Transcript Introduction to Macroeconomics and Thailand’s Economic Data

What are Thailand’s macroeconomic data?
… and Where are they?
Somprawin Manprasert, Ph.D.
Faculty of Economics
Chulalongkorn University
[email protected]
Why are macroeconomic data so
important?
Real GDP Growth of Thailand (Percent)
15.0
10.0
9.2
6.9
9.0
5.9
6.1
4.8
5.0
5.3
4.4
2.2
0.0
-1.4
-5.0
-10.0
-10.5
-15.0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Why are macroeconomic data so
important?
There are uncertainties.
The economy can be good or bad.
GDP, Private Consumption, and Personal Income
7,000
6,000
Billions of Bahts
5,000
4,000
3,000
2,000
1,000
1996
1997
GDP
1998
1999
Personal Consumption
2000
2001
Disposable Income
2002
2003
Why are macroeconomic data so
important?
Its effects seem to be far from us, but in
fact it could affect your wellbeing and your
future income.
Why are macroeconomic data so
important?

The bottom-line is we need to know what are
consequences of a good economy, and what
are consequences of a bad one.

We need to know ‘what is going on out there’
and ‘how could it affect your life’.
From Macroeconomic Condition
To Anticipating Policy Reaction

In addition, whenever there is an undesired
economic condition, the government usually
intervenes.

Consequently, not only can the economic
condition affect you, but the government’s
counter-problem policies (such as interest
rate hike) could also influence your decision.
What are characteristics of a good
economic practitioner?
People who understand:
1. macroeconomic condition,
2. its consequences, and
3. are able to anticipate the government’s
stabilization policy
will be better off during the course of
business cycle.
Objective

To know macroeconomic condition of a
country, we must first understand economic
data.

In this class, we will learn
1.
What are macroeconomic data?
2.
Where could we find those data in Thailand?
Economic Data and Economic Theory

Economics is a social science. Therefore, its methodology is in
line with other sciences, such as physics, chemistry, and etc.

Scientists observe surrounding nature and try to develop a
theory that could explains those natural behavior.

Like all other sciences, economic theories have been motivated
by observation. Rather than nature, economists try to explain
human behavior.
Why do we have to study ‘historical’ data
anyway?

Leading theorists observed human’s economic behavior and
put forward undeniable economic theories (such as Alfred
Marshall, John Nash, and Robert Lucas).
Data  Observation  Question  Finding Answer  Economic Model

In reverse, a good economic practitioner needs to balance
his/her knowledge between economic theory and economic
reality.
Data
Economic Theory
Outline of the Lecture
The National Accounts System
1.
•
•
2.
Structure of the data
Meaning and interpretation
Macroeconomic data sources in Thailand
The National Accounts System

The National Accounts System is the most
comprehensive macroeconomic data of a
country, including all economic activities and
transactions.

The system has been standardized by the
UN – The United Nations System of National
Accounting (UN SNA)
Components of
the UN System of National Accounting
1.
National Accounts
2.
Input-Output Tables
3.
Flow-of-Fund Accounts
4.
Balance of Payments
5.
National Balance Sheet (or, National Wealth)
Implication of the System

The System of National Accounting is a country’s economic
map, which consists of Real Activities and Financial Activities.

Real Sector contains economic activities that relate to
production, income, and expenses, such as investment and
consumption.

Financial Sector is an intermediary that facilitates financial
transactions among economic agents, such as banking.

First two represent real activities, while the latter three display
financial activities.
Let’s look at the first component…
the National Accounts
1.
National Accounts
2.
Input-Output Tables
3.
Flow-of-Fund Accounts
4.
Balance of Payments
5.
National Balance Sheet (or, National Wealth)
1. National Accounts

The National Accounts is a component of the
System of National Accounting.

The National Accounts depicts
1.
2.
3.
Gross output of the country
National income of the country
Expenses of the country
Gross Output  National Income  Expenditure
Example 1- What exactly is the GDP?

Consider “Table 3” from the National
Accounts of Thailand.

What do we see when we look at the GDP?

