What happened this week 18/11 – 22/11


  • Foreign institutes worry about rice support — Knowledge Network Institute of Thailand Policy Research Institute (KNIT) says that since the IMF has raised questions about the government rice subsidies scheme, several foreign institutes have asked KNIT to release some of its statistics on the matter, saying that the rich subsidies scheme is one of their main risk concerns for Thailand. (Khao Sod, 18/11/13)
  • NESDB to cut GDP again — The Office of the National Economic and Social Development Board (NESDB) will cut its 2013 GDP target to below 4% even though tourism growth has been outstanding. Private sectors feel that a cut in GDP target will not affect confidence as it has been expected for sometime. (Kom Chat Leurk, 16/11/13)
  • Tame inflation may keep rate in check next year – Inflation is expected to remain subdued next year and unlikely to lead to an interest rate hike, says the Fiscal Policy Office (FPO). Director-general Somchai Sujjapongse said inflationary pressure next year will likely be in check, while the current rate is accommodative for economic growth. The FPO forecast headline inflation will stand at 2.3% and rise to 2.8% next year, still in the central bank’s inflation targeting range of 0.5% to 3%. (Bangkok Post, 18/11/13)
  • Govt plans B4bn savings bonds issue to fund deficit – The Finance Ministry’s Public Debt Management Office will issue three-year savings bonds worth Bt4bn to raise funds to offset the projected Bt250bnbudget deficit. PDMO deputy director Suwit Rojanawanich said yesterday the office will offer the bonds to the public between next month and March. (Bangkok Post, 18/11/13)
  • NESDB slashes 2013 growth to 3%, quarterly 2.7% growth worse than expected – The government has cut its growth forecast for this year after the economy in the third quarter expanded at a slower pace due mainly to shrinking consumption and investment. (Bangkok Post, 19/11/13)
  • NESDB lowers growth forecast on ‘flat exports’ – The National Economic and Social Development Board has cut its estimate for Thai economic growth for this year to 3%% as exports are expected to stay flat because major overseas markets have not yet recovered. (The Nation, 19/11/13)
  • Bond to help fund rice plan, B75bn note to lower BAAC borrowing costs – The government will issue a Bt75bn bond to finance the rice-pledging scheme as it has failed to pay farmers since the main crop began in October. (Bangkok Post, 20/11/13)
  • New income taxes take effect this year – The cabinet agreed yesterday to issue a royal decree to make sure the revised personal income tax structure takes effect during the 2013 tax year, to be filed next year. Late last year the cabinet approved the new personal income tax rates, which expanded the previous five tax brackets to seven from five: 5%, 10%, 15%, 20%, 25%, 30% and 35%. The existing rates are 5%, 10%, 20%, 30% and 37%. (Bangkok Post, 20/11/13)
  • Thailand, China ink rice deal – The government signed a contract yesterday to sell 1.2mn tonnes of 5% white rice and 90,000 tonnes of tapioca on a government-to-government (G2G) basis to a state enterprise in Harbin, in northeastern. Delivery will be made in one or two years, with the first shipment of 150,000 tonnes committed for delivery within the next three months. This agreement would reduce rice stock that is currently at 10mn tonnes, although industry sources estimate the amount is closer to 16-17mn tonnes. (Bangkok Post, 21/11/13)
  • BoI: Applications for investment privileges will miss target next year – BoI Secretary-General Udom Wongwiwatchai said as long as the political situation remained violence-free, it would not have an impact on investment in Thailand. He viewed the global economic condition as the main risk factor for investment in the coming period while indicating that the private sector’s investment in business expansion could be obstructed by the export slowdown. (NTT, 21/11/13)
