• Private consumption index (PCI) registered the largest growth in ten months in December (2.7% YoY; Nov: 2.2%), largely on a low base effect (PCI: -8.3% MoM)
  • While employment growth remained on an uptrend (2.9% YoY; Nov: 1.5%), the new COVID-19 outbreak which emerged on 20th December has already taken a toll on consumer confidence (50.1; Nov: 52.4).
• By segment, the YoY improvement was led by the durables index, masking a steeper contraction in spending on services
  • Durables (6.9%; Nov: 0.2%): rebounded to chart the largest growth in over two years, underpinned by a turnaround in sales of motorcycles (10.6%; Nov: -10.6%).
  • Services (-28.3%; Nov: -20.1%): deepest fall since May, as mobility and non-essential services operations were hindered by the reimposition of strict containment measures in high-risk localities.
• Private investment index (PII) improved further, registering the largest expansion in 26 months (4.5% YoY; Nov: 1.1%)
  • However, underlying indicators have showed repercussions from the resurgence of COVID-19 cases on capacity utilisation rate (64.9%; Nov: 65.2%) and business sentiment (46.8; Nov: 47.7).
• The better growth was attributed to the machinery & equipment segment
  • Imports of capital goods (5.4%; Nov: -1.0%): quickest expansion in 17 months, supported by gradual recovery in external demand, in line with the technology upcycle.
  • Newly registered motor vehicles (27.7%; Nov: 1.8%): marked the first double-digit expansion in almost two years, primarily due to a lower base in the preceding year.
• Recovery in private sector activities would be temporarily slowed by efforts to tackle the second wave of COVID- 19 infections
  • Record-high daily COVID-19 cases registered in January halted the recovery in domestic economic activities, exerting substantial pressure on our initial GDP growth forecast of 4.1% in 2021.
  • Nevertheless, after another 1-2 months of soft growth momentum, we expect the economy to take a turn for the better amidst the highly anticipated first phase of vaccine rollout on 14th February, announcement of an additional fiscal stimulus worth THB210b and the ongoing easing of COVID-19 restrictions in several provinces.

Source: Kenanga Research - 2 Feb 2021