Fiscal Policy Office Weekly Economic Report as of November 26, 2021

Nov 27, 2021 | view 2,631

The Fiscal Policy Office (FPO) reports on the economic situation for the week ending November 26, 2021:
1. The agricultural production index in October 2021 grew by 0.9% compared to the same period last year, while the agricultural price index contracted by -8.2% year-on-year.
2. Foreign tourist arrivals in October 2021 increased by 1,588.0% compared to the same month last year.
3. The value of exports in October 2021 grew by 17.4% year-on-year, while the value of imports increased by 34.6% year-on-year.
4. Singapore's GDP in the third quarter of 2021 grew by 7.1% year-on-year.

Economic Indicators in Thailand
The agricultural production index in October 2021 grew by 0.9% year-on-year, representing a contraction of -0.7% compared to the previous month after seasonal adjustments. In October 2021, agricultural production growth was observed in the major crops and livestock categories at 0.9% and 1.6%, respectively, while fishery production contracted by -3.0%. Key agricultural products with increased production included rubber, palm oil, cassava, fruits, chicken, and pigs, while significant products with decreased production included paddy rice, animal feed corn, chicken eggs, and vannamei shrimp.
The agricultural price index in October 2021 contracted by -8.2% year-on-year, or grew by 0.8% compared to the previous month after seasonal adjustments. All categories of agricultural prices showed contraction, with major crops, livestock, and fishery prices decreasing by -8.6%, -7.3%, and -4.1%, respectively. Key agricultural products with rising prices included cassava, animal feed corn, palm oil, and chicken eggs, while products with declining prices included paddy rice, rubber, fruits, pigs, chicken, and vannamei shrimp.

Source: Office of Agricultural Economics

In October 2021, the number of foreign tourists visiting Thailand reached its highest level in 19 months, while the number of Thai visitors continued to rise for the second consecutive month, reflecting the improving COVID-19 situation in the country.
In October 2021, 20,272 special foreign tourists, including business travelers and those seeking medical services, visited Thailand, marking a significant increase of 1,588.0% compared to the same month last year. After seasonal adjustments, this represented a growth of 58.5%, driven by the improving COVID-19 situation and the onset of the tourism season.
The number of Thai visitors in October 2021 was 4.6 million, reflecting a year-on-year decline of -66.5%, but after seasonal adjustments, it showed a growth of 69.0%, attributed to the ongoing improvement in the COVID-19 situation and the registration for the 'Half-Half' program starting from October 8.
However, there are risks to monitor, including a new wave of infections in Europe, where several countries are reporting increased cases, prompting some to reintroduce control measures. In Chiang Mai, there has been an upward trend in cases, which may impact tourism during the year-end holiday season.

Source: Ministry of Tourism and Sports

The value of exports in October 2021 was $22.739 billion, representing a growth of 17.4% year-on-year, marking the eighth consecutive month of growth. Key export products that supported this growth included automobiles and parts (10.3%), oil-related products (67.3%), steel and products (35.9%), jewelry and non-gold ornaments (20.6%), electrical circuits (18.6%), and various fruits such as fresh longan (97.7%) and fresh mangoes (27.0%). Rubber (51.7%), rice (33.7%), cassava products (29.5%), granulated sugar (111.6%), canned and processed fruits (24.5%), and pet food (14.4%) also contributed. When analyzing by major trading partners, exports to key markets grew across all regions, particularly the United States, China, South Korea, ASEAN, and South Asia, especially India, which saw growth rates of 16.1%, 14.1%, 30.5%, 31.0%, and 58.3% year-on-year, respectively. The average export value in the first ten months of 2021 grew by 15.7% year-on-year.
The value of imports in October 2021 was $23.109 billion, continuing to grow at a high rate of 34.6% year-on-year. Imports showed strong growth across all major categories, including fuel (104.4%), capital goods (25.4%), raw materials (26.7%), consumer goods (34.3%), and vehicles and equipment (2.5%). The average import value in the first ten months of 2021 grew by 31.3% year-on-year. The trade balance in October 2021 recorded a deficit of -$370.2 million, resulting in a cumulative trade surplus of $1.646 billion in the first ten months of 2021.

