The Thai private sector should brace for a global economic reset, amidst the uncertainty over geo politics and the changing political landscape, which will lead to a multi-polar world order and the advent of artificial intelligence (AI), warned Dr. Phatcharaphot Nuntramas, first executive vice present and chief economist of the state-run Krungthai Bank.

Citing the assessment of the Thai economy this year by Krungthai COMPASS, the bank’s research centre, he said that Thailand’s economic growth this year will be around 2.7%, while export growth is estimated at just 1.8% due to the economic slowdown in Thailand’s main trading partners, especially in the United States and China, which is affecting Thailand’s industrial sector.

Thai tourism continues to expand this year, but arrivals for the whole year are expected to be around 34 million, which is fewer than the 40 million arrivals during the pre-COVID pandemic period.

The visa-free measure for Chinese tourists may help increase arrivals from China, but the numbers are limited due to the economic slowdown in China and the Chinese government’s promotion of domestic travel, according to Dr. Phatcharaphot.

Thailand is still burdened with huge levels of debt, while private sector consumption is slowing and some businesses are experiencing debt servicing problems.

Dr. Phatcharaphot said the global economic reset, in a tight financial environment and rising interest rates, will render fund mobilisation difficult for debt servicing and will impact the economic engines of both China and the US.

He said there is a high level of uncertainty over the economic policy of the US, if former president Donald Trump is re-elected for a second term in November, as well as the prospect of a fierce trade war, which will further weaken the Chinese economy.

The Thai private sector, he said, should prepare for the prospect of “reshoring” of multi-nationals’ production bases and the prospect of “friend-shoring” trade practices.