The domestic economy may slow down in the second half of the year due to a number of problems, ranging from looming drought and political uncertainties to a sluggish global economy, says the Employers' Confederation of Thai Trade and Industry (EconThai).
"The global economy is expected to grow by less than 2.1% in 2023," said Tanit Sorat, vice-chairman of EconThai.
"The Chinese economy has yet to fully recover while the US market is slowing down, affecting our exports."
The Commerce Ministry reported earlier that the customs-cleared value of exports dipped for a seventh consecutive month in April, falling by 7.6% year-on-year to US$21.7 billion, while imports decreased by 7.3% to $23.2 billion, resulting in a trade deficit of $1.47 billion.
Local politics is another factor that will affect the economy as it remains unclear whether the Move Forward Party (MFP) and its seven political allies can successfully form a new government, led by MFP leader and prime ministerial candidate Pita Limjaroenrat.
A delay in the establishment of a new government will dampen the confidence of the business sector.
"Foreign investors have delayed their investments here because they want to know the investment policies of the new government and make sure that the new administration will not change the policies initiated by its predecessor," said Mr Tanit.
He is also worried the slow process of forming the new government would impact the budget planning for fiscal 2024, which would affect efforts to drive the domestic economy.
Drought is another problem that can put pressure on the economy as water scarcity would reduce the amount of farm produce and the prices of these items would increase, affecting the export sector.
"Drought is expected to last from 2023 to 2026 as a result of El Niño and the impact of climate change on many countries, including Thailand," said Mr Tanit.
While water scarcity is a serious problem, EconThai has not seen a clear strategy to brace for the drought and ensure domestic food security.
The Joint Standing Committee on Commerce, Industry and Banking submitted a proposal to Prime Minister Prayut Chan-o-cha on May 31 to deal with the drought, hoping to work with the government to prevent any severe impact caused by water shortage.
The business sector wants the authorities to prepare mid-term and long-term solutions to ensure that investment projects can continue operating.
