Ministry of Finance Economic Situation Report for the Week of October 1, 2021

Oct 01, 2021 | view 1,888

Ministry of Finance - Economic Situation Report for the Week of October 1, 2021 states the following:
1. In August 2021, the number of foreign tourists entering the country was 15,105, representing a 100% year-on-year growth.
2. The value of exports in August 2021 grew by 8.9% compared to the same period last year, while the value of imports grew by 47.9% year-on-year.
3. The agricultural production index in August 2021 grew by 13.8% year-on-year, while the agricultural price index contracted by -6.4% year-on-year.
4. The Manufacturing Production Index (MPI) in August 2021 contracted by -4.1% year-on-year.
5. The domestic sales volume of steel and steel products in August 2021 contracted by -2.9% year-on-year.
6. Total budget disbursement in August 2021 grew by 36.7% year-on-year.
7. The government's net revenue collection (after allocation to local governments) in August 2021 contracted by -29.0% year-on-year.
8. The government's cash-based fiscal position in August 2021 showed a deficit of -78,224 million baht.
9. Public debt outstanding at the end of August 2021 was 57.0% of GDP.
10. The value-added tax collected by the government at constant prices in August 2021 grew by 12.4% year-on-year.
11. The tax on real estate transactions in August 2021 contracted by -8.3% year-on-year.

Economic Indicators of Thailand
In August 2021, the number of foreign tourists entering Thailand and the number of Thai visitors remained low due to the impact of the COVID-19 pandemic.

In August 2021, the number of special tourist visa (STV) holders, Thailand Privilege Card holders, business travelers, and health tourists entering the country was 15,105, slightly down from the previous month due to the COVID-19 situation in Thailand. However, this represents a 100% year-on-year growth due to low base factors, primarily from tourists from the USA, France, Germany, Israel, and China. Among these, 12,345 were foreign tourists who entered under the "Phuket Sandbox" program, which allows tourists to visit Phuket without quarantine and travel to other provinces after 14 days.

Meanwhile, domestic tourism reflected by the number of Thai visitors in August was 893,565, continuing to decline from the previous month, with a contraction of -92.0% year-on-year due to the worsening COVID-19 situation in Thailand, leading to lockdown measures from July 10, 2021. On July 21, 2021, the Civil Aviation Authority of Thailand (CAAT) announced restrictions on flights to and from high-risk areas, prohibiting all commercial airlines from operating domestic flights for an initial period of 14 days, except for flights related to pilot reopening areas or emergency landings.

The value of exports in August 2021 was 21,976 million USD, representing a growth of 8.9% compared to the same period last year, continuing a six-month growth streak.
Key products that supported exports during this month included automobiles and parts (17.8%), computers and parts (10.5%), oil-related products (68.3%), motorcycles and parts (44.3%), jewelry and non-gold ornaments (35.7%), fruits and vegetables (84.8%), cassava products (48.4%), rice (25.4%), rubber (98.8%), and pet food (17.3%). When considering the main trading partners of Thailand, growth was observed in almost all major markets, particularly China, Japan, the USA, the European Union, India, South Korea, and Taiwan. The value of exports in the first eight months of 2021 grew by an average of 15.3% year-on-year.

Source: Ministry of Commerce

The agricultural production index in August 2021 grew by 13.8% compared to the same period last year, or a contraction of -0.7% compared to the previous month after seasonal adjustments.
When considering the categories of agricultural products in August 2021, agricultural production grew in the major crops and livestock categories by 20.6% and 3.3%, respectively, while fishery production contracted by -13.6%. Significant agricultural products with increased production included paddy, rubber, cassava, corn, livestock, fruit trees, chicken, and pigs, while significant products with decreased production included white shrimp.

