Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Economy Update 1st September 2011


Published on

Published in: Education, Business, Technology
  • Be the first to comment

  • Be the first to like this

Economy Update 1st September 2011

  1. 1. Economy UpdateEconomy Update September 1, 2011 September 1 2011
  2. 2. Economic Update• Last Friday, Bernanke speech could be summarized; L t F id B k h ld b i d – no hints on QE 3 from Fed and instead, pledged that Fed is "prepared to employ its tools as appropriate to  promote a stronger recovery".  – the September FOMC meeting will be extended to 2 days. • Revised US GDP growth in Q2/2011 declined to 1% from 1.3% d h / d l d f• Consumer confidence plunged in August to 44.5 that is lowest since the 2007‐2009 recession.   (consensus 52.0, previous 59.2). • FOMC, Mom of Aug, showed there was no clear consensus on what the stimulus would be. FOMC, Mom of Aug, showed there was no clear consensus on what the stimulus would be. – another round of asset purchases (QE3) – Fed could shift the maturity of the assets its buying to help drive mortgage rates lower.  – Fed could also cut the rate it pays banks on excess reserves deposited at the Fed, possibly incentivizing  banks to lend more. banks to lend more.  – Fed could also buy long term asset indicating it would maintain the size of its balance sheet for a more  concrete time period.  Consumer Sentiment Survey GDP Growth and ISM index
  3. 3. Economic Update• Economic Confidence in Aug was lower at 98.3• Germany  – Unemployment rate was not changed at 7% Unemployment rate was not changed at 7% – German Chancellor approved measures which would allow EFSF to buy  government bonds and would increase its lending capacity.  Economic Sentiment and Industrial Production Unemployment Rate
  4. 4. Economic Update 2010 2011• Thai Gov announced suspend the state Oil  Q1 Q2 Jul Aug Funds levies on diesel and gasoline from  Headline 3.30 3.01 4.10 4.08 4.29 Core 1.00 1.46 2.37 2.59 2.85 last Saturday would cut inflation by 0.5  PPI 9.40 6.40 5.80 5.20 percentage point. percentage point. Policy Rate and Inflation  l d fl – Finance Ministrys Fiscal Policy Office, said  that the policy interest rate should be lower  than the current 3.50%• Headline and Core Inflation in Aug rose to  4.3% and 2.8% respectively.• Thai Economy was slowdown in Jul due to  world economy and high inventory.  Manufacturing Production Index and CAPU USD/THB Movement
  5. 5. Interest Rate Update THB Interest Movement THB I M USD Interest Movement
  6. 6. Expecting GDP Global GDP 2009, USD 62 trn Global GDP 2009 USD 62 trn Global GDP 2030, USD 129 trn Global GDP 2030 USD 129 trnPopulation change by region, 2010‐2030 Number of Patents
  7. 7. Global Trade OpennessExport Volume Index World Export to GDP  Thailand Export Structure   
  8. 8. Economic update• The S&P/Case‐Shiller index of home prices in 20 cities continued to see substantial fall of  4.5% yoy i J 4 5% in June, after a 4.6% drop in the 12 months ended in May. ft 4 6% d i th 12 th d di M• Personal Spending increased 0.8% in Jul from ‐0.1% in Jun.• Pending Home Sales remain weak at ‐1.3% 
  9. 9. Asia Market Update• China – PBOC may increase Reserve requirement ratio (existing 21.5%) due to  fighting inflation and calm down economy. fi hti i fl ti d l d – Increased Reserve requirement ratio 100‐150 bps equi remove liquidity RMB  900‐950 Bil.• Japan – Japan Finance Minister Yoshihiko Noda has been selected to be new PM. 
  10. 10. Thai Economic Update• Q2 GDP was weaker than expect, lower at  k h l GDP Growth and GDP Contribution GDP Growth and GDP Contribution 2.6% – Supply Disruption ‐> Export – Pre‐election Caution ‐> Investment Pre election Caution > Investment• GDP Forecast 2011 declined to 3.5‐4%• Trade Surplus in Jul = 2.8 Bil. USD – Export = 21.5 Bil. USD Export = 21 5 Bil USD – Import = 18.7 Bil.USD Trade Balance is continuing surplus in Jul  Consumer Confidence 
  11. 11. Fluctuating THB Due to Political Uncertainties and Global Risk Aversion 2011 Foreign Flows (Million Baht) and USDTHB 350,000 31 Somewhat clearer Inflation domestic political 300,000 fears picture in July 30.5 30 5 250,000 Strong external Political uncertainties Balance, 4.271 prior to the July Billion USD in Feb general election 200,000 Solid growth BOT’s tight MP 30 t stance 150,000 Risk off sentiment 100,000 in August 29.5 50,000 29 0 Jan Feb Apr Mar Jun May 010 August July M A M F 50 000 -50,000 J 20 J 28.5 -100,000 -150,000 -150 000 Stocks Bonds USDTHB (RHS) 28 11Source: The Stock Exchange of Thailand, the Thai Bond Market Association, Bloomberg and SCB FM analysis
  12. 12. USD/THB Movement Avg = 30.31 1 Mth 1 Mth 3 Mth 3 Mth 6 Mth 6 MthSpot 29.97 29.97 29.97Swap point pp 0.08 0.23 0.43All in Rate 30.05 30.20 30.40
  13. 13. Quantitative easing (QE3)?   Possible but not very soon and might not be that helpful y g p “…that the recent economic weakness may prove more persistent than expected and that  deflationary risks might reemerge … another approach would be to initiate more securities  purchases … “ Source: July‐2011, Semi‐annual testimony to the congressUS real GDP growth: Weakness? US core inflation: Deflationary risk?Unit: %QOQ SAAR Unit: %YOY Start of QE2 Start f St t of QE2Source: SCB EIC analysis based on data from Bloomberg 13
  14. 14. Federal Reserve District• Board of Governors & Reserve Bank Districts• Board of Governors• 1‐Boston• 2‐New York 2 New York• 3‐Philadelphia• 4‐Cleveland• 5‐Richmond• 6‐Atlanta• 7‐Chicago• 8‐St. Louis• 9‐Minneapolis 9 Minneapolis• 10‐Kansas City• 11‐Dallas• 12‐San Francisco