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BOT issues Northern Economic report for November

The Bank of Thailand’s economic report shows passenger traffic in Chiang Mai for the past year.

Chiang Mai Mail reporters
The Bank of Thailand, Northern Branch issued their latest economic report for November, 2014 which saw a slight slowdown from the previous month due to a slackness of private consumption and investment including short fall of government current expenditure. The slowdown was associated with drops in manufacturing and processed agricultural production. Nevertheless, tourism sector has been performing well during its peak season.

On stability front, key indicators such as inflation and unemployment rate remained unchanged. For banking sector, deposits growth ascended while credits descended continually. Private consumption and investment weakened further with a slower pace than expected.

The Private consumption index dropped by 2.7 percent year-on-year year on year from decline of automobile sales shouted with slackening general purchasing power. Farm income and consumer confidence also came off from households’ spending cautiousness. However, overtime income from non-agriculture sector, government’s farmer subsidy scheme and tourists spending helped boosting sales of those consumer goods.

Private investment continued its negative territory. Private investment index fell by 4.1 percent year on year contributed mainly from a declining of construction materials sales and those suspended decision on new investments. Nonetheless, permitted construction area in municipalities rebounded on both residential and commercial building projects and investment promotion approval from BOI also expanded in categories of services, public utilities and alternative energy.

Government disbursement through provincial treasury offices in the Northern region declined by 43.6 percent year on year due to a huge subsidy transfer to local authorities and academic institutions. Meanwhile, disbursement on investment such as maintenance and rehabilitation grew marginally.

Exports ticked up by 2.2 percent year on year mainly from cross-border trade on consumer goods to Myanmar. Meanwhile, exports of electronic components to Japan, China and Europe dropped from high production last month. Import values decreased by 4.4 percent year on year following imports of raw materials and intermediate goods.

The Manufacturing Production Index decreased by 7.3 percent year on year mainly from production of beverages, construction materials, processed food industry, electronic components and sugar owing to a delay in sugarcane crushing process. Nevertheless, production of camera lenses, tableware ceramics, jewelry and furniture performed well.

The Major Crop Production Index fell by 7.3 percent year on year owning to second crop rice and sugarcane production. Altogether, sugar mills postponed the start of seasonal production causing harvest-to-cut. However, production of off-season longan as well as cassava and livestock especially broilers and eggs went up. In the meantime, major crop price lowered by 3.7 percent year on year, accounted for declining prices of glutinous paddy, soybean, livestock, particularly swine, broilers and eggs. Farm income, thus, contracted by 10.7 percent year on year.

The Tourism sector kept growing during the high season. The tourist promotion campaigns from public and private sector such as “Chiang Mai Golf Classic 2014” and “China’s first-tier cities road show” in line with more direct and charter flights available helped boost numbers of tourists as evidenced by increased number of air passengers and occupancy rate from the previous month.

Inflation came off further to 1.2 percent year on year following prices of fuel in accordance with falling global prices. Likewise, prices of fresh food, especially meat, chicken and fruits went down as a result of abundant supply. The unemployment rate remained low at 0.4 percent year on year.

In October 2014, commercial banks’ deposits totaled 590,042 million baht, a 4.7 percent rise year on year due to an increase of government accounts and more deposit competition among commercial banks. Concurrently, commercial banks’ lending, accounted for 583,685 million baht, grew by 4.8 percent year on year, moderating for 17 consecutive months, partly from a slackness of hire purchase lending. However, lending by banks has improved in some categories such as wholesale and retail trade, rice mills and agricultural processing businesses which showed a 3-month consecutive increase.

Hotel occupancy rates for the past year from the BoT.

EU cuts GSP privileges due to trade policy changes

The Ministry of Foreign Affairs has explained that the European Union now excludes Thailand from its Generalized System of Preferences (GSP) because of changes in its trade policies. The European Union stopped all GSP privileges for Thailand, China, Ecuador and the Maldives on Jan 1.

Some privileges for Thailand ended earlier, but this time severe restrictions also impact the export of shrimp and squid. The Department of Foreign Trade at the Ministry of Commerce estimates that the GSP exclusion may cause Bt30 billion in damage, nearly 4 per cent of the value of Thai exports to the EU or 0.3 per cent of the total value of Thai exports.

The GSP was introduced in the form of tariff reduction in 1971 to allow developing countries to sell their products to the EU to improve their economies. The EU now excludes Thailand, China, Ecuador and the Maldives from its GSP because the World Bank has defined them as upper-middle income countries from 2011 to 2013.

The European Union informed Thailand and other trading parties of the decision in December 2012 and had Thailand adjust for the change last year.

The Ministry of Foreign Affairs stated that the GSP exclusion of Thailand had nothing to do with any political situation in the country or with bilateral relations between Thailand and the EU and EU countries. It said that the relations and cooperation on economic affairs, trade, education, tourism, research and development continued as usual.

Since being informed of the EU’s decision, the Ministry of Foreign Affairs warned the Thai private sector of the exclusion and led the Thai business community to other countries to find new markets instead of Europe. (MCOT online news)

HEADLINES [click on headline to view story]

BOT issues Northern Economic report for November

EU cuts GSP privileges due to trade policy changes