What happened this week 25/11 – 29/11

Thailand

  • Rate cut to offset mounting risks, growth also slashed to 3% from 3.7% — The Monetary Policy Committee (MPC) unexpectedly lowered the policy interest rate by 25 basis points yesterday to 2.25% following rising downside risks to growth partly triggered by the ongoing political tensions. (Bangkok Post, 28/11/13)
  • Export growth this year to be only 1% Commerce – The Commerce Ministry now expects export growth this year to end up at 1% at the most, after shipments in the first 10 months declined by 0.02% YoY. (The Nation, 28/11/13)
  • FTI expects growth in 2014 — The Federation of Thai Industries (FTI) said that it expects Thai industry to continue growing moving into 2014, including automotive, food and construction materials sectors, which will grow supported by the growth in the Thai economy and the global recovery. (Khao Hoon, 28/11/13)
  • Rate cut to bring growth — The BoT said the policy rate cut may encourage commercial banks to cut lending and borrowing rates, boosting both consumption and investment and thus the economy. (Khao Sod, 29/11/13)
  • MPI down again — The Office of Industrial Economics reports Thailand’s Manufacturing Production Index (MPI) declined again. October MPI fell 4.0%, the seventh month of contraction, with utilization rate at 63.04%. Year end forecasts are at MPI at -2.1% YoY, and utilization at 64.94%. The OIE forecast the MPI will continue to decrease in coming months (November at -7%, and December at -5%), to bring 2013 MPI in at -2.8%. Its Industrial GDP forecast for the year is at 0.2%, a contraction of 6.9% from last year. (Khao Sod, 29/11/13) 
  • Occupation could sting; delays expected in budget disbursement – A prolonged seizure of the Budget Bureau by anti-government protesters could delay the government’s budget disbursement, a key engine expected to underpin the country’s economy this quarter while other sectors lose steam. (Bangkok Post, 27/11/13)
  • TDRI critical of rice scheme — TDRI has criticized the rice subsidies scheme, with real farmers seeing little benefits. It advised that the money could be better used elsewhere to raise the farmers’ standard of living. (Thai Post, 27/11/13) 
  • MoF reassures trade partners — The MoF has instructed Commercial Attachés to inform trade partners that the current political situation in Thailand is short-lived, and a solution will be reached soon. The country is certain that Thailand will still be able to complete any trade order without delay. (ASTV Manager, 27/11/56) 
  • ADB to lower GDP view to 3% — The Asian Development Bank (ADB) is expected to cut its GDP growth forecast for the Thai economy this year to around 3%, says Luxmon Attapich, senior country economist for ADB Thailand. Sluggish third-quarter economic growth and weak export data contributed to the decision. (Bangkok Post, 26/11/13)
  • More credit checks — The Credit Bureau of Thailand revealed that personal credit score checks from banks and credit card companies reached 22.09mn in the first nine months of 2013, an increase of 6.45mn from the same period last year. (Kom Chad Luek, 26/11/13)
  • FTI says foreign concerns growing — The Federation of Thai Industries says that foreign entities are becoming more concerned over Thailand’s internal conflict. The FTI said tourism and investor sentiment will be greatly affected if the situation is prolonged or escalates. (Khao Sod, 26/11/13)
  • Logistics contingency plan — The Thai Federation of Logistics is preparing a contingency plan to distribute goods during the mass protest. It said, from the logistics point of view, the situation will not be of great concern if the protest ends within a week. (Kom Chat Leurk, 26/11/13)
  • NESDB study on Bangkok — An NESDB study shows that as unemployment increases, the household debt of the poor also increases. On average, debt per head in the capital is Bt150,000, some of which is illegal lending at 60% interest rate. The organization said that the government’s populist policy has ironically failed to reach the capital. (Matichon, 26/11/13)
  • FTI warns of economic damage — The Federation of Thai Industries cautions that mass political protests will damage the economy. The anti-Thaksin protestors began to march down 12 routes, crippling traffic; while the red shirts held their ground at Rajamangala Stadium. (Krungtep Thurakit, 25/11/13)
  • Revenue Department ready for tax refunds — The MoF said the Revenue Department is ready to cope with any tax refund on overpayments. It estimates total refunds of Bt27bn, as taxpayers whose income tax is deducted automatically from their salaries will be due for a refund after tax rates are lowered. (Khao Sod, 25/11/13)
  • BAAC says it can pay rice subsidies — The BAAC is confident it can pay the rice subsidies, as it has Bt55bn allocated to the scheme. The BAAC says that its net receivables from the government are now at Bt180bn after the government repaid Bt24bn. However the government says it owes the bank another Bt140bn. (Kom Chat Leurk, 23/11/13)
Globally
  • US: The Thomson Reuters/University of Michigan’s final reading of U. S. consumer sentiment index for November rose to 75.1, topping October’s 73.2 and market estimates. The number of Americans who initially applied for jobless benefit last week unexpectedly dropped 10,000 to 316,000, the Labor Department said Wednesday.
