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The SCB’s Economic Intelligence Center (EIC) has reduced its growth projection for the Thai economy this year to 3.6% from a previous expectation of 3.8%.
Trade war puts brakes on exports
According to first executive vice-president Yunyong Thaicharoen, this is mainly due to the decreasing trends of the export sector affected by global economic conditions, a trade dispute between the United States and China, and the International Monetary Fund’s (IMF) latest global economic growth projection reduced to 3.3%.
Yunyong said he believes the superpower trade dispute will not come to a conclusion at a foreseeable date, making it a long-term problem for the Thai economy, which is integrated into the supply chain of goods affected by the tariffs each country has imposed on the other.
Investments by the private sector show signs of recession
Companies are waiting for clarity on the formation of a new government, which should benefit the Q3-4 economy as soon as the new administration can take office, by raising confidence among private firms and international investors.
According to the EIC, current Thai economic growth remains good because of the strong economic foundation, complimented by government investment in infrastructure projects, and the expectation of an additional 760 billion baht in investments this year.
Tourism shows recovery
The tourism sector has shown signs of recovery with a further increase in the number of Chinese tourists.
It is expected Thailand will welcome 40.7 million international visitors this year. General income in other sectors except farming has also shown growth, which helps with consumer confidence.
As for Thailand, Yunyong predicts that the Bank of Thailand (BOT) will maintain its policy rate at 1.75 per cent throughout the year, given the internal and external risk factors facing the economy.
“Furthermore, the inflation level in the first two months has been at a low 0.7 per cent. We predict that the inflation level in 2019 will be 0.9 per cent on average. This low inflation level is another incentive for the BOT to maintain their policy rate,” he said to The Nation
Strong baht to remain
As for the strengthening of the baht, the EIC expects the currency to remain strong throughout 2019, forecasting it will close the year at between Bt31 and Bt32 to the US dollar.
Given the baht’s strength, Titinan urges exporters to not only depend on price for competitiveness but focus more on the quality of their products to compete with Thailand’s rivals in the Asean region.