Drop in domestic consumption, foreign demand weakening Thai economy

Indicators for private consumption expanded at a slower pace in almost all categories, while indicators for private investment contracted. Public spending also shrank in both current and capital expenditures. The value of exports continued to contract, in line with a drop in merchandise import and manufacturing, though the tourism sector rebounded thanks to a rise in Indian tourists. However, the number of tourists from China continued to contract. 
The Bank of Thailand put the moderate expansion in private consumption indicators to a drop in the purchase of durable goods and a decline in domestic vehicle sales and a lower number of newly registered motorcycles. 
The fundamental factors supporting overall purchasing power appeared softer, mainly due to a softer increase in non-farming income, though income from agriculture showed a favourable expansion. 
However, the improvement in farm income was mainly put down to the rise rubber and pineapple prices, while the price of other main crops continued to fall. This reflects a disparity in the benefits gained from a rise in farm income consistent with the Consumer Confidence Index, which has continued to drop. 
Private investment indicators tightened from the same period last year, while spending in construction also dropped due to a reduction in permitted construction area, except for manufacturing purposes, while the sale of construction materials expanded. Investment in machinery and equipment also contracted in all categories. After seasonal adjustment, private investment indicators dropped slightly from the previous month from both investment in construction and in machinery and equipment.

Public spending, excluding transfers, contracted from the same period last year from both current and capital expenditures. Current spending contracted mainly from the use of goods and services, while compensation for civil servants rose slightly. Capital spending contracted due to a reduction in the budgets allocated to provincial clusters, and a contraction in the disbursement of funds due to constraints on investment efficiency after the reassessment and realignment of investment projects under the 20-year National Strategy Framework.
The value of merchandise exports contracted by 2.1 per cent from the same period last year, and excluding gold, the value of merchandise exports dropped by 9.1 per cent. This continual contraction can be attributed to a weaker global demand owing to slower economic growth in a number of major trading economies, protectionist policies resulting from the US-China trade war, continued downturn in the electronic cycle and a fall in global crude oil prices. The contraction was mainly due to a drop in the export of petroleum-related products in terms of both price and export volume; electronic products, especially hard-disk drive and integrated circuits; agricultural products, especially rice; and agro-manufacturing products, especially rubber-based products and sugar. However, export in some categories continued to expand such as automotive and parts, particularly commercial vehicles and car tyres.
The value of merchandise imports contracted by 9.6 per cent from the same period last year, and excluding gold, the value of merchandise imports declined by 10.5 per cent. The contraction was attributed to a decline in the import of raw and intermediate goods, particularly crude oil in terms of both price and import volume, partly due to the shutdown of oil refineries for maintenance, and imports of electronic parts, in line with the continued contraction in exports of such products; import of capital goods excluding aircrafts, ships, floating structures, and locomotives, particularly telecommunication equipment, and machinery used in manufacturing, consistent with the slowdown in private investment; import of consumer goods especially non-durable goods following a drop in the price of tuna from the same period last year; and automotive and parts consistent with the contraction of automotive production and domestic car sales. The value of imports showed a solid reduction from last month, contributing to an increase in trade surplus. 
Meanwhile, the number of foreign arrivals rebounded by 0.9 per cent from the same period 
last year, mainly due to a continual expansion in the number of Indian tourists, who partly benefited from the exemption of visa-on-arrival fee. However, the number of Chinese tourists continued to contract as a result of the slowdown in Chinese economy and stronger competition from neighbouring countries. Moreover, the number of Malaysian tourists reduced from last year owing to an acceleration after the Malaysian 2018 general election. After seasonal adjustment, the number of foreign tourists rose from the previous month, mainly due to the return of Chinese visitors to the North after the air-pollution problem was cleared. 
On the stability front, headline inflation decelerated to 0.87 per cent from 1.15 per cent 
last month, due mainly to the decelerated core inflation, coupled with a fall in domestic retail petroleum prices. However, fresh food prices accelerated from a rise in fruit and pork prices.