Thailand’s economy started to recover in September


In September 2021, the Thai economy began to recover from the previous month thanks to the relaxation of the COVID-19 containment measures according to the latest press release from the Bank of Thailand.

As a result, private consumption and private investment indicators improved. Merchandise exports increased slightly as demand from trading partners recovered.

Manufacturing output increased in several sectors due to improved domestic and external demand as supply disruption issues such as temporary plant closures began to resolve.

Government spending continued to support the economy through current spending and transfer payments. Nonetheless, foreign tourism figures remained weak.

On the economic stability front, headline inflation has increased with the end of government subsidies on electricity and water bills, as well as the increase in retail oil prices in the domestic market as a result of the upward trend in world oil prices raw. The labor market improved slightly in line with economic activities but remained vulnerable. The current account recorded a smaller deficit compared to the previous month, mainly due to a larger surplus in the trade balance.

The details of the economic conditions are as follows:

Private consumption indicators, after seasonal adjustment, increased from the previous month in almost all expenditure categories due to

1) the gradual relaxation of containment measures and good progress in vaccination which has helped boost global economic activity, household income, and consumer confidence,

2) pent-up demand, and

3) government measures which continued to support household purchasing power.

Private investment indicators, after seasonal adjustment, increased from the previous month. Investments in machinery and equipment increased in line with the improvement in demand and the business climate. At the same time, investment in construction continued to increase after the relaxation of containment measures on construction sites since the end of July 2021.

The value of merchandise exports, after seasonal adjustment, up slightly from the previous month in several categories. This was due to the recovery in demand from trading partners after the epidemic situation abroad subsided while manufacturing production in Thailand resumed after the previous setback.

Manufacturing manufacturing, after seasonal adjustment, increased from the previous month in almost all categories as demand picked up as temporary plant closures began to resolve. Nonetheless, global shortages of semiconductors and shipping containers continued to affect manufacturing output, particularly in the automotive, electrical appliance, and food and beverage sectors.

The value of merchandise imports, after seasonal adjustment, down compared to the previous month after an acceleration in previous periods, especially for imports of raw materials and intermediate goods. In addition, imports of certain categories declined, such as machinery and equipment and auto parts.

Public expenditure continued to play a role in supporting the economy. Current expenditure continued to grow compared to the same period last year due to compensation of employees and purchases of goods and services. However, capital spending contracted due to the high base effect that resulted from the accelerated central government disbursement last year.

The number of arrivals of foreign tourists, after seasonal adjustment, decreased compared to the previous month and remained low as the epidemic situation both in Thailand and abroad remained uncertain. In addition, restrictions on international travel to many countries remained in place.

Stability side, headline inflation has increased with the end of government subsidies on electricity and water bills, as well as the increase in retail oil prices in the domestic market as a result of the upward trend in world oil prices raw. The labor market remained vulnerable but showed signs of improvement in line with all economic activities.

This was reflected in a movement of labor to industrial areas as well as an improvement in the sentiment of the self-employed group. The current account recorded a smaller deficit compared to the previous month, mainly due to a larger surplus in the trade balance. On exchange rates, the baht against the US dollar, on average, remained stable compared to the previous month.

The Thai economy in the third quarter of 2021 was hit hard by the COVID-19 epidemic and strict containment measures. After adjusting for seasonal variations, private consumption indicators fell compared to the previous quarter due to weak household purchasing power, despite the support of government measures.

Merchandise exports declined due to the intensifying epidemic on board which sapped demand from trading partners. At the same time, private investment indicators and manufacturing output declined due to weak demand while production in some sectors was affected by the problem of supply disruption.

Nonetheless, the numbers of foreign tourists increased after the opening of the tourist sandbox program in July 2021. Public spending increased compared to the same period last year. On the stability front, headline inflation has receded as the weak base effect of energy prices eased last year. The labor market has become more vulnerable. The current account recorded a deficit at a level close to the previous quarter.

Bank of Thailand
October 29, 2021

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