This document provides an economic update on Thailand with data from November and December 2011. It discusses declines in the SET index, farm income, manufacturing production, private consumption, investment, exports and imports due to the European debt crisis and flooding in Thailand. Headline inflation declined to 3.53% in December as food and transportation prices fell with improved flooding conditions. Government bond yields rebounded at the end of December on news of large planned bond issuances in the coming quarters.

1. ECONOMIC
UPDATE Capital Markets Research
4 January 2012
Thai Economic Update
November Economic Data Nalin Chutchotitham
nalin.c@kasikornbank.com
• SET index closed lower in 2011 as European
debt crisis worsens; Thai baht among the Puttikul Ackarachalanonth
puttikul.a@kasikornbank.com
weakest in the region in December
• Farm income index declined from the decrease
in rice production
• Manufacturing production declined in
November due to direct and indirect effects in
the production from the floods
• Private consumption index dropped to the
lowest level for this year and private
investment declined significantly
• Exports and imports dropped which result in
lower trade surplus and current account deficit
• Bond yields rebounded towards the end of
December upon news of large bond issuance
December Inflation Data
• Headline inflation declined to 3.53% after
flooding conditions improved and caused
prices of food and transportation
• Core inflation lowered to 2.66% from 2.90%
• Deposit rates and lending rates remained
largely unchanged in December
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was obtained
from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 1 of 6

2. Economic Update
Monthly Economic Data
SET index closed lower in 2011 as European of expectation that China would continue its stronger-
debt crisis worsens; Thai baht among the yuan policy to boost domestic demand and yuan’s
flexibility and usage in the financial markets. At the same
weakest in the region in December time, Thai baht was deemed less attractive due to the
floods (affecting foreign investments and exports growth)
1200 as well as the decline in policy rate. Meanwhile, imports
1107.36 1144.14
1100 of gold (after gold price hit several months’ low in
1025.32
December) by local investors also played a part in driving
1000
the Thai baht weaker.
900
855.45
800 2000 72
737.28 73
700 1900 74
600 1800 75
Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 76
1700 77
SET Index
78
1600 79
SET index saw much volatility in the year 2011 compared 80
1500
to the year 2012, mainly due to uncertainties in the global 81
financial markets and doubts about the continuity of 1400 82
Jun-11 Aug-11 Oct-11 Dec-11
global economic growth. The index closed at 1032.76 in
the year 2010 and 1025.32 in the year 2011. A major Gold ($/ounce, LHS) Dollar Index (RHS, inverted)
slump was observed in September-October period when
the risk of the euro-zone breaking up was escalating and Farm income index declined from the
European leaders lacked a credible plan to ameliorate
decrease in rice production
the situation. In any case, SET index found support from
local investors from the tax-saving LTF and RMF Agricultural production decreased by 7.2% YoY due to
purchases towards year-end. decrease in rice production that was damaged by the
$ mn Foreign net buy in SET (year-to-date, $ mn) flooding. Meanwhile, rubber and oil palm production
2000
continued to increase from the expansion of the planting
1500 areas. In November, farm income dropped by 8.6% YoY
1000 with 1.5% decline in agricultural price. Agricultural price
500
mainly declined as rubber price decline from the concern
in global economy slowdown, production of several
0
automobile manufacturers’ disruption from the floods and
-500 increase in global supply.
-1000
-1500
Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11
Manufacturing production declined in
November due to direct and indirect effects in
The degree of volatility in the SET index can be observed the production from the floods
from the foreign net-buying value as well. Throughout the
% yoy %
year, year-to-date net-buying value had swung from a 40 70
low of – USD1,229mn to a high of USD 1,082mn. At 30
20 65
year-end, foreign investors had sold USD167mn of local
10 60
stocks, compared to the net-buy position of USD2,687mn 0
as of end-2010. -10 55
-20
-30 50
-40 45
JPY 1.5%
Change against USD, 1 month, -50
CNY 1.1% -60 40
as of end 4th Jan 2012
MYR -0.1% Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11
TWD -0.4%
Manufacturing production index ISIC (%yoy, left) Capacity Utilization (%, right)
SGD -0.6%
IDR -1.2%
PHP -1.3% Production continued to drop in most of the sectors as
KRW -1.6% the manufacturing plants temporarily shutdown due to
THB -2.4% direct and indirect effects (supply chain disruotpion) from
INR -2.9% the flooding situation. Manufacturing Production Index
-4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% (MPI) dropped by 48.6% YoY. The most affected
industries were vehicles (-84% YoY), hard disk drive (-
81.6% YoY) and integrated circuit (-75.5% YoY).