  • The November Chicago Business Barometer softened to 63.0 after October’s sharp rise to a 31-month high of 65.9, but remained above 60 for the second month, said the Institute for Supply Management on Wednesday. Any reading above 50 indicates expansion.
  • Among other data, U.S. new orders for manufactured durable goods in October decreased 2.0%, said the Commerce Department. In the meantime, the leading economic index increased 0.2% in October, according to the Conference Board, a New York-based business association. (Xinhua, 28/11/13)
  • US: U.S. privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1.034mn, up 6.2% from the September rate of 974,000, the Commerce Department said. The latest building permits were the biggest since June 2008. Meanwhile, the upward momentum in U.S. house prices remained strong in the third quarter, as prices rose 2% from the previous quarter, the ninth consecutive quarterly price increase, reported the Federal Housing Finance Agency (FHFA). Separately, U.S. single-family home prices for September posted their strongest year-on-year gains since February 2006, according to data released by S&P Dow Jones Indices. In addition, the 10- City and 20-City Composites’ annual growth rates were both recorded at 13.3% in September.
  • U.S. consumer confidence came out below market consensus. The index declined again in November after a sharp fall in October, as Americans worried about their future job and earning prospects, said the Conference Board, a New York-based private research organization, in a report released Tuesday. (Xinhua, 27/11/13)
  • US: U.S. pending home sales fall in October on government shutdown — U.S. pending home sales declined in October for the fifth straight month, partially due to the effects of a 16-day government shutdown, a leading U.S. industry group said on Monday. The National Association of Realtors (NAR) said its index of pending home sales slipped to 102.1 in October, down 0.6% from last month and 1.7% YoY. It is the lowest level since December 2012. (Xinhua, 25/11/13)
  • Europe: Lending to eurozone private sector contracts further: ECB- Credit to the private sector contracted by 2.1% in October after shrinking by 2.0% in September, according to data. Meanwhile the annual growth rate of the broad monetary aggregate M3 decreased to 1.4% in October 2013, from 2.0% in September 2013. The annual growth rate of the narrow money M1 stood at 6.6% in October, only slightly lower than 6.7% registered in September. (Xinhua, 28/11/13)
  • ECB board member sees need for action if deflation risks grow – European Central Bank executive board member Benoit Coeure said Monday that additional monetary policy steps would be necessary if there is a growing risk that the eurozone will fall into deflation. “We have room for maneuver and we have different instruments in case we would see further deterioration in inflation,” Coeure said during round-table talks with Kyodo News and other Japanese media outlets in Tokyo. (Kyodo, 25/11/13)
  • Europe: Eurogroup satisfied with member states draft budgetary plan – In a statement, the Eurogroup noted that member states with deficit close to 3% of GDP in 2013 are expected to see drops below the level in 2014. “Both the debt and deficit projections for the euro area are considerably more positive than for other major economies, including the United States and Japan,” Eurogroup added. Meanwhile, the Eurogroup stressed that setting correct priorities for fiscal policies will lay the foundations for improving bloc’s growth and the nascent recovery. (Xinhua, 23/11/13)
  • German FinMin says no more contagion risks in eurozone – In a business conference in Berlin, German Finance Minister Wolfgang Schaeuble said that with a stable euro, and narrow spreads between the bonds of Germany and crisis countries, “there are no risks of contagion anymore” in the common currency bloc. The minister also warned that ECB’s low interest policy might weaken member states’ incentives for structural reforms. (Xinhua, 24/11/13)
