● Private consumption index (PCI) registered the largest growth in nine months in November (0.9% YoY; Oct: - 1.1%)

- This was reflective of the continued improvement in employment (1.7% YoY; Oct: 0.8%) and consumer confidence (52.4; Oct: 50.9), coupled with support from extended fiscal stimulus and special holidays.

● By segment, the improvement was broadly based, led by the durables index

- Durables (-1.6%; Oct: -4.5%): smallest contraction in sixteen months, underpinned by the first YoY expansion in domestic car sales in 18 months (2.7%; Oct: -1.4%) on the back of fiscal aid measures, launches of new car models and marketing campaigns.

- Services (-22.0%; Oct: -24.2%): declined at a slightly softer pace on improvement in VAT collection at hotels and restaurants as domestic travels picked up during the special holiday in November.

● Private investment index (PII) rebounded to chart the largest expansion in almost two years (1.5% YoY; Oct: - 4.9%)

- Consistent with the sustained recovery in capacity utilisation rate (64.5%; Oct: 64.2%) and the ten-month high business sentiment level (47.7; Oct: 45.4) amid global COVID-19 vaccine optimism.

● The better performance was attributed to the machinery & equipment segment

- Imports of capital goods (-1.0%; Oct: -15.6%): softest fall in nearly one year, supported by launches of new mobile phone models.

● Recovery in private sector activities to continue, but partially weighed by the ongoing COVID-19 resurgence

- Additional eight special holidays in 2021 and extended fiscal measures are expected to allow the Thailand’s economic recovery to continue. However, the pace could be slowed by the second wave of COVID-19 infections, with active cases reaching a new high of 2,417, resulting in reimplementation of lockdown measures in affected areas.

- Growth-wise, we expect 2020 GDP to register at -6.2% in 2020 (National Economic and Social Development Council's forecast: -6.0%; 2019: 2.4%), before rebounding to 4.1% this year on the back of the rollout of COVID19 vaccine.

Source: Kenanga Research - 4 Jan 2021