The performance of Thai baht was one of the weakest in
Following the declining MPI, capacity utilization in
the region for the month of December. Notably, Asian
November declined from October to 40.1.
currencies were mostly weakening against the U.S. dollar
as investors sought refuge in the traditional safe haven
assets, including the dollar and the yen. Only the
Chinese yuan managed to continue gaining on the back
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was obtained
from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 2 of 6

3. Economic Update
Private consumption index dropped to the Exports and imports dropped, resulting in a
lowest level for this year and private lower trade surplus and a current account
investment declined significantly deficit
% YoY Index % yoy
10 150 80
8 145 60
6 140
135 40
4
130 20
2
125
0 0
120
-2 115 -20
-4 110 -40
-6 105
-8 100 -60
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11
PCI Growth (left axis) Private Consumtption Index (sa, right axis) Exports Imports
Private Consumption Index (PCI) decreased from 135.8 Export value dropped by 13.1% YoY in November,
in October to 135.1 in November, especially from the amounting to USD15.3bn. This was the lowest export
contraction in the indicator for domestic automobile sales value since July 2010 due to manufacturing production
and VAT. A decline in domestic automobile sales was contraction. Moreover, exports of computer and
due to the shortage of the supplies in the car production integrated circuit dropped on the back of the slowdown in
while VAT declined from the reduced consumption in global economy, especially in the U.S. and the euro area.
products and services. Compared to the same period last
year, PCI decreased 1.6% and decreased 0.5% from the Import value dropped by 1.9% YoY in November,
previous month. amounting to USD15bn. This resulted from the decline in
the electronic component, raw material used in the
PII PCI chemical and plastic industries as well as the decrease in
180 150 electrical machinery imports due to the shrinkage in the
170 145
production sector.
160
150 140 US$, mn
140 135 6000
130 130 5000
120 4000
110 125 3000
100 120 2000
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 1000
0
Private Investment Index (sa, left axis) Private Consumtption Index (sa, right axis) -1000
-2000
-3000
The investment side showed the same picture. Private
Sep-10 Dec-10 Mar-11 Jun-11 Sep-11
Investment Index (PII) decreased from 198.9 in October
to 186.4 in November from the shrinkage in the Trade balance Services and transfers Balance of Payments
production sector. Imports of capital goods declined in
almost all product categories and commercial car sales This resulted in the reduction in the trade balance. Trade
dropped from temporary shutdown of the automobile balance in November was only USD218m, compared to
industry. the trade surplus of USD1.01bn in October. Income and
service account registered a deficit at USD355m even
50 = neutral Thai Business Sentiment Indices though there was an increase in the transfer receipt from
60 foreign insurance companies to the local insurers
55 regarding to the flood damage. This, together with the
50
lower trade surplus, resulted in the current account deficit
of USD136m. Capital and financial account in November
45
reported a deficit of USD1.38bn, mainly from the
40 repayment of short-term loan of the commercial banks.
35 Balance of Payment in November registered a deficit of
30 USD1.5 resulting in the forth month of the deficit
Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 continually.
BSI BSI 3m forward expectations
Foreign tourist arrival was 1.2 million people, decreased
by 17.5% yoy This was due to the decline of foreign
Business Sentiment Index (BSI) in November increased tourist arrival in almost all of the countries – especially
from 36.7 in October (the lowest level since early 2009) from ASEAN, China, India and Japan. The seasonally-
to 39.0 in November. However, BSI in November was still adjusted foreign tourist arrival in November dropped
lower than September’s level of 48.5. The indicator for 21.3% from October’s level due to the trip cancellations
next 3 months’ outlook surveyed in November was 54.4, when many parts of Bangkok were flooded. However,
higher than 42.9 in October survey. hotel occupancy rate did not shrink, mainly because of
temporary residential evacuation from flooded areas
which offset the reduction in hotel occupancy from the
decline in foreign tourist arrival.
