Aug-12 Apr-13 Dec-13 Aug-14 Apr-15 Dec-15 Aug-16 Apr-17 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Quarterly Economic Outlook: Quarter 4 2017 4 January 2018 B-GUIDE: Economic Outlook The economy will expand with faster pace in 2018 from strengthening confidence Thai Economy: For the 4th quarter, the economy is expected to continue its expansion from consumption. Export and tourism have benefited from the pickup in global and Asian growth. Government expenditure in infrastructure projects will increase the investments. Private investment is supported by the improvement in global and Asian growth and Eastern Economic Corridor. Bloomberg Consensus forecasted the economy to increase to 3.7%, supported by consumption, government expenditure in several infrastructure projects, and private investment recovery. Global economy: For the last quarter of 2017, global economy is expected to expand at faster pace, largely driven by private consumption and recovery in industrial production. Consumer and producer confidences are rising. The analysts have lifted their global economic forecast in 2018 to 3.7% higher than 3.6% in 2017. US economy is projected to pick up while European and Japan s, which has expanded beyond the expectation during 2017, are projected to slightly lower in 2018. Figure 1: Higher consumer and producer confidence 55 50 45 Streghtening Confidences 85 80 75 70 Figure 4: Confidences continue to increase around the globe 62 60 58 56 54 52 50 48 46 Higher global confidence 40 65 US EU China Japan BSI Consumer confidence RHS Source: Bank of Thailand Disclaimer: This document is produced based upon sources believed to be reliable but their accuracy, completeness or correctness is not guaranteed. The statements or expressions of opinion herein were arrived at after due and careful consideration to use as information for investment and/or buying insurance. Expressions of opinion contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities, insurance and products. The use of any information shall be at the sole discretion and risk of the user. The user should carefully read details in the prospectus before making investment decision, in the factsheet and insurance policy before buying insurance, and in the products factsheet. Please see Disclaimer at the end of the report Page 1
Apr-13 Nov-13 Jun-14 Jan-15 Aug-15 Mar-16 Oct-16 May-17 Aug-12 Apr-13 Dec-13 Aug-14 Apr-15 Dec-15 Aug-16 Apr-17 B-GUIDE: Economic Outlook Thai Economy: Continues to expand and private investment is improving Figure 1: Higher consumer and producer confidence 55 50 45 40 Source: Bank of Thailand Figure 2: Investment in property sector helps spurring the overall private investment 12 10 8 6 4 2 0-2 -4 BSI Source: Bank of Thailand Streghtening Confidences Figure 3: Thai economic forecast Consumer confidence RHS Property sector is recovering Building Permit RHS Single house price Indicator 2015 2016 2017 2018 2019 Economic Activity Real GDP (YoY%) 2.9 3.2 3.8 3.7 3.6 CPI (YoY%) -0.9 0.2 0.7 1.4 1.7 Unemployment (%) 0.9 1.0 1.1 1.1 Interest Rates Central Bank Rate (%) 1.50 1.50 1.50 1.50 Exchange Rates USDTHB 36.0 35.8 33.4 32.5 31.6 85 80 75 70 65 3000 2500 2000 1500 1000 Thai economy has expanded better than expected During the 3 rd quarter, Thai economy expanded higher than expected at 4.3% YoY supported by export and tourism. Private consumption continued its recovery from higher consumer confidence and signaling recovery in durable good consumption such as automobile. For the 4 th quarter, the economy continued its expansion from consumption. Export and tourism have benefited from the pickup in global and Asian growth. Government expenditure in infrastructure projects will attract investments. Private investment is supported by global and Asian economies which are expanding at higher pace. Eastern Economic Corridor is also the positive factor for private investment. The pickup in private investment is the primary driver for Thai economy in 2018 Thai economy in 2018 is expected to expand at faster pace. Bloomberg Consensus has forecasted