Why do economists (or, anyone) always
mention about the GDP?
Table 3. Gross National Product and National Income
at Current Market Prices by Economic Activities
(Millions of Baht)
1996
1997
1998
1999
2000
2001
2002
2003p
Agriculture
438,119
447,176
498,587
435,507
444,185
468,905
513,094
595,004
Agriculture, Hunting and Forestry
350,172
351,974
390,604
332,045
326,389
357,979
407,046
491,026
87,947
95,202
107,983
103,462
117,796
110,926
106,048
103,978
Fishing
Non-Agriculture
Mining and Quarrying
Manufacturing
4,172,922 4,285,434 4,127,860 4,201,572 4,478,546 4,664,597 4,932,949 5,335,358
63,410
82,402
84,318
87,362
116,726
126,232
135,851
154,564
1,370,438 1,427,657 1,428,323 1,514,030 1,653,658 1,715,926 1,831,903 2,060,447
Electricity, Gas and Water Supply
106,833
118,958
142,277
130,399
146,105
166,683
175,595
190,946
Construction
341,518
271,824
178,680
166,253
150,615
154,493
165,705
175,586
762,898
812,214
785,928
801,340
847,564
856,098
865,964
914,328
Hotels and Restaurants
248,960
245,872
230,921
255,738
275,214
289,175
309,626
300,414
Transport, Storage and Communications
341,051
369,949
360,918
376,111
395,926
427,049
449,603
465,204
Financial Intermediation
328,177
309,193
235,449
156,439
145,840
151,360
170,952
202,151
Real Estate, Renting and Business Activities
155,171
156,982
153,368
157,127
161,792
163,862
171,703
177,890
Public Administration and Defence; Compulsory Social Security
171,329
181,095
195,257
204,172
211,045
222,161
244,731
262,081
Education
149,224
163,467
181,699
186,666
196,542
202,318
211,261
220,938
Health and Social Work
68,848
76,417
83,165
90,926
96,678
104,825
107,649
106,803
Other Community, Social and Personal Service Activities
58,902
62,754
60,581
68,089
73,813
77,118
84,951
96,184
6,163
6,650
6,976
6,920
7,028
7,297
7,455
7,822
Wholesale and Retail Trade; Repair of Motor Vehicles,
Motorcycles and Personal and Household Goods
Private Households with Employed Persons
Gross Domestic Product, (GDP)
Plus : Net Factor Income Payment from the Rest of the World
Gross National Product, (GNP)
4,611,041 4,732,610 4,626,447 4,637,079 4,922,731 5,133,502 5,446,043 5,930,362
-102,084
-123,375
-160,044
-126,436
-76,874
-85,069
-88,632
-111,028
4,508,957 4,609,235 4,466,403 4,510,643 4,845,857 5,048,433 5,357,411 5,819,334
Example 1- What exactly is the GDP?

What do we see when we look at the GDP?
# Gross Domestic Product (GDP) is the total value of all
products produced within the country’s territory.

Why do economists (or, anyone) always mention
about the GDP?
# If we believe in the statement ‘the more, the better’, the
GDP represents the producing capacity of the country.
Example 1- and…What else from GDP?

In turns, these gross products generate income to the country.
And, the total expenses of the country must not exceed its
income. Look at GDP components.
Account 1. Domestic Product
(Millions of Baht)
1996
Net Domestic Product at Factor Cost
1998
1999
2000
2001
2002
2003p
3,496,067 3,561,095 3,471,092 3,461,276 3,712,111 3,861,229 4,067,574 4,425,839
Provision for Consumption of Fixed Capital
Indirect Taxes
1997
Income
Less : Subsidies
553,798
630,817
679,148
703,862
728,308
759,455
790,921
824,312
573,428
551,105
489,680
489,619
505,778
537,994
614,605
712,761
12,252
10,407
13,473
17,678
23,466
25,176
27,057
32,550
Gross Domestic Product at Market Prices
4,611,041 4,732,610 4,626,447 4,637,079 4,922,731 5,133,502 5,446,043 5,930,362
Private Consumption Expenditure
2,479,828 2,586,956 2,505,312 2,595,113 2,762,925 2,941,012 3,113,524 3,360,621
General Government Consumption Expenditure
469,516
Gross Domestic Fixed Capital Formation
Change in Inventories
476,705
511,691
1,892,923 1,598,633 1,035,447
Expenses
35,240
-5,469
-89,474
533,041
557,807
581,117
603,651
630,378
965,899 1,081,420 1,181,315 1,243,148 1,425,269
-15,294
42,744
55,774
56,607
57,926
Exports of Goods and Services
1,809,910 2,272,115 2,723,953 2,703,308 3,287,284 3,380,750 3,499,004 3,886,566
Less : Imports of Goods and Services
2,099,234 2,205,119 1,988,907 2,120,348 2,862,305 3,047,574 3,134,265 3,485,272
Statistical Discrepancy
Expenditure on Gross Domestic Product
22,858
8,789
-71,575
-24,640
52,856
41,108
64,374
54,874
4,611,041 4,732,610 4,626,447 4,637,079 4,922,731 5,133,502 5,446,043 5,930,362
Example 1- What exactly is the GDP?
…to sum up

