Monthly economic update: November 2022
Executive summary
Global Economy
- Global demand conditions have been weakening, which can be also seen that the imports of consumer goods in major economies namely USA, Europe and China, have been softened.
- Global productions and trades are also in weak direction as reflected by a contraction of the recent global manufacturing PMI index and New export orders index.
- Global inflations have eased onwards, excepting for EU and UK. This is due to a decline in global demands and improved global supply chain bottleneck problems.
- However, geopolitical risks have caused the food and energy price to be at high level. Coal prices are significantly rising, and food prices edges up, mainly in wheats.
- Further tightening stances are required to bring inflation back to the target. However, several central banks have signaled a smaller size of rate hike going forwards. This is since the demands in several nations have clearly shown a softer growth pace from the period before.
Domestic Economy
- In Sep 22, Thai economy continued to recover but at a slower pace for the third consecutive month. Private consumption indicators remained close to the previous month. Private investment decline slightly after accelerated in industrial production on months earlier.
- Private investment indicators slightly declined in this month, mainly from the machinery and equipment category corresponding with overall industrial production.
- The value of merchandise exports (ex. gold) increased slightly from previous month, mainly from export of industrial products. By key partners, China’s trading demand remain dropped while demand from U.S and ASEAN accelerated.
- Foreign tourists in Sep increased consecutively to reach a new peak since pandemic. The major groups still came from East Asia. Moreover, Russia tourists show a signal of return
- Headline inflation in Sep 22 decelerated due to energy, food prices stabilized while core inflation also mark at 3% level.
Financial Market
- Major central banks around the world hiked policy rate to curb rising inflation. The Federal Reserve hike 75 bps on 1-2 November. Meanwhile, the next rate decision of Federal Reserve is expected for 50 bps after signs of cooling inflation.
- Investors went into long term bond tenor, for both US and Thai bond, due to recession concerns. Moreover, 10y-2y yield spread for US government bond dropped below zero, negative yield curve signal higher possibility of coming US economy recession. Meanwhile, 10y-2y yield spread for Thai government bond was still in positive territory.
- USDTHB remained in high level in October, ending 38.02 level. It could be around 36.00-36.50 in November. Dollar would tend lower in short term on soft inflation data and expectation of slower pace of Fed’s interest rate hikes.
