12 Feb 2019
Thai Economy
The level of ultrafine dust particles exceeding safety standards in Greater Bangkok is expected to prolong until March 2019. Given this, KResearch has revised our forecast of its effect on the Thai economy in terms of opportunity costs incurred from health and tourism related issues, as well as other business issues resulting from changes in consumer behavior to cope with the high level of hazardous dust particles...Read more
28 Jan 2019
International Economy
KResearch expects the Federal Reserve to keep the policy rate unchanged at 2.25-2.50 percent during its first policymaking meeting of the year from January 29-30, 2019. Although the US economy has shown signs of solid growth, risks associated with global economic uncertainty may prompt the US central bank to tighten its monetary policy. At the same time, low oil prices and inflation may enable the Fed to wait and apply a data-dependent approach to its decision making. Additionally, the current interest rates are now moving toward the lower end of the long-term Fed target rates between 2.5-3.5 percent. Therefore, the Fed may not find it necessary to hasten the policy rate hike during this time of the year....Read more
22 Jan 2019
China’s economy grew 6.6 percent in 2018, declining substantially from the 6.8 percent pace recorded in 2017. Its economy has weakened steadily, especially during 4Q18 to 6.4 percent, representing the lowest growth in 28 years. The sharp decline in 4Q18 economic performance was attributable chiefly to a decelerated export growth of 4.3 percent YoY against the 11.1 percent pace reported for 3Q18. China’s disappointing export performance was clearly a result of the protracted trade war, which has crippled its business sector to make profit. In November 2018, profit in the Chinese business sector contracted for the first time in over three years at only 1.8 percent despite attempts by the government to sustain economic growth through numerous policy tools, including liquidity injection via financial institutions and easing control of local government investment. A slower growth in M1 at only 1.5 percent in December also shows that the effectiveness of China’s monetary policy has become increasingly restricted and liquidity injection into the economic system was intended only to maintain financial costs. As a result, private investment will continue to be subdued ahead. In addition, the slowing GDP growth seen in the tertiary industry signals that domestic demand has began to decline. ...Read more
Trading
Thai exports in 2018 rose 6.7 percent YoY, driven mainly by commodity prices. Nonetheless, Thai export growth was significantly lower than those of our neighboring countries. Traditionally, intermediate goods accounted for a majority of the entire Thai export structure, showing that connectivity with value chains in different countries is important for Thai trade. Nonetheless, the exports of intermediate goods from Thailand have shown signs of slowdown and declining share in the total export structure. However, the share of Thai finished products increased. At the same time, the exports of intermediate goods from Vietnam and the Philippines rose at the expense of the market share of Thai exports, especially electronics. This trend shows Thailand’s diminishing competitive edge and less important role in the supply chain of the electronic industry. If the trend continues, it will hurt Thailand’s ability to reap profits from the electronic industry, which has promising growth prospects in the future. ...Read more
1 Feb 2019
Tourism
The number of Chinese tourist arrivals to Thailand bounced back quickly toward the end of 2018, thanks to a concerted effort by the private and public agencies in helping shore up confidence of Chinese tourists toward Thailand and an exemption of visa-on-arrival fee for citizens of 20 countries, including China. The recovery was clearly seen in December 2018 when their arrivals revered to growth for the first time in five months. We at KResearch expect that the number of Chinese tourists visiting Thailand during the Chinese New Year 2019 will reach approximately 325,000, which would be on a par with last year. The figure represents a positive sign for our Chinese inbound tourism market during the remainder of 2019. According to Ctrip’s poll, Chinese tourists still choose Thailand as one of their top holiday destinations during the Chinese New Year 2019. ...Read more
31 Jan 2019
Industry
Amid attempts to promote carmakers to adopt the Euro 5 emission standards for domestically-produced cars in 2021, aimed at addressing the PM2.5 dust particle problem over the long term, we at KResearch have assessed that the costs involved will force consumers to set aside extra expenses of at least THB5 billion for new car purchases during a one-year period of using those standards....Read more
Financial Markets
The Baht hit an almost 9-month high of THB31.18/USD after the FOMC meeting. The Baht rose in line with net foreign stock buying orders and other Asian currencies. The US dollar, however, tumbled on the Fed’s dovish statement. The Fed cut a reference to the Fed’s plan for further gradual rate hikes and gave a cautious approach for the months to come. ...Read more
Financial Institutions
Thai Baht has surged to THB31.23/USD or up 4.4 percent from the beginning of this year due mainly to a weaker US dollar. The movement of Thai Baht was in alignment with other currencies in the region. However, from the beginning of this year, the Thai currency hit a record high in nine months and became the second-best performer in the region after Indonesian Rupiah on the back of dollar downsize and the Federal Reserve’s hints that the interest-rate increases may be put on hold, resulting in a selloff of the greenback. ...Read more
KResearch expects the Bank of Thailand’s Monetary Policy Committee (MPC) to keep the policy rate unchanged at 1.75 percent during the upcoming meeting after it raised policy rate by 0.25 percentage point on December 19, 2018. Since the Thai GDP growth begins to show signs of slowdown, the MPC is likely to closely monitor the Thai economic development. Meanwhile, the recent rate increase has not significantly tightened financial conditions. In short, an accommodative monetary policy is still needed to shore up an expansion of the Thai economy....Read more