In accounting, these 3 things must be equal:
1.
2.
3.
Value of the Gross Domestic Product
Total factor payment to primary inputs
Total expenditure of the country
Example 2
Current Prices vs. Constant Prices

Consider ‘Summary Table 1-2’ from the National Accounts
Table 1. Balance Sheet of National Income and Expenditure at Current Market Prices
1999
Private Consumption Expenditure
2000
2001
2002
2003p
2,595,113 2,762,925 2,941,012 3,113,524 3,360,621
General Government Consumption Expenditure
533,041
Gross Fixed Capital Formation
965,899 1,081,420 1,181,315 1,243,148 1,425,269
Change in Inventories
-15,294
557,807
42,744
581,117
55,774
603,651
56,607
630,378
57,926
Expenditure on Consumption and Gross Capital Formation
4,078,759 4,444,896 4,759,218 5,016,930 5,474,194
Plus : Exports of Goods and Services
2,703,308 3,287,284 3,380,750 3,499,004 3,886,566
Exports of Goods
2,150,049 2,730,943 2,802,530 2,837,663 3,233,116
Exports of Services
553,259
556,341
578,220
661,341
653,450
Expenditure on Gross Domestic Product and Imports
6,782,067 7,732,180 8,139,968 8,515,934 9,360,760
Less : Imports of Goods and Services
2,120,348 2,862,305 3,047,574 3,134,265 3,485,272
Imports of Goods
1,800,131 2,513,501 2,691,579 2,719,439 3,077,529
Imports of Services
Expenditure on Gross Domestic Product
Plus : Statistical Discrepancy
Gross Domestic Product, (GDP)
320,217
348,804
355,995
414,826
407,743
4,661,719 4,869,875 5,092,394 5,381,669 5,875,488
-24,640
52,856
41,108
64,374
54,874
4,637,079 4,922,731 5,133,502 5,446,043 5,930,362
Table 2. Expenditure on Gross Domestic Product at 1988 Prices
1999
Private Consumption Expenditure
2000
2001
2002
2003p
1,542,775 1,623,716 1,690,644 1,779,852 1,894,432
General Government Consumption Expenditure
271,029
277,132
284,026
289,068
294,841
Gross Fixed Capital Formation
566,413
597,442
604,215
643,752
720,219
-6,691
25,636
35,780
36,395
45,436
Change in Inventories
Expenditure on Consumption and Gross Capital Formation
2,373,526 2,523,926 2,614,665 2,749,067 2,954,928
Plus : Exports of Goods and Services
1,657,258 1,947,081 1,865,083 2,088,685 2,235,565
Exports of Goods
1,300,030 1,589,774 1,498,560 1,678,438 1,837,266
Exports of Services
357,228
357,307
366,523
410,247
398,299
Expenditure on Gross Domestic Product and Imports
4,030,784 4,471,007 4,479,748 4,837,752 5,190,493
Less : Imports of Goods and Services
1,178,170 1,497,672 1,415,355 1,609,145 1,732,308
Imports of Goods
960,845 1,267,932 1,188,789 1,347,176 1,478,300
Imports of Services
Expenditure on Gross Domestic Product
Plus : Statistical Discrepancy
Gross Domestic Product, (GDP)
217,325
229,740
226,566
261,969
254,008
2,852,614 2,973,335 3,064,393 3,228,607 3,458,185
19,366
35,066
9,208
8,952
1,859
2,871,980 3,008,401 3,073,601 3,237,559 3,460,044
Example 2
Current Prices vs. Constant Prices

What is the difference between ‘current market prices’ and ‘constant at
1988 prices’?

Value = Price x Quantity

In each year, both prices and quantity change. Therefore, if we want to
examine only how the country’s producing capacity change over time,
we need to fix prices.

In practice, we measure each year production value in terms of the
base year. In this case, all years are measured in 1988 prices. When
each year is measure in 1988 prices, its value represents quantity.
Other Accounts

GDP by sector

Private consumption expenditure in details

Investment by type of goods

Others
Now… Let’s move on.
1.
National Accounts
2.
Input-Output Tables
3.
Flow-of-Fund Accounts
4.
Balance of Payments
5.
National Balance Sheet (or, National Wealth)
2. Input-Output Table – What is it?

It is what it’s named !

