2. Thailand Economy Update – Q2/2011
Thai Economy continued to display in MPI and CAPU
positive trend
Supply Side in June
MPI was expanding 3.3% yoy.
CAPU increased to 63.6% .
BSI was in upward trend to 53.1.
Demand Side
Consumer Confidence index rose from 80.4 in
May to 81.7 in Jun.
PCI increased 3.5% yoy.
y y
PII moderately growth at 7.4%.
Retail Sales increased to 7.7%
Retail Sale and CCI BSI
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3. Thailand Stability- Q2/2011
External Stability Current Account and Trade Balance
Trade Balance for Q2/2011 was surplus
1.7 Bil.$
In Jun – Export growth was 16.4% yoy
I J E t th 16 4%
and Import growth is 23.5% yoy.
Internal Stability
Inflation in July was lower than forecast.
y
However, if the PT Gov run the policy
following the campaign, the inflation will
be boosted up.
Expected Inflation next 12 months Inflation
2010 2011
Q1 Apr May Jun Q2 Jul
Headline 3.30 3.01 4.04 4.10 4.06 4.10 4.08
Core 1.00 1.46 2.07 2.50 2.55 2.37 2.59
PPI 9.40 6.40 6.60 6.20 4.50 5.80
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4. US Economic Update
GDP growth was weaker than expected US Real GDP
Q1 revised = 0.4% from 1.9%
Q2 = 1.3%
Chicago PMI in Jul also dropped 58.8
from 61.1 in Jun
ISM manu came in worse than expected,
and barely above break-even at 50.9
(consensus 54.5)
ISM non-manu was lower than expected at
52.7
52 7 (consensus 53 5)
53.5).
Personal Spending in Jun dropped -0.2%
mom
Personal Spending and Consumer Confidence US ISM Index
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5. US Economy Update – Debt Ceiling
Previous Debt Ceiling $14.3 Trn.
Amid the cloud over US economy, on 2 Aug, the
congress approved
Increased Debt limit to $2.1 Trn. (Debt Ceiling =
$16.4 Trn.) and immediately increase debt ceiling $0.9
Trn. (Debt Ceiling = $15.2Trn.)
Immediately spending cut $0.917 Trn. for 10 years ;
balanced between Defense and Non -Defense.
Set up the bipartisan panel called Congressional
Committee for identify $1.5 Trn. Budget deficit reduction
plan including entitlement and tax reform.
Congressional Committee is required to report the
plan by 23 Nov and the Congress in required to vote by
December 2323.
Credit Rating US Rating
Message from Credit Rating
Moody’s : Maintain AAA rating, b with Neg outlook
d ’ i i but h l k AAA ( outlook)
(- tl k)
S&P : Tend to downgrade to AA+ if the budget deficit
reduction plan is not clear
Aaa (- outlook)
Fitch : Review rating outlook in August, and will take
August
into account the final budget agreement
AAA (under review)
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6. What’s happening if Rating agency downgrade US 1 notch?
Owner ship of US Treasury
Downgrade from AAA to AA+
Interest Trend
US Treasury yield will rise up for S-T
In L-T, US Treasury is still a safe haven and
yield will be low for a extended period.
USD
USD against Asian currency will be depreciate
The US dollar was also briefly under pressure
from rumours that the Fed was considering
further quantitative easing.
QE is introduced in market now
Largest Foreign Owner o US Debt
g o g of
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7. What is the possibly scenario after?
Downgrade 1 Notch to AA+
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