What happened this week 07/10 – 11/10

A summary of the key events in Thailand and Internationally
Thai Economy
  • Excise tax on liquor unequal — The cabinet recently approved a sharp increase in the tax ceiling on alcoholic drinks, based on a proposal by the Finance Ministry. The excise tax ceiling for both fermented beverages (such as beer and wine) and distilled drinks (such as whisky and brandy) rose to Bt2,000/liter of 100% alcohol content, but the taxation system is still based on sales price. Because of this, taxes are far from the same for the same product: Heineken is currently paying the most tax at Bt5 per bottle, followed by Chang at Bt4.84, while Singha is paying the least at Bt2 per bottle. (Matichon, 07/10/13)
  • Interest coverage ratio down — BoT revealed that Thailand business interest coverage ratio is on the decline upon slowing earnings. The average interest coverage ratio is at 3.1, and the property development sector has fallen the most, from 4.2 to 3. (Krunthep Turakij, 07/10/13)
  • World Bank: US crisis may hit region’s growth – The World Bank forecasts that the US budget deadlock could shave one percentage point off the gross domestic product (GDP) growth of East Asia and Pacific for every two percentage points the US economy falls. The World Bank’s growth forecast for regional developing countries including Thailand was lowered to 7.1% for 2013 and 7.2% for 2014 from 7.8% and 7.6% respectively. The bank plans to revise Thailand’s 2013 GDP growth forecast in December from the current projection of 4%, which was reduced from the forecast of 4.5%in April. The World Bank predicts Thailand’s export growth this year at 2.5%. (Bangkok Post, 08/10/13)
  • 31 projects win perks – The Board of Investment granted promotional privileges to 31 projects yesterday that carry a combined investment cost of up to Bt152.58bn. (Bangkok Post, 08/10/13)
  • Bt2trn loan bill clears first Senate bar- The Bt2trn borrowing bill for government infrastructure development projects cleared its first reading in the Senate yesterday. After more than 18 hours of debate, the Senate voted 86 to 41 to accept the bill in principle. A Senate committee has been set up to scrutinize the bill ahead of its 2nd reading. (Bangkok Post, 09/10/13)
  • Drop in mortgage overpayments – Some bank customers are now paying less to reduce their mortgages because they feel the need to build up a reserve against economic uncertainties and repairs in case their homes are damaged by floods. (The Nation, 09/10/13) 
  • Thai-China MoU okayed — The cabinet has approved a draft MoU between Thailand and China for four science and technology projects. The Thai PM also said she will sign an agreement with the Chinese President on Oct 11, 2013 for Chinese investment in double rail and high speed train projects. (Krungthep Turakij, 09/10/13)
  • Electronics & electric exports falling – Exports of electronics and electric appliances in 8M13 dropped by 3.2%, with computers and components parts falling the most. Air conditioners will fall the least, supported by the real estate business. (Prachachart Turakij, 09/10/13)
  •  No barter deal with China yet — The government has not struck a barter deal with China to swap Thai farm produce for Chinese investment in high-speed rail, Transport Minister Chadchart Sittipunt says. He dismissed reports that PM Yingluck has persuaded Chinese Premier Li Keqiang to agree on a barter trade deal. (Bangkok Post, 11/10/13) 
  • More companies closing than opening — The number of new companies rose 3% in September – while those closing rose 5%. MoF expects that there will be 70k new companies set up this year, an all-time high. (Manager, 11/10/13)
Global Economy
  • Japan: Bank of Japan Governor Haruhiko Kuroda on Friday praised the government’s decision to raise the nation’s sales tax as planned next April, and voiced a view that a stimulus package to moderate the negative impact of the tax hike is expected to sustain economic growth. (Global Post, 04/10/13)
  • US: U.S. consumer credit rose at an annual rate of 5.4% to US$3.04trn in August, according to the U.S. Federal Reserve, beating market consensus. (Xinhua, 08/10/13)  
