What happened this week 02/09 – 06/09

Thailand

Fundamentals still sound despite slowdown, says BoT- Thailand’s economic fundamentals remain sound despite a continuous decline in July on the back of a slowdown in private consumption, exports and manufacturing output coupled with a current account deficit, says a Bank of Thailand official. The central bank’s senior director of macroeconomic and monetary policy, said July’s economic indicators showed signs of a continued slowdown andit is too soon to tell whether the economy is on the path of recovery. (Bangkok Post, 31/08/13)

Impacts of price hikes limited – Low-income earners are bracing themselves for hikes in the price of liquefied petroleum gas (LPG), electricity and expressway tolls this month. The higher living costs reduce people’s disposable income, adding to the burden of those caught in a debt trap. (Bangkok Post, 02/09/13)

Trades in the “North-South-Isaan” region jump. Data from the Ministry of Commerce shows that the value of border trading have increased by Bt79bn, doubled from five years ago. Trade value of Mae Hong Son exceeded Bt45bn. Retailers are ramping up on their expansion plans in border provinces to follow the higher purchasing power in those areas. (Krungthep Turakij, 02/09/13)

Inflation falls before price hikes – Inflation hit a 45-month low in August on falling retail prices of certain fuels, coupled with stable fresh meat prices, cheaper vegetables and sales campaigns by retailers. Commerce Ministry figures showed inflation based on 450 consumer items slowed for an eighth straight month in August, registering 1.59% YoY against 2% in July, 2.25% in June, 2.3% in May and 2.4% in April. (Bangkok Post, 03/09/13)

Cut withholding tax to boost border trade, urges joint committee – The Joint Standing Committee on Commerce, Industry and Banking is urging the government to lower the withholding tax to 0.5-1.0% to encourage border trade. (The Nation, 03/09/13)

MS cuts GDP forecast — Morgan Stanley slashed Thailand’s GDP target to 3.7%, citing rising interest rate concerns and the tapering of QE3 and the government is running out of measures tostimulate the economy. (Krungthep Turakij, 04/09/13)

Drinkers awake to higher tabs – Drinkers awoke today to higher prices of beer, wine and liquor after the cabinet yesterday approved new effective alcohol tax rates. The Excise Department has ordered its officials to be on alert to prevent the smuggling of untaxed alcohol and the hoarding of liquor following the decision, which took effect at midnight last night. (Bangkok Post, 04/09/13)

MoC trimming export target — The Ministry of Commerce will be trimming its export target to only 2.68% from its original target of 7-7.5%, after exports in the first seven months grew only 0.6%. The MoC committee is to meet on Sept 23. The Fiscal Policy Office (FPO) said it is also planning to revise down its GDP forecast to match the NESDB’s forecast of 4% since exports for the year must grow at 5.5% to support its original 4.5% GDP growth forecast. (Krungthep Turakij, 05/09/13)

Agencies expect improvement to economic performance in current half – The government’s economic ministries believe the economy will recover during the remaining months of the year, as they put in support measures to shore up exports of manufactured and agricultural products. (The Nation, 05/09/13)

Issues remain despite climb in competitiveness – Thailand has advanced for the second year in a row in a global competitiveness ranking, but challenges are considerable on many fronts. (The Nation, 05/09/13)

Logistics squeezed by farmer blockade – Logistics firms are calling on the state to end quickly the escalating protest by rubber farmers in the South, saying 80%of transport in the region is frozen and Malaysia-bound shipments are in limbo. (Bangkok Post, 05/09/13)

New alcohol tax structure ‘unfair’ – Business operators have slammed the new alcohol excise tax structure as unfair, saying the rates of some categories remain far lower than others despite the same levels of alcohol content. (Bangkok Post, 05/09/13)

Consumers still wary of spending – Thai consumer confidence hit a nine-month low in August as people became increasingly worried about the economic slowdown and political uncertainties. Consumers became less confident after the government’s economic planning agency last month cut its 2013 GDP growth projection to a range of 3.8% to 4.3% from its previous forecast of 4.2% to 5.2%, the survey showed. (Bangkok Post, 06/09/13)

Ministry sticks to export target – The Commerce Ministry yesterday maintained its target for this year’s export growth at 7-7.5% as it wants to aim high to encourage officials and exporters to boost shipments in the remaining months. (The Nation, 06/09/13)

FPO hopes budget disbursement slows downturn – The government will accelerate disbursement of its Bt700bn budget in the final quarter this year in the hope that it offsets weak exports and resuscitates the country’s limp economy. (Bangkok Post, 06/09/13)

Traders call for widening of spread – Small foreign exchange traders are bargaining with large counterparts to widen the spread between the US dollar and the baht, saying a larger gap would help them survive tougher competition. Both groups are members of the Thai Association of Foreign Exchange’s (TAFEX), according to president Chanaporn Poonsuphirun. The wider spread means consumers will have to pay more to exchange money. They have asked for the spread to be increased further to a range of 0.08 to 0.10 baht per dollar from 0.05 baht now. (Bangkok Post, 06/09/13)

Global

US: Personal income edged up 0.1% in July, following a 0.3% increase in June, the U.S. Commerce Department said. Personal consumption expenditures also rose 0.1% in July, in contrast to a revised 0.6% gain in June, the department added. This was below analysts’ expectations. JP Morgan economist Daniel Silver said Friday that July’s personal consumption expenditure added “fairly significant” downside risk to their third-quarter U.S. gross domestic product forecast. U.S. consumer sentiment fell in August from a six-year high in the prior month. The final reading of the consumer sentiment index stood at 82.1 in August, slightly better than the preliminary reading of 80, according to a joint survey released Friday by Thomson Reuters and University of Michigan. Moreover, the Chicago Purchasing Managers’ Index, considered as a leading indicator of the U.S. economy, increased to 53.0 in August from 52.3 in July, the Institute for Supply Management – Chicago said on Friday. (Xinhua, 31/08/13)