The agricultural price index in August 2021 contracted by -6.4% compared to the same period last year, or a contraction of -3.5% compared to the previous month after seasonal adjustments.
When considering the price categories of agricultural products in August 2021, the agricultural price index contracted in all categories, with major crops, livestock, and fishery categories contracting by -6.8%, -5.3%, and -10.1%, respectively. Significant agricultural products with increased prices included rubber, cassava, animal feed corn, palm oil, and chicken eggs, while products with decreased prices included paddy, pigs, chicken, fruit trees, and white shrimp.

Source: Office of Agricultural Economics

The Manufacturing Production Index (MPI) in August 2021 contracted by -4.1% year-on-year and -0.9% compared to the previous month after seasonal adjustments.

The contraction of the MPI in August 2021 was due to declines in key industries, including the automotive industry, petroleum refining products, motorcycle manufacturing, non-alcoholic beverage production, bottled mineral water, and malt and beer production, which contracted by -9.8%, -6.8%, -45.5%, -17.1%, and -30.1% year-on-year, respectively. Industries that continued to grow included electronic components and circuit board manufacturing, other rubber products, basic steel and iron industries, primary plastics and synthetic rubber industries, and sugar production, which grew by 12.5%, 12.1%, 11.9%, 6.1%, and 47.1% year-on-year, respectively.

The domestic sales volume of steel and steel products in August 2021 contracted by -2.9% year-on-year but grew by 8.1% compared to the previous month after seasonal adjustments.
The domestic steel sales volume contracted for the second consecutive month, primarily due to the continuous decline in construction steel, particularly rebar and wire rod, which contracted by -48.7% and -12.4% year-on-year, respectively. However, steel sales used in the industry continued to grow, resulting in a reduced overall contraction in domestic steel sales from the previous month. In the future, the easing of economic activities in line with the declining pandemic situation is expected to help restore confidence in the overall economy, including the construction sector, in the remaining months of 2021.

Source: Office of Industrial Economics

Total budget disbursement in August 2021 amounted to 251,010 million baht, representing a growth of 36.7% year-on-year. This brings the total disbursement for the first 11 months to 2,905,930 million baht, growing by 2.1%, with a cumulative disbursement rate of 83.0%.
(1) Current year expenditures amounted to 243,493 million baht, growing by 39.8% year-on-year, with a cumulative disbursement rate of 83.2%. This is divided into (1.1) regular expenditures of 203,554 million baht, growing by 60.1% year-on-year, with a cumulative disbursement rate of 89.9%, and (1.2) investment expenditures of 39,939 million baht, contracting by -15.0% year-on-year, with a cumulative disbursement rate of 55.7%.
(2) Previous year expenditures amounted to 7,517 million baht, contracting by -20.7% year-on-year, with a cumulative disbursement rate of 80.4%.

The government collected net revenue (after allocation to local governments) in August 2021 amounting to 182,829 million baht, contracting by -29.0% year-on-year. This brings the total revenue for the first 11 months to 2,105,023 million baht, contracting by -2.6% year-on-year, with revenue declining from corporate income tax by -54.5% year-on-year, personal income tax by -17.6% year-on-year, and excise tax by -18.4% year-on-year.

The government's cash-based fiscal position in August 2021 showed a budget deficit of -78,224 million baht. When combined with the off-budget balance, there was a surplus of 66,066 million baht. The cash balance before borrowing showed a deficit of -12,158 million baht. In this month, the government borrowed 67,400 million baht, resulting in a final cash balance after borrowing of -55,242 million baht. The ending cash balance was 499,342 million baht.

Public debt outstanding at the end of August 2021 amounted to 9,159,513.19 million baht, or 57.01% of GDP. Compared to the previous month, public debt increased by a net of 250,449.41 million baht.
The status of public debt in Thailand is considered stable, as reflected by the ratio of public debt to GDP remaining below the fiscal discipline threshold of 70% of GDP, with the majority of public debt being long-term, accounting for 86.59% of total public debt, and domestic debt accounting for 98.3% of total public debt.