  • FPO to cut GDP forecast — The FPO says that it will cut GDP forecast to 3% from 3.7% in December. This follows similar cuts from NESDB, as exports growth crawl to a halt, and the economic outlook is gloomy. (Post Today, 22/11/13) 
  • BAAC asks farmers for time — The BAAC is asking farmers to be patient, promising to pay rice subsidies within this year as it currently faces some liquidity problems. It also is asking the government to repay its previous rice subsidies loan of Bt500bn, which will solve its liquidity problem. (Krungtep Thurakit, 22/11/13)
  • World Bank trims Thailand outlook, weak exports, slow Q3 the culprits – The World Bank is cutting its forecast for Thailand’s GDP this year on a sluggish third quarter and weak exports, says Kirida Bhaopichtr, the bank’s senior economist for Thailand. (Bangkok Post, 22/11/13)
  • FPO warns of four risks — The Fiscal Policy Office warned that Thailand’s economy faces four risks in 2014: decreasing demand, currency volatility, rising interest rate and falling commodities prices. It recommended setting up a new strategy when Asia is rising. (Bangkokbiznews, 21/11/13)
  • Yellen defends Fed stimulus efforts as she navigates confirmation hearing- Yellen said although the economy is “significantly stronger” and continues to improve, the nation has “farther to go to regain the ground lost in the crisis and the recession, … I strongly believe that monetary policy is most effective when the public understands what the Fed is trying to do and how it plans to do it,” Yellen told the Committee, adding that she would work with the Fed’s policy-setting panel to continue promoting robust economic recovery. (Xinhua, 15/11/13)
  • Growth in advanced economies stuck at 0.5% in Q3: OECD – The US and British economies speeded up slightly in the third quarter but expansion in several other economies slowed, leaving OECD-area growth at 0.5%, the OECD said on Monday. The latest provisional OECD data painted a picture of overall 1.4% growth over 12 months, but of faltering recovery stuck at 0.5% growth in the last two quarters. (Bangkok Post, 18/11/13)
  • US: U.S. builder confidence remains unchanged in November – U.S. builder confidence for newly-built, single-family homes remained unchanged in November, a leading industry report said on Monday. The builder sentiment index held steady at 54 in November from a downwardly revised reading in October, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Any reading over 50 indicates that more builders view sales conditions as good, rather than poor. (Xinhua, 18/11/13)
  • U.S. Treasury yields surged as investors wait for signal from the Fed. 10-year treasury yields rose to 2.702%, while 30-year treasury bill rose to 3.793%. (IQ Biz, 18/11/13)
  • US: The U.S. Consumer Price Index decreased 0.1% in October on a seasonally adjusted basis, the Labor Department reported Wednesday. U.S. retail and food services sales for October increased 0.4% from the previous month to US$428.1bn, said the Commerce Department. The data topped market expectations. Meanwhile, U.S. business inventories moved up 0.6% in September from the prior month, also exceeding market consensus, the department said in a separate report. However, U.S. existing-home sales dropped for the second consecutive month in October, falling 3.2% to a seasonally adjusted annual rate of 5.12mn units, according to the National Association of Realtors. (Xinhua, 21/11/13)   
  • US: U.S. initial jobless claims drop to almost two-month low — The number of Americans who initially applied for jobless benefits was 323,000 in the week ending Nov. 16, a decrease of 21,000 from the previous week’s upwardly revised figure of 344,000, the Labor Department said Thursday. Analysts had expected last week’s claims to fall to 335, 000. The U.S. unemployment rate rose to 7.3% in October.  (Xinhua, 21/11/13)
  • Manufacturing in the mid-Atlantic region continued to grow in November but at a much slower pace unexpectedly, with the reading declining to 6.5 from 19.8 in the preceding month, the Federal Reserve Bank of Philadelphia reported Thursday.
