The think-tank has maintained its growth forecast at 1.4% this year, but Burin Adulwattana, K-Research’s managing director and chief economist, referred to the current downside risks for a possible downgrade, reports the Bangkok Post.
“We still don’t see any clear signs of recovery in tourism,” said Mr Burin, citing a 7% contraction in flights from China to Thailand year to date.
Domestic consumption has remained sluggish, partly due to low consumer confidence and a continued contraction of bank loans.
The outlook for exports has turned bearish for the second half after shipments soared in the first six months.
“The jump in Thai exports in the first half of the year was mainly driven by the frontloading of shipments in the run-up to higher US import tariffs. K-Research now sees the possibility that exports may contract by as much as double digits in the latter half,” he noted.
According to Mr Burin, K-Research’s growth forecast of 1.4% this year takes into account a likely technical recession in the latter half.
“But if Thailand fails to seal a deal with the US for a competitive tariff with the rates granted to neighbouring countries, GDP growth might fall to 1.2% or even lower,” he said.
Mr Burin also recommends revisiting stimulus measures to shore up the economy, suggesting that the half-half co-payment scheme launched by the Prayut Chan-o-cha-administration would be helpful in boosting domestic consumption.
“The recently-launched tourism co-payment programme might not work well in propping up tourism demand because when people face economic hardship, they will not be in the mood for travel,” he said.
“It is critical that the government boost consumer confidence in the economy, partly by launching stimulus measures to tackle debt repayment issues and create more employment.”
Kitpon Praipaisarnkit, vice-president of UOB Kay Hian Securities, said stock market analysts have anticipated that Thai exports would be eventually subjected to a US import tariff of around 19-25%, compared to Vietnam’s 20%, Indonesia’s 19% and the proposed 24% for Malaysian exports.
“I believe once the negotiations by countries with the US are settled, say on Aug 1 or a month after that, President Donald Trump might adjust the tariffs down because of concerns over rising inflation in the US,” Mr Kitpon said.