11 July 2024

Kasikorn Research Center revises down Thailand’s economic growth this year to 2.5 percent from the initial projection of 2.8 percent and projects the next year’s growth at 2.7 percent.

Speaking at the press conference on Monday, Kasikorn Research’s economists said they lowered the growth projections due to lackluster export performance, less-than-expected overall investment and delay in the enactment of budget expenditure bill for the fiscal year 2020.

Ms. Nattaporn Triratanasirikul, Kasikorn Research Assistant Managing Director, said the economic growth next year is projected to grow 2.7 percent or within a projection range of 2.5-3.0 percent.

Since the growth will be driven largely by budget spending, if there is political uncertainty and it causes the delay in budget spending, Thailand’s GDP growth may be lowered to 2.5 percent, she said.

Meanwhile, exports may continue to shrink due to poor economic performance of Thailand’s major export markets, the US-China trade war which is unlikely to be resolved anytime soon as well as the stronger Thai baht, amid the expectation of more Fed’s rate cuts which will put greater pressure on the US Dollar.

Thai commercial banks are expected to brace for several challenges in line with the overall economic sentiment. The loan growth next year is expected to stay unchanged at 3.5 percent. The non-performing loan may increase from 2019, while the banks’ fees are likely to grow no more than 1-2 percent, she added.

Ms. Kevalin Wangpichayasuk, Assistant Managing Director of Kasikorn Research, said the stronger Thai Baht in 2020 will also lead to a fall in the manufacturing output and possible job losses. Based on preliminary estimations, over 30,000 jobs in the manufacturing sector will be affected after almost 100,000 jobs have disappeared in 2019.

Meanwhile, the drought in 2020 is forecasted to be more severe than 2019 as the water levels in dams and reservoirs stayed at low levels since the beginning of this year. If the drought worsens, it may affect the farm outputs.

Regarding the latest daily minimum wage rise, she said although its impact on 2020 inflation will likely be limited, it may present a challenge to the business sector.

An average increase in the daily minimum wage of approximately Bt5 will cause an average labor cost to rise by another 0.3 percent, she said.

Meanwhile, the property sector has not recovered yet because there are around 200,000 units of accumulated unsold residential units in the market, which is too high for property developers to clear them within a short period of time.

Tourism, which accounts for as much as 18 percent of GDP, will continue to thrive. Although international tourist arrivals to Thailand are projected to grow at a slower pace of approximately 2-3 percent in 2020, declining from a prior estimate of about 4 percent in 2019. Some inbound tourism markets, including China, ASEAN and India, as well as domestic tourism will likely help promote hospitality business in Thailand.