Source: Public Debt Management Office

The value-added tax collected by the government at constant prices in August 2021 grew by 12.4% year-on-year, but contracted by -2.8% compared to the previous month after seasonal adjustments.
Part of this growth is due to the value-added tax collected from imports, which grew well at 46.7% year-on-year due to low base factors from the previous year and the continuous growth in imports. Meanwhile, the value-added tax collected from domestic spending contracted by -4.9% year-on-year due to high base factors from the previous year, which included special factors amounting to 3,198 million baht. Nevertheless, the value-added tax collected at constant prices in the first two months of the third quarter of 2021 still managed to grow by 17.4% year-on-year.

The tax on real estate transactions in August 2021 contracted by -8.3% year-on-year and contracted by -4.2% compared to the previous month after seasonal adjustments.
The collection of taxes from real estate transactions in August 2021 contracted for the second consecutive month across all categories, particularly the specific business tax, which contracted by -5.3% year-on-year due to the impact of the third wave of COVID-19, which slowed down the economy and affected income, employment, and purchasing power for housing. However, the improving pandemic situation due to ongoing vaccination distribution and the easing of economic activities is expected to gradually help the overall economy recover in the coming period.

Source: Revenue Department, calculated by the Fiscal Policy Office

Foreign Economic Indicators
United States

The median home price index in August 2021 grew by 1.4% from the previous month (seasonally adjusted), slowing down from the previous month’s growth of 1.7%. The index showed a slowdown in almost all regions, except for the South Atlantic and New England regions, which accelerated. Year-on-year, this represents a growth of 19.2%.
The number of initial jobless claims for the week of September 19-25, 2021, increased for the fourth consecutive week to 362,000, higher than the market's expectation of 348,000 and up from the previous week’s 351,000, indicating ongoing concerns and a need for support amid the increasing pandemic situation.

China

The PMI index for the manufacturing sector (NBS) in September 2021 was at 49.6 points, down from 50.1 points in the previous month, marking a continuous decline for the sixth month amid the COVID-19 pandemic, rising production costs, production bottlenecks, and particularly power shortages.
The PMI index for the non-manufacturing sector (NBS) in September 2021 was at 53.2 points, increasing from 47.5 points in the previous month, driven by improvements in new orders, export orders, and employment.
The PMI index for the manufacturing sector (Caixin) in September 2021 was at 50.0 points, rebounding after three consecutive months of decline, with the index in the previous month at 49.2 points, driven by an increase in new orders and consumption levels.

Japan

Retail sales in August 2021 contracted by -3.2% year-on-year due to the increase in COVID-19 Delta variant infections.
The unemployment rate in August 2021 was at 2.8% of the total labor force, unchanged from the previous month.

European Union

The consumer confidence index in September 2021 was at -4.0 points, increasing from -5.3 points in August 2021, as consumers had a more positive outlook on the overall economic situation.
The unemployment rate in August 2021 was at 7.5% of the total labor force, down from 7.6% in the previous month, indicating a recovery in the labor market.

Vietnam

GDP in the third quarter of 2021 contracted by -6.2% year-on-year, down from a growth of 6.6% in the previous quarter, marking the largest contraction since the country began recording quarterly figures in 1986.
Industrial production in September 2021 contracted by -5.5% year-on-year, improving from a contraction of -7.8% in the previous month.
The value of exports in September 2021 contracted by -0.6% year-on-year, improving from a contraction of -1.7% in the previous month.
The value of imports in September 2021 grew by 9.5% year-on-year, down from 20.4% in the previous month.
The trade balance in September 2021 was in surplus at 500 million USD, improving from a deficit of -109.1 million USD in the previous month.
Retail sales in September 2021 contracted by -28.4% year-on-year, improving from a contraction of -33.7% in the previous month.
The inflation rate in September 2021 grew by 2.1% year-on-year, down from 2.8% in the previous month.
The PMI index for the manufacturing sector in September 2021 was at 50.9 points, stable from the previous month.

