ENG-2020 — Page 78

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The Economy

sharply as a result of scant passenger traffic, but the rate of decline narrowed in the second half thanks to improved regional trade and cargo flows. Imports of manufacturing services continued its down trend, reflecting the slack in outward processing activities. Imports of business and other services also fell amid the difficult global economic environment.

Compiled based on the change of ownership principle, the goods deficit narrowed further in 2020, reflecting the larger decline in imports of goods than exports of goods. Over the same period, the services surplus shrank notably, as surplus from trade in transport services was reduced and trade in travel services turned from surplus to deficit. The combined goods and services account registered a surplus of $49 billion in 2020, as compared to the surplus of $44 billion in 2019.

Domestic Demand

Domestic demand was badly hit in 2020. Private consumption expenditure recorded the steepest ever annual decline of 9.9 per cent in real terms in 2020, after falling 0.8 per cent in 2019. Local consumption activities were severely disrupted by the COVID 19 pandemic and the resultant social distancing requirements. Worsened job and income conditions also weighed on sentiment. Meanwhile, outbound tourism came to a halt with the imposition of stringent travel restrictions worldwide. In consequence, private consumption expenditure registered double-digit declines on a year-on-year basis in the first and second quarters of the year, before showing some relative improvement in the second half (chart 7). Meanwhile, government consumption expenditure rose markedly by 8.1 per cent in real terms in 2020, further to a 5.1 per cent increase in 2019.

Chart 7

Main Components of Domestic Demand (year-on-year rate of change in real terms)

1135

10

เก

5

0

-5

-10

-15

-20

Per cent

Private consumption

Government

expenditure

consumption

expenditure

-25

Q1

Investment expenditure in terms of gross domestic

fixed capital formation

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2016

2017

2018

2019

Q2 Q3 Q4

2020 I

Private consumption expenditure recorded the steepest ever decline in 2020. Overall investment spending continued to fall noticeably.

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