the economy to edge up to 3.7%, supported by consumption, and government expenditure, in several infrastructure projects. For private investment, it benefits from Eastern Economic Corridor and the recovery in property sector from the improving prospect of tourism. Global and Asian growth help export and tourism expanding. Interest rate is held constantly byproduct of low inflation and Baht appreciation Inflation is gradually increasing but still below the BOT s inflation target at 2.5%. Thai Baht appreciation would keep inflation lower than expected. This condition remains the prospect of low interest rate in Thailand. Please see Disclaimer at the end of the report Page 2
2007 2009 2011 2013 2015 2017 Million USD Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 B-GUIDE: Economic Outlook Global Economy: Economy continues its robust growth and liquidity remains at high level Figure 4: Confidences continue to increase around the globe 62 60 58 56 54 52 50 48 46 Figure 5: Major central banks keep injecting money supply into the market 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 - Higher global confidence US EU China Japan Total Assets of Central Banks FED ECB BOJ PBOC BOE Figure 6: Global economic forecast Region 2015 2016 2017 2018 2019 Real GDP (YoY%) Economic Activity 3.4 3.2 3.6 3.7 3.6 US 2.9 1.5 2.3 2.6 2.2 Eurozone 2.1 1.8 2.3 2.1 1.8 Asia ex Japan 6.1 6.0 6.0 5.9 5.8 Japan 1.4 0.9 1.6 1.3 1.0 CPI (YoY%) World 2.8 2.8 3.0 3.1 3.0 US 0.1 1.3 2.1 2.1 2.2 Eurozone 0.0 0.2 1.5 1.5 1.6 Asia ex Japan 1.9 2.3 1.8 2.5 2.6 Japan 0.8-0.1 0.5 0.8 1.0 Improving economic growth prospect For the 4 th quarter, global economy is expected to expand at faster pace, largely driven by private consumption and recovery in industrial production. Consumer and producer confidences are increasing. US economy continues to recover from consumption and investment in property sector. European economy is expanding with improving consumption and industrial production. ECB has reduced the rate of asset purchase from 60 billion euro per month to 30 billion euro per month, starting at the beginning of this year. Japan s economy has expanded at the better-than-expected pace from export and a rebound in activities within the property sector. China s economy is likely to improve from consumption and industrial sector. Liquidity keep increasing around the globe While global economy is projected to continue its expansion this year, major central banks including ECB, BOJ, and PBOC have been injecting money supply into the financial system; therefore, that total asset size of global central banks reaches the historical high level. On the other hand, Fed began to gradually unwind its balance sheet. Inflation in several countries including Europe and Japan remains below the target. Therefore, the policy rates in those countries are likely to stay at low or below-zero level in some countries. Economic forecast is revised up Supported by improving prospect of private consumption and manufacturing sectors, the analysts have lifted their global economic forecast in 2018 to 3.7% rising from 3.6% in 2017. US economy is projected to pick up pace while European and Japan s, which has expanded beyond the expectation during 2017, are projected to slightly lower in Please see Disclaimer at the end of the report Page 3 2018.
Dec-12 Jul-13 Feb-14 Sep-14 Apr-15 Nov-15 Jun-16 Jan-17 Aug-17 Apr-97 Aug-99 Dec-01 Apr-04 Aug-06 Dec-08 Apr-11 Aug-13 Dec-15 B-GUIDE: Economic Outlook U.S. Economy: The economy is recovering under the risk of debt ceiling Figure 7: Producer and consumer confidences are strengthening 170 120 70 20 Figure 8: The risk of debt ceiling Trillion USD 22 20 18 16 Producer and Consumer Confidences Consumer Confidence US Debt Ceiling Debt Ceiling Figure 9: U.S. economic forecast ISM RHS Total Debt Indicator 2015 2016 2017 2018 2019 Economic Activity Real GDP (YoY%) 2.9 1.5 2.3 2.6 2.2 CPI (YoY%) 0.1 1.3 2.1 2.1 2.2 Unemployment (%) 5.3 4.9 4.4 4.0 3.8 Interest Rates Central Bank Rate (%) 0.50 0.75 1.50 2.25 2-Year Note (%) 1.05 1.19 1.76 2.34 2.84 