD. Meanwhile, the Yen, Euro, Ringgit, Won, and Singapore Dollar depreciated against the USD compared to the previous week. The Baht's appreciation was greater than that of other major currencies in the region, resulting in a 1.04% increase in the Nominal Effective Exchange Rate (NEER) from the previous week.