Malaysia

The value of exports in August 2021 grew by 18.4% year-on-year, up from 5.0% in the previous month.
The value of imports in August 2021 grew by 12.5% year-on-year, down from 23.9% in the previous month.
The trade balance in August 2021 was in surplus at 21.4 billion Malaysian Ringgit, up from a surplus of 13.8 billion Malaysian Ringgit in the previous month.
The PMI index for the manufacturing sector in September 2021 was at 48.1 points, up from 43.4 points in the previous month.

Indonesia

The PMI index for the manufacturing sector in September 2021 was at 52.2 points, up from 43.7 points in the previous month due to the easing of lockdown measures in some areas of the country. The inflation rate in September 2021 was at 1.6% year-on-year, stable from the previous month.

South Korea

Industrial production in August 2021 grew by 9.6% year-on-year, accelerating from 7.7% in the previous month.
Retail sales in August 2021 grew by 3.8% year-on-year, slowing down from 7.9% in the previous month.
The consumer confidence index in September 2021 was at 103.8 points, up from 102.5 points in the previous month due to the rapid increase in vaccination rates.
The PMI index for the manufacturing sector in September 2021 was at 52.4 points, up from 51.2 points in the previous month.
The value of exports in September 2021 grew by 16.7% year-on-year, slowing down from 34.8% in the previous month.
The value of imports in September 2021 grew by 31.0% year-on-year, slowing down from 44.0% in the previous month.
The trade balance in September 2021 was in surplus at 4.2 billion USD, up from a surplus of 1.67 billion USD in the previous month.

Hong Kong

Retail sales in August 2021 grew by 10.6% year-on-year, accelerating from 0.7% in the previous month, driven by sales of jewelry, fuel, textiles, furniture, and electrical appliances.
The value of exports in August 2021 grew by 25.9% year-on-year, slowing down from 26.9% in the previous month.
The value of imports in August 2021 grew by 28.1% year-on-year, accelerating from 26.1% in the previous month.
The trade balance in August 2021 showed a deficit of -26.3 billion Hong Kong dollars, improving from a deficit of -34.9 billion Hong Kong dollars in the previous month.

Philippines

The PMI index for the manufacturing sector in September 2021 was at 50.9 points, increasing from 46.4 points in the previous month.

Taiwan

Industrial production in August 2021 grew by 13.69% year-on-year, slowing down from 14.36% in the previous month.
Retail sales in August 2021 contracted by -4.3% year-on-year, improving from -9.6% in the previous month.
The PMI index for the manufacturing sector in September 2021 was at 54.7 points, down from 58.5 points in the previous month, marking the lowest level since September 2020 amid production shortages due to the COVID-19 pandemic.

United Kingdom

GDP in the second quarter of 2021 grew by 23.6% year-on-year, or a growth of 5.5% compared to the previous quarter (seasonally adjusted).

Money Market and Exchange Rate Indicators

The SET index slightly increased from the previous week, in line with other regional stock markets that also saw increases, such as Nikkei225 (Japan), HSI (Hong Kong), and CSI300 (Shanghai). On September 30, 2021, the index closed at 1,619.59 points, with an average trading value between September 27-30, 2021, of 104,629.74 million baht per day. Foreign investors and domestic institutional investors were net sellers, while retail investors and brokerage accounts were net buyers. During September 27-30, 2021, foreign investors sold a net of -622.54 million baht.

The overall yield on government bonds increased by 1 to 23 basis points. This week, there were no government bond auctions. Between September 27-30, 2021, foreign investor capital outflow from the bond market was -11,107.41 million baht, and since the beginning of the year until September 30, 2021, foreign investor capital inflow into the bond market was a net of 65,020.93 million baht.

The Thai baht depreciated slightly from the previous week, closing at 33.90 baht per US dollar on September 30, 2021, a depreciation of -1.19% from the previous week, in line with the depreciation of the euro, ringgit, won, Singapore dollar, and yuan against the US dollar. The baht depreciated more than other major currencies in the region, resulting in the NEER index of the baht depreciating by -0.47% from the previous week.