10-Year Note (%) 2.27 2.45 2.42 2.88 3.25 70 60 50 40 30 US economy in the 4 th quarter is projected to continue its expansion U.S. economy during the 4 th quarter is projected to continue its expansion from the previous quarter. The economy is largely supported by strengthening consumer and producer confidences. Investment in property sector is growing beyond expectation, spurring employment. US Congress successfully approved tax-reform bill which will be implemented this year. Tax-reform bill aims to reduce corporate tax from 35% to 21%. Congressional Budget Office forecasted the budget deficit to rise by nearly 1.5 trillion USD over the next decade. Inflation in the 4 th quarter is projected to increase slightly from energy price while core inflation is expected to remain stable and below the Fed s target of 2%. US debt ceiling would have impact on the economy US Congress is considering the agreement on short-term spending bill and debt ceiling since the current deal will be expired on January 19, 2017. If the Congress cannot come up with a clear agreement on debt ceiling, it will affect government s spending plan and tax-reform bill which is supposed to widen budget deficit by huge amount. Eventually, this unsolved problem will disrupt the economic growth. Monetary policy under new Fed chairman The current chair of Federal Reserve, Fed chairman, will be succeeded since the current term will be ended in February, 2018. Jerome Powell will be the next chairman. Under the new chairman, the prospect of the policy rate is expected to be unchanged from the current plan to raise the policy rate by three times this year. Please see Disclaimer at the end of the report Page 4
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 B-GUIDE: Economic Outlook European Economy: The economy will face a slowdown in growth rate in 2018 Figure 10: Producer confidence is increasing 64 62 60 58 56 54 52 50 48 46 European producer confidence European economy has expanded more than expected European economy in the 4 th quarter is projected to expand from consumer and producer confidences. Monetary policy is expected to be accommodative within Eurozone through negative policy rate and QE program, boosting liquidity. However, inflation is gradually increasing but still below the target. Inflation in November was 1.5% while core inflation was 0.9%. Figure 11: Accommodative monetary policy Rate (%) 1.25 1.00 0.75 0.50 0.25 - EU Germany France UK Italy Spain ECB is injecting liquidity through QE program ECB Rate Figure 12: European economic forecast Total Asset RHS Billion EUR 5,000 4,000 3,000 2,000 Indicator 2015 2016 2017 2018 2019 Economic Activity Real GDP (YoY%) 2.1 1.8 2.3 2.1 1.8 CPI (YoY%) 1.7 1.7 1.8 1.6 Unemployment (%) 1.9 1.2 1.3 1.2 Real GDP by Region Germany 1.7 1.9 2.5 2.2 1.8 France 1.1 1.2 1.8 1.8 1.7 Italy 1.0 0.9 1.6 1.4 1.2 Spain 3.4 3.3 3.1 2.5 2.2 Sweden 4.3 3.0 3.0 2.6 2.2 United Kingdom 2.3 1.9 1.5 1.4 1.4 ECB agreed to keep the easing policies but ready to raise the policy rate and reduce asset purchase from QE program. ECB has reduced the rate of asset purchase to 30 billion euro per month since January, 2018. Risks of politics and end of negative-rate policy Political risks remain as the major risks in Eurozone, including general election in Italy and Brexit negotiation between U.K. and EU. Furthermore, unclear Brexit negotiation would affect financial system and U.K. financial institutions. European economy has expanded more than expected in 2017. Therefore, any changes in monetary policy, removing negative-rate policy, will be watched this year and it will have effects on the economy. The analysts expect the slowdown in growth European economy in 2018 is expected to grow at 2.1% lower than 2.3% in 2017. The drop in growth rate unavoidably comes after the higher-than-expected growth rate in 2017. However, private consumption and property sector are the primary drivers for the economy in 2018. Please see Disclaimer at the end of the report Page 5
Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 B-GUIDE: Economic Outlook Asian ex Japan Economy: Strengthening demand in Asia support trade and investment Figure 13: Rising demand in Asia -10-20 Figure 14: Asia s policy rate remains low 9 8 7 6 5 4 3 2 1 40 30 20 10 0 Asia's export is increasing China Korea India Indonesia Malaysia Asia Policy Rate Thailand Philippines India Indonesia China Korea Figure 15: Asian economic forecast Indicator 2015 2016 2017 2018 2019 Economic Activity Real GDP (YoY%) 6.1 6.0 6.0 5.9 5.8 CPI (YoY%) 1.9 2.3 1.8 2.5 2.6 Real GDP by Region China 6.9 6.7 6.8 6.5 6.2 India 7.5 8.0 6.3 6.7 7.4 South Korea 2.8 2.8 3.1 3.0 2.8 Taiwan 0.8 1.4 2.6 2.5 2.3 Indonesia 4.9 5.0 5.1 5.3 5.5 Malaysia 5.0 4.2 5.8 5.3 5.2 Philippines 6.1 6.9 6.6 6.6 6.6 Singapore 2.0 2.0 3.3 2.8 2.7 Thailand 2.9 3.2 3.8 3.7 3.6 Asian economy continues its expansion Asia s economy is forecasted to continue its expansion with faster pace in the 4 th quarter, largely driven by industrial production and export. Consumption picks up in several countries from global recovery and higher consumer confidence. Investment also recovers from Belt and Road Initiative, promoting many infrastructure projects in China and other Asian countries. China s economy is driven by export which also supports industrial production. Property sector and government expenditure in infrastructure support the pickup of investment in China. Technology sector in South Korea and Taiwan is expanding from higher demand in technological products. India s economy after facing the short-term effect of demonetization is recovering from consumption and export which will help improving investment. Asia s policy rate remain low Policy rates in Asia remain low since ECB and BOJ have kept their policy rate in negative territory and Asia inflation is still low. Except for South Korean central bank that raised its policy rate in the 4 th quarter, most of Asian central banks decided to keep low interest rate and accommodative policies to support the economy. The economy to continue its expansion in 2018 Asia s economy is expected to grow at 5.9% in 2018 which is lower than 6.0% in 2017. China s economy is projected to grow at 6.5%. India s economy is forecasted to edge up to 6.7%. ASEAN economy is able to continue its robust growth. Thailand s and Indonesia s economies are expected to grow at 3.7% and 5.3% respectively while Malaysia s and Singapore s economies will grow at slower pace. Please see Disclaimer at the end of the report Page 6
Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 B-GUIDE: Economic Outlook Japan Economy: The economy is expanding from strong Asia demand Figure 16: Japan s economy follows Asian economy % YoY Japan's Export and Import 15 10 5 0-5 -10-15 Figure 17: Consumer confidence is strengthening amid the weak retail sale growth % YoY 15 10 5 0-5 -10-15 Retail Sales Export Figure 18: Economic forecast Import Japan's Retail Sale Consumer Confidence (RHS) Indicator 2015 2016 2017 2018 2019 Economic Activity Real GDP (YoY%) 1.4 0.9 1.6 1.3 1.0 CPI (YoY%) 0.8-0.1 0.5 0.8 1.0 Unemployment (%) 3.4 3.1 2.8 2.7 2.7 Interest Rates Central Bank Rate (%) 0.00-0.10 0.00 0.00 Exchange Rates USDJPY 120.22 116.96 113.00 112.00 110.00 50 45 40 35 30 Strengthening demand in Asia Japan s economic growth is forecasted to expand in the 4 th quarter from producer confidence. Global economic growth and depreciation in yen support the pickup in industrial production. The economy is driven by export and tourism which help domestic consumption and investment to recover. A pickup in real estate sector drives up the property and land prices. Monetary stimulating policies including QE program and negative-rate policy are very accommodative to the economy. Yield curve control policy keep 10-year yield at 0% in order to increase inflation reaching the target of 2%. Risk of deflation remains from weak consumption Risk of Japan s economy is deflation. Inflation in November remained low at 0.9% and below the target of 2%. The economy is driven by strengthening demand in Asia while domestic demand has declined from decrease in the retail sales by 0.2% in October. Japan s economy is projected to slowdown in growth Japan s economy is projected to edge up to 1.3% in 2018 slower pace than 1.6% in 2017 since the economy has expanded more than expect during 2017 from export, industrial sector, consumption and investment. However, the economic growth rate remains low and inflation is gradually increasing. Inflation in 2018 is forecasted to be 0.8% YoY below the BOJ target. Therefore, BOJ is likely to support the accommodative policies throughout this year. Please see Disclaimer at the end of the report Page 7
