Yuanta Research Center

Oct 1, 2000

The BoT latest set of economic indicators for August 2000 indicated that overall economic activities remained weak, namely manufacturing production, domestic expenditure, private investment, while strong exports were the key factor to drive economics.

1. Manufacturing Production Index declined by 2.3%, year-on-year. The categories which experienced a robust expansion were export-oriented including electronics and electical appliances. The categories which experienced contraction were beverage, construction – especially cement (due mainly to sluggish domestic demand), petroleum products – especially oil as a hike in price slowed down consumption.

2. Indicators of private consumptions continued to show growth year-on-year, but dropped when compared with the average for 8 months this year.

3. Indicators of private investment. Investment in machinery and equipment remained stable in line with domestic expenditure, while construction contracted.

4. External Sector. Export rose by 24.9% yoy, to a record $6.074billion in August. This indicates that export sector could be the key factor in driving economic growth. Import value rose by 41.2%, at $5.812billion in August. And the trade surplus was $449 million versus $806 million in the same month last year. When combined with services and transfer account, the current account recorded a surplus of $556 million.

5. Monetary condition. Commercial bank credit remained sluggish by declining 6.8% yoy, while commercial bank deposit rose slightly 1.4% yoy. Liquidity in the financial system rose, contributing to a (small) decline in money market interest rates. In September, 2000 most commercial banks reduced their interest rate by 0.25% and as a result, 3-month fixed deposit rate and minimum lending rate of the four large banks stood at 3% and 7.75%, respectively.