Information from the table tells us:
1.
The economy’s output structure: What kind of goods are we
producing? And, how many are they?
2.
The economy’s structure of production: To producing these
output, what kind of inputs do we use? And, how many do we
need?
…for the whole economy!

Think of the economy as a factory.
The Look of an Input-Output Table
Sales from i to j
qi
Final Demands -- f
Total output from industry i
Imports
Special exports
Exports
Inventory change
Investment
Government expenditure
Private consumption
Purchases of j from i
Intermediate Flow s
X i,j
Expenditure
qj
Wages and salaries
Operating surplus
Depreciation
Net indirect taxes
Total input from industry j
Income
Valueadded
v
GDP
Gross Output
Example:
An Imaginary 8-Sector Economy
Sell to
Buyer
Agri Mining
Buy from
Seller
Agri
Mining
Gas-Elec
Mfg
Trade
Transport
Services
Others
Intermediate
20
4
6
20
2
2
6
0
60
1
3
4
10
1
1
3
0
23
GasElec
0
20
10
4
1
5
8
0
48
Mfg
Trade Trnspt
Deprec
Wage
Profit
Indirect tax
Value-added
11
65
20
8
104
5
20
2
0
27
60
21
56
20
157
130
260
60
50
500
35
140
40
109
324
40
97
12
10
159
25
485
59
18
587
0
150
0
0
150
Col Sum
164
50
205
787
401
198
667
150
100
15
40
60
10
17
45
0
287
5
2
20
25
2
3
20
0
77
Srvics
Oths
Con
Gov
Inv
Exp
Imp
FD
0
1
10
18
3
2
5
0
39
2
2
25
20
6
5
20
0
80
0
0
0
0
0
0
0
0
0
15
2
80
400
350
130
500
0
1
1
10
80
10
20
40
150
0
0
0
200
6
8
10
0
40
10
0
120
10
5
30
0
-20
-10
0
-170
0
0
-20
0
36
3
90
630
376
163
560
150
Row
Sum
164
50
205
787
401
198
667
150
614
306
1238
249
215
2008
1477
312
224
215
-220
2008
The third component is…
1.
National Accounts
2.
Input-Output Tables
3.
Flow-of-Fund Accounts
4.
Balance of Payments
5.
National Balance Sheet (or, National Wealth)
3. Flow-of-Funds Accounts

Look at the table…what information does the table show us?

The Flow-of-Funds Accounts show…
the relationship between national savings and investment among
economic agents in the country. Those economic agents include
Household, Government, Business firms, and other countries.
Savings
Source of Funds

Investment
Use of Funds
The FoF Accounts also display types of financial intermediaries
that facilitate transfers between savings and investment.
Look ‘Outside’ for the forth component
1.
National Accounts
2.
Input-Output Tables
3.
Flow-of-Fund Accounts
4.
Balance of Payments
5.
National Balance Sheet (or, National Wealth)
4. Balance of Payments

Look at the table…what information does the table show us?

The BoP displays
the country’s trade and financial transactions with the rest of the
world over a particular period of time, usually one year.

Two main parts in the BoP
Current Account
1.
–
–
It shows income and expenditure from trading goods and services with the
rest of the world.
Example, export of cars, income from tourists.
Capital and Financial Account
2.
–
–
It records financial flows between the country with the rest of the world.
Example, government external loans.
At Last….
1.
National Accounts
2.
Input-Output Tables
3.
Flow-of-Fund Accounts
4.
Balance of Payments
5.
National Balance Sheet (or, National Wealth)
5. National Balance Sheet

The National Balance Sheet reveals the value of total assets
and liabilities of the country at a particular time.

There are 2 types of assets reported in the National Balance
Sheet:
1.
2.

Tangible Assets: land, buildings, machinery, etc.
Intangible Assets: Financial instruments, bonds, patents, etc.
In addition to the aggregate report, the account also includes
balance sheets for detail sectors, such as financial sector,
producing sector, household, and government.
Where do we find economic data for
Thailand?

The National Economic and Social Development Board (www.nesdb.go.th)
–

Bank of Thailand (www.bot.or.th)
–

All data about government revenue, expenses, and projects.
Ministry of Commerce (www.moc.go.th)
–

All data about financial sectors, both in domestic transactions and with external
transactions, including the Balance of Payments, capital flow, interest rates, exchange
rates.
Ministry of Finance (www.mof.go.th)
–

All data about real sectors, including the National Accounts, Input-Output tables, Flowof-Fund accounts.
All data including Free Trade Agreement, as well as domestic prices.
National Statistical Office (www.nso.go.th)
–
Employment, labor forces, others