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was
obtained from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 3 of 6

4. Economic Update
% Government bond yield curve
2,000 75
3.50
70
1,800 3.40
65
1,600 60 3.30
55 3.20
1,400
50
3.10
1,200 45
3.00
40
1,000 2.90
35
800 30 2.80
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 6m 1y 2y 3y 4y 5y 6y 7y 8y 9y 10y
Tourist arrival ('000 left axis) Hotel occupany rate (right axis) 30-Dec-11 20-Dec-11 30-Nov-11 TTM
The market has priced in a larger bond supply in Q1 –
THB108bn is announced during the last week of the year
Inflation rate declined significantly in
while the Finance Ministry also said that another
December after flooding conditions improved THB53.5bn of supply would likely be added once the
Headline consumer price index (CPI) declined by 0.48% FY2012 budget bill becomes law in February. This is
mom in December, indicating that price pressure has much larger than issuance during the past few quarters,
eased more than expected and the headline inflation rate even if we skip the Oct-Dec 2011 period where issuance
is down to 3.53% from 4.19% in November. For the year was merely THB32bn. At the same time, investors are
2011, inflation rate averaged at 3.81%, in line with the also aware that issuance during the second half of fiscal
forecast of the Ministry of Commerce. year is not any less. Taking into consideration the
planned issuance of THB540bn of government bonds
% Headline CPI mom Headline CPI yoy
5.0 (LBs and FRBs only, not including saving bonds) in total
4.5 for the year, we are likely to be left with THB320bn of
4.0 issuance in Q3 and Q4. Despite the high level of liquidity,
3.5
3.0 it is likely that the yield curve would continue to steepen
2.5 going forward. The issuance of LB540bn of government
2.0 1.4
1.5 bonds do take into consideration THB400bn of planned
1.0 0.5 0.4 0.5
0.3 0.1 0.2 0.4
budget deficit and about THB340bn of debt restructuring,
0.5 0.2 0.2 0.0 0.2 0.2 0.2 0.2
0.0
but had not taken into consideration the cabinet’s plan to
-0.5 -0.1 borrow an additional THB200bn via an emergency
-0.3 -0.5
-1.0 decree (not finalized so far). In any case, government
Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11
funding needs is likely to be hefty for the year and the
market may not like it much although the room for
There were several conditions at play in December. First government’s borrowing over the long-run remains
of the all, retail oil prices had declined in line with the fall substantial, with the public debt to GDP ratio standing at
of world crude oil prices. Meanwhile, flooding conditions 41.03 as of end October.
in Thailand had ameliorated and supply of necessary
goods and food began to return to normal. Transportation Deposit and lending rates stayed unchanged
costs had also reduced due to the above reasons. while growth of loans and deposits slowed
Notably, the CPI for raw food and energy items declined
down
by 1.94% mom in December while the CPI for food and
beverages fell by 1.20%.
%
4.5
Meanwhile, the core inflation rate (excluding raw food
4.0
and energy items) was at 2.66% in December, a
3.5
deceleration from November’s level at 2.90%. For the
whole year, core inflation rate averaged at 2.36%. 3.0
2.5
Bond yields rebounded towards the end of 2.0
1.5
December upon news of large bond issuance
1.0
Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11
In December, bond yields declined by 5-13bp across the Repo rate 12m deposit rate MLR - 4%
curve when compared to their levels as of end-
November. The fall in 4-year yield was as much as 31bp
The 4 large banks’ average 1-year time deposit rate and
during mid-month as global markets turned to safer
minimum lending rate (MLR) remained unchanged in
assets such as bonds and the local market was
December at 2.74% and 7.25%, respectively. This was
expecting low levels of bond issuance in the coming
despite of the 25bp rate cut by the BoT on November
quarter due to the delay in the FY2012 budget bill. Yet, th
30 .
towards the end of the month, yields rebounded and the
yield curve steepened somewhat, driving the 2-10 spread
Commercial banks had to keep their deposit rates
to 24bp from 21bp as of end-November.
competitive with the state-own banks. Due to the
upcoming government’s projects and increased financing
needs for reconstruction efforts, state-own banks had
been offering attractive returns for depositors in order to
amass sufficient funds. As for lending rates, they had to
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was
obtained from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 4 of 6

5. Economic Update
be kept high on increased credit risks (due to poorer
economic outlook) and the unchanged deposit rates as
well. In any case, there is a high chance that both deposit
and lending rates would fall should the policy rate be
reduced to 3.00% (according to our forecast) as of end-
January.
% yoy
14
12
10
8
6
4
2
0
-2
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Private credit Private deposits M2
Private credit growth moderated to 16.0%yoy in
November from 17%yoy in the previous month.
Meanwhile, deposit growth remained strong but slowed
down to 10.3% yoy from 11.3%.
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was
obtained from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 5 of 6

6. Economic Update
Bank of Thailand Data Table 2011
May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11
The Real Sector (%yoy , unless specified otherwise)
Manufacturing Production Index, seasonally adjusted (level) 182.9 193.9 185.7 196.1 188.2 132.8 99.2
Manufacturing Production Index, without seasonal adjustment (level) 178.1 201.6 188.9 196.1 200.8 133.7 97.9
Manufacturing Production Index, without seasonal adjustment -3.7 3.8 -0.7 6.8 -0.3 -30.1 -48.6
Industrial Capacity Utilization (%) 58.8 64.1 63.1 65.0 65.5 46.4 40.1
Private Consumption Indicators (%yoy)
Retail Sales (at 2002 prices) 6.1 6.1 6.1 13.5 11.3 -3.0 n.a.
