Payments to rice farmers in Thailand under government's rice-pledging program will begin within one week following approval to use 120B baht from central funds to pay farmers; government must repay funds by May 31

, March 5, 2014 () – EC approves Bt20bn funds from central budget to pay rice farmers

The Election Commission (EC) approved the government's request to use Bt20bn from the central funds to pay long-overdue debts to farmers on condition that the government must repay the funds by May 31.

Meanwhile, caretaker Deputy Commerce Minister Yanyong Phuangrach said the Bt20bn will start being distributed to farmers within one week.

Our take: The Bt20bn amount remains inadequate to make all of the overdue payments to farmers as the government is still obliged to seek Bt90bn more to pay them. Thus, we do not expect a sharp rebound in domestic consumption due to the approval.

EC seeks Constitutional Court ruling on new poll for no-candidate constituencies

Yesterday the Election Commission (EC) petitioned the Constitutional Court to rule on three issues related to the holding of elections in 28 constituencies where there were no MP candidates. The three issues are:

I. Whether the EC could go ahead and announce candidacy registration, and a new election date in the 28 constituencies.

II. If the EC was not empowered to make such announcements, whether it would need the issuance of a royal decree to amend the previous decree for dissolution of the House of Representatives. This would have to be carried out by the prime minister.

III. In case a new royal decree needs to be issued, whether the decree could allow the holding of elections in only the 28 constituencies, or the decree can declare new elections to be held on the same day nationwide.

State of Emergency may be extended until protests end

According to Foreign Minister Surapong Tovichakchaikul, the chief of the Center for Maintaining Peace and Order (CMPO), the state of emergency in Bangkok could be extended until anti-government demonstrations ended.

Note that the current emergency decree will expire on Mar 22.

Our take: Even if the emergency decree is extended, it still lacks power in dealing with protests because of the Civil Court's ruling. However, the planned extension may continue to dampen tourist arrivals as travel insurance effectively becomes invalid.

Global Economic Pulse

Putin says no plan to use military force, helping calm market sentiment

Putin told reporters that whilst Russia retained the right to use its military forces in Ukraine, this would only occur in an extreme case and Russia is not considering annexing Crimea. Russian army exercises near the Ukrainian border were said to have concluded.

The Obama administration said the US is preparing an aid package consisting of USD1bn in loan guarantees for Ukraine and there are continued reports of a pending IMF/EU funding package worth around USD2bn.

Speaking in Kiev, John Kerry US Secretary of State, warned the US would isolate Russia politically, economically and diplomatically unless it withdrew the forces that have seized control of Crimea.

Obama budget suggests 2014 GDP to expand 3.1%, fastest growth in 9 years

President Obama sent the fiscal 2015 budget request to Congress which sees a deficit of 3.1% of GDP in 2015, real GDP growth at 3.1% in 2014 (vs. an upward revision from 2.6% in last White House's projection and 1.9% 2013's growth) and followed by growth of 3.4% in 2015.

The budget including increased spending for employment, education and training, financed in part by reduced tax-breaks for those on higher incomes and some corporates. The request will likely serve more as a platform for Congressional elections in November than as an actionable plan given divisions in Congress.

The budget also forecasts the unemployment rate at an average of 6.9% in 2014 and 6.4% in 2015.

However, private economists project lower growth than Obama does, taking bad weather into account. The median forecast is 2.9% according to Bloomberg survey last month.

On the other hand, the Fed will release its new economic and inflation projection in the next meeting (18-19 Mar).

Euro area Jan PPI declined 0.3% MoM (vs. 0.2% prev. and -0.1% est.) so that the annual rate of deflation increased to 1.4%. Excluding energy prices rose 0.1% MoM but were still down 0.4% YoY.

Big day ahead

In China, the National People's Congress kicks off today as Premier Li Keqiang retained China's growth target for 2014 at 7.5% inflation target at 3.5%.

China's HSBC/Markit Services PMI is also due.

In Europe, the service sector PMIs will be the main point of interest together with the second reading on euro area GDP for Q4 (no revision is expected to the initial estimate of 0.3% QoQ).

In the US, the ADP employment report and non-manufacturing ISM will be scanned closely for clues ahead of Friday's non-farm payrolls report and the Fed will release its latest Beige Book.

(TISCO Securities: 5 March 2014)

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