International Economic Indicators
United States

New home sales in October 2021 grew by 4.0% from the previous month (seasonally adjusted), slowing from 7.1% growth in the previous month, with sales in the Midwest and South regions slowing down, while sales in the Northeast and West regions contracted.
Existing home sales in October 2021 grew by 0.8% from the previous month (seasonally adjusted), slowing from 7.0% growth in the previous month due to a decline in second-hand condominium sales.
The median price of existing homes in October 2021 grew by 13.1% year-on-year, accelerating from 12.7% growth in the previous month.
The number of initial jobless claims for the week of November 14-20, 2021, was 199,000, continuing to decline for the eighth consecutive week and reaching the lowest level in 52 years since November 2012.

Japan

The manufacturing PMI in November 2021 rose to 54.2 from 53.2 in October 2021, driven by increased production and new orders.
The services PMI in October 2021 increased to 52.1 from 50.7 in September 2021.

Eurozone

The preliminary consumer confidence index in November 2021 was -6.8, down from -4.8 in October 2021, as households expressed concerns about the new wave of COVID-19 infections.
The preliminary manufacturing PMI in November 2021 was 58.6, up from 58.3 in the previous month and exceeding market expectations of 57.3.
The preliminary services PMI in November 2021 was 56.6, up from 54.6 in the previous month and also exceeding market expectations of 53.5.

Hong Kong

The inflation rate in October 2021 grew by 1.7% year-on-year, up from 1.4% in the previous month.
The value of exports in October 2021 grew by 21.4% year-on-year, accelerating from 16.5% growth in the previous month.
The value of imports in October 2021 grew by 17.7% year-on-year, slowing from 23.5% growth in the previous month.
The trade balance in October 2021 recorded a deficit of -$30.5 billion HKD, down from a deficit of -$42.4 billion HKD in the previous month.

Australia

The preliminary manufacturing PMI in November 2021 was at 58.5, up from 58.2 in October 2021, reflecting increased confidence in the economy due to the improving COVID-19 situation.
The preliminary services PMI in November 2021 was at 55.0, up from 51.8 in October 2021, as the Australian government relaxed COVID-19 control measures.

Singapore

GDP in the third quarter of 2021 grew by 7.1% year-on-year, slowing from 15.2% growth in the previous quarter, or 1.3% growth compared to the previous quarter (seasonally adjusted).
The inflation rate in October 2021 grew by 3.2% year-on-year, up from 2.5% in the previous month, primarily due to transportation costs. Industrial production in October 2021 grew by 16.9% year-on-year, improving from a -2.2% contraction in the previous month.

Malaysia

The inflation rate in October 2021 grew by 2.9% year-on-year, up from 2.2% in the previous month, primarily due to housing costs.

South Korea

The Bank of Korea decided to raise the policy interest rate to 1.0% per annum from 0.75% to curb rising inflation and household debt.

Taiwan

The unemployment rate in October 2021 was 3.8% of the total labor force, down from 3.9% in the previous month, marking the lowest level since May 2021.
Industrial production in October 2021 grew by 11.3% year-on-year, slowing from 11.6% growth in the previous month.
Retail sales in October 2021 grew by 6.7% year-on-year, accelerating from 2.0% growth in the previous month.

United Kingdom

The preliminary manufacturing PMI in November 2021 was at 58.2, up from 57.8 in October 2021. However, the UK manufacturing sector continues to face challenges with shortages of raw materials and labor.
The preliminary services PMI in November 2021 was at 58.6, down from 59.1 in October 2021, but still above the 50 mark, indicating continued growth in the services sector.

Financial Market Indicators

The SET index slightly increased from the previous week, contrary to other regional stock markets that declined. On November 25, 2021, the index closed at 1,648.46 points, with an average daily trading value of 86.099 billion THB from November 22-25, 2021. Foreign investors and securities company accounts were net buyers, while domestic retail and institutional investors were net sellers. During this period, foreign investors purchased a net of 3.045 billion THB.

The overall yield on government bonds increased by 1 to 4 basis points. This week, investors participated in the auction of 15-year and 3-year government bonds, with interest rates at 2.46 and 0.79 times the auction limit, respectively. From November 22-25, 2021, foreign capital outflow from the bond market was -1.495 billion THB, while since the beginning of the year until November 25, 2021, foreign capital inflow in the bond market was a net of 143.224 billion THB.

The Thai Baht depreciated against the previous week, closing at 33.33 THB per USD on November 25, 2021, a depreciation of -2.20% from the previous week. This trend was consistent with the depreciation of other currencies such as the Yen, Euro, Ringgit, Won, Singapore Dollar, and Yuan against the USD. The Baht's depreciation was more pronounced than other major currencies in the region, resulting in a -1.56% decline in the NEER index.