  • Moreover, U.S. Producer Price Index (PPI) for finished goods declined 0.2% in October on a seasonally adjusted basis, mainly attributable to a 1.5% decrease in energy prices, the department said in a separate report.  (Xinhua, 22/11/13)  
  • EU warning on 2014 budget lifts Italian yields – Italian bond yields rose on Friday after the EU Commission warned the country’s draft budget for next year risked breaking the rules, bringing the focus back to Italy’s debt problems. Italian 10-year yields rose 4 basis points to 4.10% with the bonds underperforming euro zone peers. (Reuters, 15/11/13)
  • European car sales rise a second straight month on Spain – European new car sales rose for two consecutive months for the first time since 2011 as a cash-for-clunkers program in Spain and a regional economic recovery spurred consumers to purchase vehicles. Registrations in October advanced 4.6 percent from a year earlier to 1.04 million autos, the Brussels-based European Automobile Manufacturers Association, or ACEA, said today in a statement. Sales in September climbed 5.5 percent. (Xinhua, 19/11/13)
  • Spanish banks’ bad loan ratio hits record high in September – Spain’s non-performing loan rate rose to 12.67% in September, the highest level in more than 50 years, the Bank of Spain reported on Monday. (Xinhua, 19/11/13)
  • U.K. budget deficit narrows as sales taxes, stamp duty Increase – Net borrowing excluding temporary support for banks was £8.1bn (US$13bn) compared with £8.2bn a year earlier, the Office for National Statistics said in London. Tax receipts increased 3.2%, with value-added tax rising 6.4% and stamp duty soaring 46%. Spending increased 1.2%. The figures pave the way for Chancellor of the Exchequer George Osborne to cut his borrowing projections next month. (Bloomberg, 21/11/13)
  • China to deepen fiscal, taxation system reform – China aims to create a standardized risk-warning system to better handle government debts, the Communist Party of China (CPC) said in a policy document released on Friday. Mounting government debts have led to concerns over the health of the Chinese economy.  The creation of a risk-warning system, as part of the reform plan to improve the country’s budget management, highlights the CPC’s effort to deepen its reforms in the fiscal and taxation system in a bid to overhaul the world’s second largest economy. (Xinhua, 16/11/13)
  • China’s FDI inflow rises 1.24% in October – Foreign direct investment (FDI) into the Chinese mainland rose 1.24 percent in October from a year ago to Bt8.42bn, an increase for nine consecutive months, data from the Ministry of Commerce showed Tuesday. (Xinhua, 19/11/13)
  • China: Zhou Xiaochuan emphasizes reducing gov’t intervention in financial market – China’s central bank governor Zhou Xiaochuan highlighted the reduction of government intervention in the financial market in an article released on Tuesday as Supplementary Reading for the Third Plenary Session of the 18th Communist Party of China Central Committee. Named as “Thoroughly deepening the opening up of the financial industry, and speeding up the improvement of the financial market system”, key points of the article include, expanding the floating range of the RMB exchange rate in an orderly way, enhancing the flexibility for two-way fluctuations of the RMB exchange rate, and maintaining the RMB exchange rate at a rational equilibrium level. (Xinhua, 19/11/13)
  • Slowdown in emerging economies to taint global growth in 2014: OECD – The Organization for Economic Cooperation and Development (OECD) on Tuesday said they expect moderate global growth in the coming two years but added negative stocks of emerging economies would hamper the world’s recovery. In its new report, the OECD lowered 2014 global growth by 0.5 percentage point to 3.6% next year “due to weaker prospects in many emerging market economies (EMEs),” prompted by “abundant capital inflows and credit growth.” (Xinhua, 19/11/13)
  • China: First home mortgage rates in many Chinese cities rise near year end – The mortgage loan rate in some Chinese cities have increased near year end as banks have nearly used up the quota for home credit, China Securities Journal reported. Home Link data showed that the average first home mortgage rate in Beijing was 5.81% in October, representing an 11% discount to benchmark. (AAStocks Financial News, 21/11/13)
  • S. Korea to hike electricity rates to curb use of electricity – South Korea will raise electricity rates by an average 5.4% to curb excessive consumption of electricity, the Ministry of Trade, Industry and Energy said Tuesday. From Thursday, the average electricity bill for households will rise 2.7 percent, while electricity consumed by the industrial sector and large office buildings will go up 6.4% and 5.8% on average. (Xinhua, 19/11/13)
  • Japan: BOJ to maintain massive stimulus, rosy economic outlook – BoJ policymakers, feeling some relief from a pickup in exports and the sliding yen, are set to maintain their ultra-loose monetary policy and upbeat economic projections on Thursday. (Reuters, 21/11/13)
  • Foreign visitors to Japan hit record — The number of foreign visitors to Japan in October jumped 31.5% YoY to 928,500, a record high for the month, an estimate by a government body showed Wednesday. The highest number of tourists came from Taiwan, climbing 58% to log a record high for the month at 213,500 as a weaker yen made Japan an attractive shopping destination, according to the Japan National Tourism Organisation. (Bangkok Post, 21/11/13)
  • Japan: BoJ’s Kuroda, upbeat on global outlook, says Japan recovery on track – Bank of Japan Governor Haruhiko Kuroda said the U.S. and euro zone economies are gaining strength, seeking to dispel concerns among other policymakers that Japan’s export engine and broader recovery were vulnerable to weakness overseas. His comments came after the BoJ, as widely expected, maintained the massive monetary stimulus put in place in April, under which it aims to achieve 2% inflation in roughly two years by doubling base money through asset purchases. (Xinhua, 21/11/13)
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