Economic Forecast Real GDP (YoY%) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 World 5.4 4.3 3.5 3.5 3.6 3.4 3.2 3.6 3.7 3.6 US 2.5 1.6 2.2 1.7 2.6 2.9 1.5 2.3 2.6 2.2 Eurozone 2.1 1.6-0.9-0.2 1.3 2.1 1.8 2.3 2.1 1.8 France 2.0 2.1 0.2 0.6 0.9 1.1 1.2 1.8 1.8 1.7 Germany 4.1 3.7 0.5 0.5 1.9 1.7 1.9 2.5 2.2 1.8 Greece -5.3-9.2-7.3-3.3 0.8-0.3-0.3 1.2 2.1 2.1 Ireland 1.8 3.0 0.1 1.6 8.3 25.6 5.1 4.0 3.5 2.9 Italy 1.7 0.6-2.8-1.7 0.1 1.0 0.9 1.6 1.4 1.2 Netherlands 1.4 1.7-1.1-0.2 1.4 2.3 2.2 3.1 2.2 1.8 Portugal 1.9-1.8-4.1-1.1 0.9 1.8 1.6 2.6 2.0 1.9 Spain 0.0-1.0-2.9-1.7 1.4 3.4 3.3 3.1 2.5 2.2 Sweden 5.7 2.8 0.0 1.3 2.7 4.3 3.0 3.0 2.6 2.2 United Kingdom 1.7 1.5 1.5 2.1 3.1 2.3 1.9 1.5 1.4 1.4 Japan 4.2-0.2 1.5 2.0 0.4 1.4 0.9 1.6 1.3 1.0 Asia 9.5 7.7 6.4 6.4 6.3 6.1 6.0 6.0 5.9 5.8 China 10.6 9.5 7.9 7.8 7.3 6.9 6.7 6.8 6.5 6.2 Hong Kong 6.8 4.8 1.7 3.1 2.8 2.4 2.0 3.7 2.9 2.7 India 8.6 8.9 6.7 5.5 6.4 7.5 8.0 6.3 6.7 7.4 Indonesia 6.4 6.2 6.0 5.6 5.0 4.9 5.0 5.1 5.3 5.5 Malaysia 7.4 5.3 5.5 4.7 6.0 5.0 4.2 5.8 5.3 5.2 Philippines 7.6 3.7 6.7 7.1 6.2 6.1 6.9 6.6 6.6 6.6 Singapore 14.9 5.3 1.9 4.4 3.3 2.0 2.0 3.3 2.8 2.7 South Korea 6.5 3.7 2.3 2.9 3.3 2.8 2.8 3.1 3.0 2.8 Taiwan 10.6 3.8 2.1 2.2 4.0 0.8 1.4 2.6 2.5 2.3 Thailand 7.5 0.8 7.3 2.8 0.8 2.9 3.2 3.8 3.7 3.6 Vietnam 6.4 6.2 5.3 5.4 6.0 6.7 6.2 6.6 6.5 6.7 Central Bank Policy Rate 2010 2011 2012 2013 2014 2015 2016 2017 2018 US 0.25 0.25 0.25 0.25 0.25 0.50 0.75 1.50 2.25 Eurozone 1.00 1.00 0.75 0.25 0.05 0.05 0.00 0.00 0.00 United Kingdom 0.50 0.50 0.50 0.50 0.50 0.50 0.25 0.50 0.70 Japan 0.10 0.10 0.10 0.10 0.10 0.00-0.10 0.00 0.00 Asia China 5.81 6.56 6.00 6.00 5.60 4.35 4.35 4.35 4.35 India 6.25 8.50 8.00 7.75 8.00 6.75 6.25 6.00 6.00 Thailand 2.00 3.25 2.75 2.25 2.00 1.50 1.50 1.50 1.50 Currency Forecast 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 EURO/USD 1.34 1.30 1.32 1.37 1.21 1.09 1.05 1.17 1.21 1.25 USD/GBP 1.56 1.55 1.63 1.66 1.56 1.47 1.23 1.32 1.36 1.39 JPY/USD 81.12 76.91 86.75 105.31 119.78 120.22 116.96 113.00 112.00 110.00 CNY/USD 6.61 6.30 6.23 6.05 6.21 6.49 6.95 6.65 6.55 6.51 INR/USD 44.71 53.07 55.00 61.80 63.04 66.15 67.92 65.00 65.00 64.00 THB/USD 30.06 31.55 30.59 32.71 32.91 36.03 35.84 33.35 32.45 31.55 Please see Disclaimer at the end of the report Page 8
Thai Economic Forecast Please see Disclaimer at the end of the report Page 9
Global Economic Forecast Please see Disclaimer at the end of the report Page 10
US Economic Forecast Please see Disclaimer at the end of the report Page 11
European Economic Forecast Please see Disclaimer at the end of the report Page 12
Asia ex Japan Economic Forecast Please see Disclaimer at the end of the report Page 13
Japan Economic Forecast Please see Disclaimer at the end of the report Page 14
Disclaimer: This document is produced based upon sources believed to be reliable but their accuracy, completeness or correctness is not guaranteed. The statements or expressions of opinion herein were arrived at after due and careful consideration to use as information for investment and/or buying insurance. Expressions of opinion contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities, insurance and products. The use of any information shall be at the sole discretion and risk of the user. The user should carefully read details in the prospectus before making investment decision, in the factsheet and insurance policy before buying insurance, and in the products factsheet. Please see Disclaimer at the end of the report Page 15