  • Spain should keep bank cash dividend limit in 2014, IMF says – Spanish banks should limit cash dividends for another year and take advantage of a jump in share prices to raise capital, the International Monetary Fund said. The government should consider strengthening the power of the Bank of Spain, which has recommended banks restrict cash dividends this year, so it can force them to cap payouts, the IMF said today in its fourth review of Spain’s progress in meeting the terms of its European banking bailout. (Bloomberg, 22/11/13)
  • Japan: Japan’s industrial output rises 0.5% in Oct. – Japan’s industrial production grew a seasonally adjusted 0.5% in October from the previous month for the second consecutive monthly rise, government data showed Friday. The index of output at factories and mines stood at 98.8 against the base of 100 for 2010, the Ministry of Economy, Trade and Industry said in a preliminary report. (Kyodo, 29/11/13)
  • Japan’s consumer prices rise 0.9% in October – Japan’s consumer prices rose 0.9% in October from a year earlier for the fifth straight month of increase, the government said Friday. (Kyodo, 29/11/13)
  • BoJ 2% inflation goal may be reached in late FY2014 or early FY201 — Bank of Japan Governor Haruhiko Kuroda on Monday admitted that achieving an inflation target of 2% is “very ambitious” but said the central bank is on its way to achieving the goal in late fiscal 2014 or early fiscal 2015 as its ultra easy monetary policy has been producing its intended effects. (Kyodo, 25/11/13)
  • China: China raises retail oil prices – China’s top economic planner announced on Thursday that it will raise the per-tonne retail price of gasoline by 160 yuan (US$26.08) and diesel by 155 yuan from Friday. (Xinhua, 28/11/13)
  • China’s CPI likely to grow over 3%t in Nov. – China’s consumer price index (CPI), a main gauge of inflation, is estimated to grow about 3-3.3% in November, the Bank of Communications said on Thursday. The bank estimated CPI growth would stay above 3% for three months running from October. In October, CPI increased 3.2% from a year ago. The country’s CPI will grow about 2.7% this year, lower than the government’s price control target of 3.5%, said the bank. (Xinhua, 28/11/13)
  • China: China goes for market interest, exchange rates – A Chinese central bank official said the country would strengthen the role of market forces in deciding interest and foreign exchange rates. Pushing for free floating interest rates is an important aspect of China’s market reform, as the country has announced a “decisive role” in allocating resources, Yi Gang, deputy governor of the People’s Bank of China (PBOC), told Xinhua in a latest interview. (Xinhua, 27/11/13)
  • China: Central bank governor calls for raising QDII, QFII investment quota – China should increase the qualification and quota for QDII and QFII investors to help them with their activities, Zhou Xiaochuan, governor of the People’s Bank of China, said on Tuesday. Administrative approval procedures for QDII and QFII qualification and quota shall be eliminated “when conditions are ripe,” Zhou added. (Xinhua, 26/11/13)
  • China: Chinese government to give incentives to steel firms cutting capacities – The Chinese government plans to provide 5 billion yuan fiscal incentives to reduce air pollution in Beijing, Tianjin and Hebei province, said Zhu Jimin, vice chairman of China Iron and Steel Association (CISA). Zhu also said the government has decided to rely more on the market mechanism to resolve the chronic overcapacity problems. (Xinhua, 22/11/13)
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