China’s manufacturing sees hefty rebound in Aug- China’s manufacturing sector saw a strong recovery in August, offering further signs that the world’s second-largest economy is moving out of the shadows of a protracted slowdown. The Purchasing Managers’ Index (PMI) for the manufacturing sector rose to 51.0% in August from 50.3% in July, marking the second monthly expansion in a row, and the highest reading this year, the China Federation of Logistics and Purchasing (CFLP) said on Sunday. (Xinhua, 02/11/13)

China: The National Bureau of Statistics of China cut back its 2013 GDP forecast by 0.1% to 7.7%. (IQ Biz, 02/09/13)

UK: Britain reports fastest growth in manufacturing output, new orders since 1994 – British manufacturing maintained a strong momentum of growth in August with the output and new orders growing at the fastest rates since 1994, said a market sensitive report on Monday. The report, jointly issued by the financial information service company Markit and the Chartered Institute of Purchasing and Supply (CIPS), showed that the Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) jumped to 57.2 in August, up from a revised reading of 54.8 in July, hitting a two-an-a-half year high. (Xinhua, 02/09/13)

Indonesia: Indonesia inflation in August rises to 8.79% – Indonesia consumer prices increased 8.79% in August YoY after an 8.61% rise in July, boosting challenge to the authorities to guard the rupiah as the trade deficit gap widens, the national statistic bureau announced here on Monday. (Xinhua, 02/09/13)

OECD forecasts moderate growth in advanced economies, slowdown in emerging economies- The OECD said the euro area as a whole is out of recession, and its three largest economies: Germany, France and Italy, could have an overall growth rate of 0.4% this year. A big surprise in the OECD report is the forecast for the growth of France, which is updated from the previous projection of a contraction of 0.3% to a rise of 0.3% in 2013. Germany will lead the growth in the bloc, by an increase of 0.7%, revised up from a May projection of 0.4%. However, Italian growth remains slightly negative, but the gap is expected to be slightly narrowed. (Xinhua, 04/09/13)

US: Economic activity in the U.S. manufacturing sector expanded in August for the third consecutive month, according to the Institute for Supply Management. The Purchasing Managers’ Index (PMI) registered 55.7, slightly up from July’s reading of 55.4.

The U.S. Department of Commerce also reported Tuesday that construction spending in July rose 0.6% to a seasonally adjusted annual rate of US$900.8bn, beating market consensus. (Xinhua, 04/09/13)

China: The final reading for China’s manufacturing PMI rose to a four- month high of 50.1 in August, reflecting stabilized manufacturing activities, said the HSBC Monday. (Xinhua, 04/09/13)

Europe: Spain’s unemployment drops for first time in August in 13 years – The number of people registered as unemployed in Spain decreased in August for the first time in 13 years, official figures showed on Tuesday. According to the Ministry of Employment and Social Security, jobless people decreased by 31 from July to August, in which unemployment used to increase because the tourist peak season ends as well as many temporary contracts. (Xinhua, 04/09/13)

Greece raises €1.1bn in new treasury bills auction – Greece raised on Tuesday €1.138bn (US$1.5bn) during a treasury bills sale, the first this autumn, the country’s Public Debt Management Agency (PDMA) announced. The six-month treasury bills were sold at an interest rate of 4.2%, the same as the previous auction in August. (Xinhua, 03/09/13)

US: Reports from the 12 Fed Districts suggested that U.S. economic activity continued to expand at a modest to moderate pace between early July and late August, according the Beige Book released by the Fed Wednesday. (Xinhua, 05/09/13)

The U.S. trade deficit in goods and services widened to US$39.1bn in July from US$34.5bn in June, the Commerce Department reported Wednesday. (Xinhua, 05/09/13)

US: U.S. private sector adds fewer jobs in August – U.S. private companies added in August the fewest jobs in the past three months, as recovery in labor market remained modest, according to a private survey released Thursday. Companies took on 176,000 workers last month, following a revised 198,000 gain in July, said the National Employment Report released jointly by Automatic Data Processing (ADP) and Moody’s Analytics, based on a monthly survey. Economists expected an increase of 184,000 private jobs last month.

U.S. initial jobless claims dip near 6-year low – The number of Americans initially applying for unemployment aid went down last week for the second consecutive week, hanging slightly over the six-year low mark, U.S. Labor Department reported Thursday. In the week ending Aug. 31, the advance figure of seasonally adjusted initial claims for jobless benefits fell by 9,000 to 323,000 from a revised figure of 332,000 for the previous week. It is just shy of the 322,000 reached three weeks earlier, which was the lowest since January 2008.

Moreover, the U.S. Non-Manufacturing Index registered 58.6 in August from 56 in July, according to the Institute for Supply Management (ISM). A reading above 50 indicates expansion in the sector. The ISM reported Tuesday that U.S. economic activity in the manufacturing sector expanded in August for the third consecutive month, with its Purchasing Managers’ Index (PMI) increasing to 55. 7 from 55.4 in the prior month. (Xinhua, 06/09/13)

Europe: ECB keeps interest rates unchanged, revises growth forecast – The European Central Bank (ECB) on Thursday decided to leave key interest rates unchanged and revised its macroeconomic projections for the eurozone. It is believed that the ECB is under less pressure to lower the main interest rate, which stands at a record low level of 0.50%. ECB revised the projection for 2013 upwards by 0.2 percentage point and that of 2014 downward by 0.1 percentage point. It foresees the annual real GDP in the euro area to decline by 0.4% in 2013 and increase by 1% in 2014. (Xinhua, 05/09/13)

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