  • Europe: Greece presents 2014draft state budget, foresees return to growth, markets- Greece’s government unveiled the 2014 preliminary draft state budget on Monday, foreseeing an initial primary budget surplus this year and return to growth and international bond markets in 2014. The primary surplus in 2013 will stand at about €340mn (US$462mn) and will reach €2.8bn (1.6% of GDP) next year with a positive 0.6% growth rate in 2014, Alternate Finance Minister Christos Staikouras said before submitting the draft to parliament for discussion. (Xinhua, 07/10/13)
  • Asia: Vietnam to pocket US$4.5bn from rubber exports in 2013:forecast – Vietnam’s rubber sector expects to bring home US$4.5bn from rubber exports in 2013, higher than US$4.26bn recorded in 2012, according to the Vietnam Rubber Association (VRA) on Monday. (Xinhua,07/10/13)
  • Japan’s Aug. composite economic index down – The composite index of coincident indicators, a key gauge of Japan’s economic conditions, fell in August, marking the first drop in two months, the Cabinet Office said Monday. The index of coincident indicators such as industrial output, retail sales and new job offers declined to 107.6 from 107.7 in July, against the 2010 base of 100, the Cabinet Office said in a preliminary report. (Xinhua, 07/10/13)
  • Global economy grows in low gear, entering another transition – The International Monetary Fund (IMF) on Tuesday lowered its forecast for global economic growth, saying the world economy has entered another transition with a set of challenges that call for new reform efforts. The Washington-based global lender cut its growth forecast for the world economy to 2.9% this year, 0.3percentage point lower than its July projection, due to a slowdown of growth in key emerging market economies. It also revised down its forecast for the world economic growth for next year to 3.6%, 0.2percentage point lower than its July estimate. (Xinhua, 09/10/13)
  • Japan current account underwhelms – The current account surplus fell 64% in August, compared with forecasts of an 18% gain, while the unadjusted monthly balance was ¥161.5bn, against forecasts of ¥520bn and down from ¥577.3bn in July. The Economy Watchers’ diffusion index for current conditions rose to 52.8 in September from 51.2 in August, the first gain in six months. The expectations indicator also picked up, helped by Tokyo winning the competition to host the 2020 summer Olympics. (Financial Times, 08/10/13)
  • German factory orders unexpectedly fall 0.3% in August-German factory orders fell unexpectedly in August, declining for the second consecutive month, official data showed on Tuesday. In a report, Deutsche Bundesbank said factory orders dropped by a seasonally adjusted 0.3% in August, defying expectations for a gain of 1.2%.(Investing.com, 08/10/13)
  • Chinese economic growth in Q4 expected to slow to 7.6%, SIC – China’s economic growth rate is expected to slow to 7.6% in the fourth quarter of this year, according to prediction by the government think tank State Information Center (SIC). The center published its forecast report on Tuesday’s China Securities Journal, saying that the country’s economy would grow about 7.6% in 2013. (Xinhua, 08/10/13)
  • China: China overtakes US as top oil importer — China passed the United States in September as the world’s biggest net oil importer, riven by faster economic growth and strong auto sales, according to US government data released this week. Chinese oil consumption outstripped production by 6.3mn bbl/day, which indicates the country had to import that much to fill the gap, the EIA said. (AP, quoted Bangkok Post, 11/10/13) 
  • US: U.S. initial jobless claims rise sharply – The number of Americans initially applying for unemployment aid rose sharply last week as California processed a backlog of recent applications and the partial federal government shutdown prompted some government contractors to dismiss employees, the U.S. Labor Department reported Thursday. In the week ending Oct. 5, the advance figure of seasonally adjusted initial claims for jobless benefits rose by 66,000 to 374,000, the highest since late March, from the previous week’s unrevised figure of 308,000. (Xinhua, 10/11/13)
  • UK: The Bank of England’s Monetary Policy Committee (MPC) Thursday left interest rates at the historic low of 0.5%. (IQ Biz, 10/11/13)
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