Passenger Car Sales (units) -15.2 -0.5 12.2 26.4 29.4 -38.8 -62.1
Motorcycle Sales (units) 14.7 22.9 0.4 26.1 16.4 -14.1 -22.4
Imports of Consumer Goods (at 2000 prices) 14.4 4.2 9.5 17.1 15.7 2.7 0.2
Private Investment Indicators
Commercial Car Sales (units) -6.2 -0.3 10.1 15.7 25.7 -41.8 -71.5
Imports of Capital Goods (at 2000 prices) 9.2 8.9 10.4 17.0 5.5 1.3 -5.2
Cement Sales (tons) -3.2 3.7 6.6 11.8 11.4 10.2 -2.2
Government Cash Balance (billions of baht) 13.9 178.7 -38.6 -9.8 95.6 -64.9 -28.6
Consumer Price Index 4.19 4.06 4.08 4.29 4.03 4.19 4.19
Food 8.38 7.76 7.17 8.43 8.84 9.86 10.21
Non-Food 1.69 1.81 2.21 1.77 1.07 0.75 0.54
Core Inflation (excluding raw food and energy) 2.48 2.55 2.59 2.85 2.92 2.89 2.90
External Accounts (Millions of US$, unless specified otherwise)
Exports 19,284 20,384 21,098 20,940 21,259 17,019 15,287
( % yoy) 17.3 14.0 36.4 28.4 18.4 -0.1 -13.1
Imports 17,098 17,017 16,546 20,235 18,840 16,006 15,068
( % yoy) 34.5 23.6 13.2 45.9 42.6 20.6 -1.9
Trade Balance 2,186 3,366 4,552 705 2,419 1,013 218
Current Account Balance -656 1,969 3,438 -697 404 39 -136
Capital Account -65 0 0 -40 34 0 0
Financial Account -294 -2,304 -2,496 161 317 -1,459 -1,381
- Monetary authority (central bank) -2,048 -448 2,316 -1,451 -755 -307 -392
- Government 236 23 873 922 6 67 165
- Other depository corporations (banks) 1,534 -178 -5,708 883 3,866 -4,103 -3,653
- Others -16 -1,700 23 -193 -2,800 2,884 2,498
Balance of Payments -2,600 -972 541 -556 -1,674 -1,886 -1,506
Official Reserves (billions of US$) 185.5 184.9 187.6 188.3 180.1 182.0 178.3
Monetary Statistics (End of period) (Billions of baht)
Monetary Base 1,193.5 1,223.4 1,206.8 1,219.2 1,229.5 1,311.0 1,259.8
( % yoy) 9.6 14.1 13.1 16.6 10.0 22.3 13.5
Narrow Money (M1) 1,395.8 1,336.6 1,336.3 1,345.1 1,328.0 1,362.7 1,363.5
( % yoy) 10.6 13.3 13.9 13.9 13.0 13.3 10.4
Broad Money (M2) 12,577.2 12,614.4 12,799.4 12,875.3 12,913.9 13,152.9 13,325.0
( % yoy) 14.3 16.3 17.6 17.4 16.2 16.2 15.9
Other Depository Corporations Deposits 11,092.8 10,993.2 11,077.8 11,153.5 11,082.1 11,364.3 11,455.0
( % yoy) 8.4 10.1 11.1 11.4 9.8 11.3 10.3
Other Depository Corporations Private Credits 10,517.7 10,679.1 10,718.9 10,899.7 11,079.9 11,209.6 11,308.7
( % yoy) 15.6 16.1 16.3 17.2 17.5 17.0 16.0
Interest Rates (% p.a.)
Repurchase Rate, 1 day (closing rate daily average) 2.75 3.00 3.16 3.32 3.50 3.50 3.49
Overnight Interbank Rate (mode daily average) 2.62 2.90 3.06 3.22 3.40 3.41 3.39
Fixed Deposit Rate (1 year) 2.00-2.30 2.20-2.50 2.45-2.75 2.45-3.00 2.70-3.00 2.70-3.00 2.70-3.00
Prime Rate (MLR) 6.75-7.13 6.87-7.25 7.12-7.50 7.12-7.50 7.25-7.625 7.25-7.625 7.25-7.625
Exchange Rate (Baht : US$) 30.25 30.52 30.07 29.87 30.42 30.86 30.95
Source: Bank of Thailand
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell any security. Although the information herein was
obtained from sources we believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained herein.
Further information on the securities referred to herein may be obtained upon request.
Page 6 of 6